One of the Obama Administration’s first initiatives of 2014 was the DOC’s (Department of Commerce) “Look South” policy. The idea is to help US companies through “coordinated assistance” of a variety of federal agencies to do business in Latin America. The “Look South” plan is part of the DOC’s “Open for Business Agenda” that is intended to support President Obama’s “National Export Initiative”.  Nominally, the strategy is to encourage US exporters to take advantage of the eleven FTA’s (Free Trade Agreements) in Latin America. According to the DOC, nearly 60% of all US exporters are exporting to only one market, generally the NAFTA (North American Free Trade Agreement) partners Canada and Mexico. The Administration would like to see US importers and exporters work with the Latin American trade groups like the Pacific Alliance and CAFTA-DR, not only to bolster their own bottom lines but to advance the larger economic interests of the US in efforts like the TPP (Trans Pacific Partnership). The Administration is also keenly aware that China has made great economic strides in the Latin American market as part of Beijing’s global strategy of securing strategic primary commodities and opening up new export markets. Latin American Exports: Slow Going but Recovery on the Horizon Latin American economies had a difficult 2013. The IDB (Inter-Development Bank) in their annual review said the region’s 2013 exports were “approximately $1.068 trillion, barely an increase compared to 2012.”  Lackluster demand with major trading partners such as the US, Europe, Japan and to a lesser extent, China, contributed to the placid performance. Additionally, prices fell for key export commodities such as soybeans, oil, iron ore and coffee. For example, coffee prices were off by over 3%, while soybeans 18%. The fall in commodity prices particularly influenced the China trade, as commodity volumes were still high but pricing undercut profits. The ECLAC (Economic Commission for Latin America and Caribbean) estimates that in 2013 the export volume figures for Latin America and the Caribbean were up 3% and import volume 3.8%. However, pricing was off 1.5% on exports and up fractionally 0.7% on imports for the region. While 2013 wasn’t a good year, some Latin American countries experienced export growth. Bolivia’s exports were up 6%, Ecuador’s 3%, El Salvador’s 4%, Dominican Republic 10%, and Paraguay 32%. In the case of the Dominican Republic, near sourcing from Asia to the Caribbean for products destined for the US market has contributed to a mini-boom in exports, (along with tobacco and bananas).  Other countries in the region are also trying to exploit the opportunity of near-sourcing, but the process is still in its infancy for most of the region with the exception of NAFTA member, Mexico. Pacific Alliance & others There is an alphabet soup of trade blocs in place in Latin America and the Caribbean that reflect various political and economic positions of the region’s nations. The newest is the Pacific Alliance, which was formally incorporated in 2012 with Chile, Colombia, Mexico, Peru and Costa Rica as the founding members. Unlike the other regional trade blocs, the Pacific Alliance has a clear interest in Asia and in many respects a vision similar to the US led TPP (Trans Pacific Partnership). Economically, the Pacific Alliance has a lot of clout with a GDP representing over 35% of Latin America.  Although the Pacific Alliance is sometimes portrayed as the alternative to Mercosur, Chile’s foreign minister Heraldo Munoz (who ratified Chile’s membership in the Pacific Alliance) offered a different viewpoint and perhaps more “pragmatic” as it is often described in the regional press, approach to trade and trading blocs. The new government of President Michelle Bachelet is looking more at South America and favors an integration of Mercosur and the Pacific Alliance.  Such an approach is maybe more wishful thinking, than truly pragmatic. For example, Mercosur has for years been attempting to work out a tariff reduction scheme with the EU, whereas the Pacific Alliance, the new kids on the block, already inked a deal. Brazil, Uruguay and Paraguay are well on their way to building a proposal for the EU, while Argentina, which is an economic basket case, is no closer today than five years ago. Argentina’s foreign minister all but guaranteed a hostile reception in Europe by vowing that Falkland Island “will be ours.” Venezuela, which recently joined Mercosur, isn’t even in the conversation of a Mercosur-EU tariff agreement. Equally, Colombia and Mexico do not share Chile’s version of “look south” as they are focused on Asia and North America.  Even within the Andean Community itself, there are disagreements over trade policy. The Andean Community is one of the oldest (1969), consisting of Colombia, Ecuador, Bolivia and Peru. In Colombia (also a member of the Pacific Alliance) there has been an ongoing battle between farmers and the government over trade policy, specifically the entry of agricultural goods from free trade alliance partners. They want the government to re-write the FTAs. In 2013 there was a farmers’ strike, and there is a good chance of one in the near future. There are also “dueling trade blocs” which are hard to ignore. For example, ALBA (Bolivarian Alliance of the Americas) is a regional bloc founded by the late Venezuelan President Hugo Chavez and Cuba’s Fidel Castro designed to provide a Latin America-Caribbean socialist alternative to other regional blocs leaning towards the West. Without Chavez, the future of the eight-member group may be in jeopardy, particularly given the state of the Venezuelan economy and political unrest. Venezuela has been in the unenviable position of inheriting Cuba as a client state in the post-Soviet Union era. Caribbean Promise With the dueling Latin American trade blocs, the US and everybody else looking at China and the Far East, the Caribbean nations have often been overlooked. The basic Caribbean trade bloc structure (from US perspective) loosely fits under the CBI (Caribbean Basin Initiative).  Initially launched in 1983, through the (Caribbean Basin Economic Recovery Act) and substantially expanded in 2002 through the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), the CBI provides duty-free access to the U.S. market for most goods. Ironically, the expansion of the pact was largely due to Mexico gaining economic advantage through NAFTA, and so the CBTPA was launched to level the playing field.  The CBTPA has really done much to expand trade although it has been a launching pad for FDI (foreign direct investment) developing the service sector in many Caribbean economies. With the expansion of the Panama Canal and expected changes in vessels rotations, Caribbean hotspots like Kingston, Jamaica; Nassau, Bahamas; Puerto Rico (which already has a heavy investment in pharmaceuticals); the Dominican Republic/Haiti and even Cuba, could all potentially become desirable free-trade zones for launching freight not only into the North American market but into South America and even Europe.