CRS Reports on U.S.-Latin American Trade, FTA Issues
The Congressional Research Service has issued a report entitled “U.S.-Latin America Trade: Recent Trends and Policy Issues.”
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Mexico is Largest Latin Trade Partner
CRS reports that between 1998 and 2009, total U.S. merchandise trade (exports plus imports) with Latin America grew by 82%. Mexico composed 11.7% of total U.S. merchandise trade in 2009 and is the largest Latin American trade partner, accounting for 58% of the region's trade with the U.S.
By contrast, the rest of Latin America together makes up only 8.3% of U.S. trade, leaving significant room for growth.
Many Large South American Economies Resist Region-Wide FTA
The U.S. has implemented comprehensive bilateral or plurilateral reciprocal trade agreements with most of its important trade partners in Latin America, including the North American Free Trade Agreement (NAFTA), the Dominican Republic-Central America-U.S. Free Trade Agreement (DR-CAFTA), and bilateral FTAs with Chile and Peru. (FTAs with Panama and Colombia have been signed but not implemented, pending congressional action.)
Many of the largest economies in South America, however, are not part of U.S. FTAs and have resisted a region-wide agreement, the Free Trade Areas of the Americas (FTAA), in part because it represented an extension of the same trade model used by the U.S. in bilateral agreements.
For example, Brazil, Argentina, and Venezuela are less compelled to capitulate to U.S. demands because they are far less dependent on the U.S. economy than countries in the Caribbean Basin, do not rely on previously existing unilateral preferential arrangements, and would have to redefine their subregional trade pacts.
Revised FTAs, Administrative Harmonization Considered as Alternatives
CRS states that alternatives to a new round of currently unpopular FTAs are being debated in the U.S. It has been suggested, for example, that FTAs be revised, enhancing controversial environment, labor, and other chapters. The response in Latin America, however, has been tepid.
Another option is to move incrementally toward harmonization or convergence of the vast array of trade arrangements in the Western Hemisphere by adopting administrative solutions where possible, without renegotiation. One example is to expand rules of origin and cumulation provisions.
Port and Customs Restraints Must Also be Addressed in FTAs
With respect to FTA implementation, CRS states that another critical issue is the provision of trade capacity building and other technical assistance to address supply-side constraints in areas such as port and customs operations modernization, infrastructure investment, technology enhancement, and development of common standards in general. These are often major constraints to the more fluid movement of goods in Latin American countries.
According to CRS, it is uncertain what the next step in Western Hemisphere economic integration may be, and these alternatives may be difficult to implement and monitor. But at the margin, they could provide benefits in light of the apparent hiatus in moving ahead with either a multilateral or hemispheric trade accord.
(See ITT’s Online Archives or 03/31/10 news, 10033140, for BP summary of a CRS report on pending FTAs (including Panama and Colombia) and their implications for U.S. trade policy.)
(Report dated 06/25/10)