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South America cool toward U.S. free trade pact pitch?

Dec. 20, 2011 at 5:25 PM   |   Comments

SAO PAULO, Dec. 20 (UPI) -- U.S. President Barack Obama is pitching for more trade with Latin America at a time when potential partners hope to extract maximum concessions out of Washington, which they see as needier than their booming economies.

Obama's aides have been pushing for a refloating of the idea of free trade agreement with Latin America since the president visited Brazil last March. Like Obama's diplomatic initiative, outlined in November, for greater political rapport with the region, the trade proposal is fraught with complications because U.S. ties with individual Central and South American countries no longer fit any pattern.

Some of the countries are at ease with a U.S. partnership, others remain hostile and still others are undecided about pursuing closer relations.

In the meantime, Latin America is being wooed by China and the European Union as a potentially lucrative market. Both the Chinese and the Europeans are also seeking individual countries in Central and South America and the Caribbean for partnerships, trade deals and bilateral cooperation that is both economic and political.

Russia isn't far behind and has forged military ties with populist governments, including Venezuela, that won't buy or won't be given access to U.S. weapons and technology export programs or offered closer economic ties.

Obama singled out Cuba and Venezuela for further criticism, the latter for ties with Iran. But both Cuba and Iran continue to thrive in partnerships in the region despite the U.S. objections.

This contrasts with Latin America's ties with the U.S. public and corporate sectors that have seen their standing undermined over the years, first because of U.S. preoccupation with political and military issues in the Middle East and second because of the region's newly acquired economic independence.

Latin America's confidence and sense of independence has received frequent boosts from increased commodity exports adding to regional liquidity and by China's significant inroads into Latin America's economies, out of Beijing's self-interest in clinching energy and raw material deals.

U.S. Trade Representative Ron Kirk used an interview with Brazilian newspaper O Estado de Sao Paulo to spell out Washington's plans to pursue greater trade, possibly within the frame of a new free trade zone.

Kirk's call for a greater opening of the Brazilian economy to U.S. exports met with mixed reactions from the business community, which is facing mounting pressure from Brazilian President Dilma Rousseff to cut imports and boost sales abroad.

Brazilian exports took hits throughout this year as its currency, the real, appreciated against the U.S. dollar, making Brazilian goods in some sectors unattractive to potential buyers. Brazil is still doing well overall, however.

Kirk said there was a historical reasoning behind a U.S.-South American trade pact.

"Historically," he said, "since we achieved NAFTA (free trade agreement including the United States, Canada and Mexico in 1994) many people in the U.S. have insisted we do something similar with the southern part of the continent.

"We've started with Chile and Peru and we hope, expect, others will be willing to join the initiative."

Kirk said the Obama administration hoped an agreement could be reached with the Southern Hemisphere despite the failure of a previous attempt at such a deal. Talks on a Free Trade Association of the Americas fell through in 2005 during a summit of the Americas in Mar del Plata, Argentina.

Kirk called for a greater opening of the region's largest economy, Brazil. The United States lost its position as Brazil's main trade partner to China in 2009.

"Our hope is that once the chalice of the Brazilians is full, they can spare a few drops to the poor neighbors from North America. We would like to have half the growth rate of Brazil," Kirk said.

No matter how strong U.S. cooperation with Chile and Peru grew, he said, Washington looked to "the potential of Brazil that can also change life for neighbors in the region."

He said greater U.S. trade with Brazil would lead to a "more balanced alliance" that could benefit the whole region.

Kirk said the United States looked beyond short-term business in connection with the FIFA World Cup 2014 and the 2016 Olympics and hoped to develop closer ties with Brazil in energy, technology and trade.

Obama canvassed for more trade when he met with Rousseff.

Obama also backed Boeing's bid to supply the F/A-18E/F Super Hornet as the fighter jet of choice for Brazil. His five-day tour covered Brazil, Chile and El Salvador.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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