While commentary in the United States still continues to resonate in response to Donald Trump’s first State of the Union address, this week, for the second time, Latin America will host the visit of a high-level official government official from the United States. Last August, Vice President Mike Pence traveled to the region. On that occasion, Pence visited Panama, Colombia, Argentina and Chile. This week it will be Rex Tillerson’s turn, and he will visit two of the countries that Pence visited in August (Argentina and Colombia) and will include three new countries: Mexico, Peru and Jamaica.
This visit is not a minor detail if we keep in mind the recent speech Trump gave before Congress, where he focused on the economy and domestic politics. He emphasized his well-known slogan “America First.” The few times that he referred to international politics during the 88-minute speech were rather defiant, asserting that he “always serves the interests of America,” a position he said was contrary to Barack Obama’s vision of dialogue.
It was a speech that was anticipated with high expectation in the U.S. for possible announcements. The truth is that it was more of a description of what Trump called the “new American moment.” Beyond that, in many ways his tone resembled that of his political campaign: confrontational with trailblazing intentions. It was noted that part of his goal was to show himself as somewhat of a unifying figure. A few minutes into the speech, he called for “all of us to set aside our differences, to seek out common ground, and to summon the unity we need to deliver for the people. … In America, we know that faith and family, not government and bureaucracy, are the center of American life. The motto is, ‘In God We Trust.’”
Trump spent little time on international politics. When he addressed the subject, he stressed that he would renegotiate trade agreements that will be beneficial to the United States without providing further details. While we know that the North American Free Trade Agreement is already in the negotiation phase, Trump did not offer any concrete criticism of the trade agreement. What he did highlight is that his country “has finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our wealth.”
In this rather combative context of Trump’s speech, the visit of Secretary of State Tillerson to Latin America is an immense opportunity for the region that for years has not had the U.S. as its main economic and political partner. Since the beginning of the Trump presidency, both Vice President Pence and Secretary Tillerson have been key players in tamping down Trump’s international rhetoric that in many cases, seems to bear an isolationist perspective. This visit by Tillerson to the region undoubtedly aims to rekindle U.S. relations with a region that is experiencing a full wave of presidential elections and still doesn’t seem to have a clear vision of how to relate to the Trump administration.
The country that seems to have a clear course in this sense is Argentina (as well as Colombia), which, in less than a year, will already have had the visit of two key officials in the current Argentine administration. So far, during the Trump administration, President Mauricio Macri has already managed to get his country back into the Generalized System of Preferences after six years of suspension. This will allow Argentina to import an important list of products with very low tariffs. Concretely, before Argentina was suspended from the GSP in 2012, the U.S. granted a 0 percent tariff status to 538 agricultural products. After the recent announcement that Argentina will return to this system, the number of concessions would be even higher for the Argentine agricultural market.
The visit to Peru also has a trade profile. After the exit of the United States from the Trans- Pacific Partnership, the 11 resident countries have shown various signals of achieving bilateral proximity with Washington. Peru, Chile and Mexico are the three Latin American countries that are integrated into the agreement. Chile is undergoing a full change of government (and there is no doubt that the relationship of Sebastian Piñera and the Trump administration will be very positive); and Mexico is a few months away from a national election, and its trade agenda with the United States today is impaired by the renegotiation of NAFTA. That is why, among the members of the TPP, Peru will be the country that the State Department will have the closest eye on in the upcoming months.
While some key countries in the region seem to have taken advantage of the troubled waters generated by the new Trump administration, Uruguay should be more active in terms of trade relations with the U.S. We don’t have any concrete link that today binds the two economies other than the framework of the Trade and Investment Agreement signed 10 years ago. Today, Uruguay is far off the economic radar of the United States, a country that occupies fourth place for our exports, which represented 6 percent of total exports in 2017 (a figure that is equivalent to some $530 million). The potential to increase exports is enormous.
It is a key market for our beef, citrus, soy and honey. Uruguay is no longer integrated into the list of countries that are part of the general system of preferences for the American market, which many of our competitors are. In comparative terms for the region, Uruguay is being proactive with the U.S. It is enough to see that during Obama’s two terms, Uruguay was one of the few countries in the region he did not visit. It is true that we have a long and good diplomatic tradition with the United States. It happens that preserving a good institutional image at the international level must be only part of our foreign policy. If we don’t compensate with a proactive trade outlook, we will once again become further relegated to the new regional dynamics. (Brazil is in full political crisis, and Argentina has new economic energy.)
If an agreement with the European Union is not made, and we seem to increasingly distance ourselves from one with China, we should ask ourselves if Uruguay has a strategy to point to. Maybe the U.S. should be a market that we should take better care of from here on out. An administration like Trump’s whose primary agenda is focused on the domestic economy is not going to be attracted to us solely based on our good institutional image.
There are at least two keys factors that define the success of trade policy of many countries on a scale comparable to that of Uruguay. One is never saying, “We are boys and we have no alternative but to wait.” For example, it is enough to look at the case when Chile convinced the European Union to shut down a free trade agreement. The second key to success is not to wait for others to come, but to go and look for others. For example, we must understand the “strategy of intelligent insertion” that Argentina is currently applying.
Today the opportunities that international trade offers means that there are at least two types of countries: those who see opportunities pass by as spectators, and those who go in search of opportunities as protagonists. I have no doubt that the Uruguayan government knows which is best for the country. What I am not convinced of is that there is a strategy to achieve it.
About this publication