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Regional realignment reflects reality

By Earl Bousquet: 0 Comment(s)Print E-mail China.org.cn, January 6, 2012

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Venezuela's President Hugo Chavez (C) surrounded by Argentina's President Cristina Kirchner (R) and Mexico's President Felipe Calderon (L) during the opening ceremony of the Community of Latin American and Caribbean States (CELAC) summit on December 2, 2011 in Caracas. [Xinhua/AFP]

The Third Summit of the new Latin American and Caribbean bloc, CELAC, concluded in Caracas at the beginning of December. The latest of several new regional blocs uniting the sub-continent's states, it joins already existing entities which seek closer ties between the Spanish-speaking nations and their English-speaking neighbors in the Caribbean Community (CARICOM) region.

Their northern neighbors may be quiet but concerned about the fact that the USA and Canada are not members of the new bloc, while Cuba is. But the reason is simple: Cuba remains locked out of the OAS by virtue of an American-imposed statute with which its fellow OAS member states disagree. With the OAS based in Washington and given America's propensity to withdraw funding to international organizations that admit members to which it objects, Havana remains locked out of the region's largest governmental body. But that's not how it's done in CELAC, where over 30 Heads of State have agreed to cooperate on common issues that affect all the region's states, including Cuba and its more than ten million inhabitants.

The new entity also offers an opportunity for the Latin American and Caribbean (LAC) member-states to seek new common approaches to their economic problems. With the global financial meltdown caused by events in the financial centers in Europe and the USA, most LAC countries have had to review and redirect their bilateral trade relations. Most are now looking to Asia – specifically to China – as they reorganize their development strategies.

There is reasoning behind this. Trade between China and Latin America is multiplying. During the first decade of this century, it grew faster than with any other region. Between 2005 and 2010, China's exports and imports to and from the region doubled those of the rest of the world. More than 60% of LAC's exports in the last five years have been to China with goods ranging from food and industrial supplies to energy and raw materials.

Because most of Latin America's trade is export oriented, there are limits in balance of trade with China, but bilateral trade continues to grow year by year. In 2009, LAC exports to the rest of the world fell, except to China. China's investments in Latin America are also increasing, standing today at 15.3% of all its overseas investments – larger than China's investments in the European Union, Africa or North America. In 2010, the value of Chinese investments in Latin America was US$10.54 billion, a 43% increase on the previous year. China is also a major capital provider for the region, with capital flows increasing by 19% during the recent financial crisis.

China maintains win-win economic relations with 16 countries in the LAC region and this continues to underpin their economic development. Its energy and raw materials needs from that part of the world are met and its trading partners benefit from encouraging favorable trading arrangements unparalleled elsewhere.

China's will to invest even more in and export more to the region is tempered by protective trade barriers and anti-dumping legislation. There are also legal, labor, and language issues, coupled with fears in national business circles about the expansion of Chinese capital. But while some nations are hesitant to go into joint oil exploration projects with China's giant national oil monopoly, many others settle for "oil for loans" deals or benefit from large infrastructure projects that come with both capital and technology.

However, the LAC nations are not the only ones looking increasingly to China for economic salvation. Africa, too, is embracing more Chinese investment, which comes with fewer political strings attached and non-interference in the internal affairs of states. Where the USA and Europe usually tie human rights and democracy strings and other conditions to their aid to various African states, China offers longer-term loans at lower interest rates and builds the infrastructure to advance and accelerate bilateral trade.

The LAC states are not insulated from the world's economic woes, so they naturally have to seek alternative alliances to advance their economic interests. Multilateral cooperation between developing nations on a South-South basis is also becoming an important norm in the new global dispensation. Similarly, smaller and poorer developing nations are increasingly starting to focus their sights on the BRICS states (Brazil, Russia, India, China and South Africa – home to more than half the world's population) to increase and improve economic relations. Caribbean hoteliers, for example, are starting to woo Russian tourists and looking seriously at attracting visitors from the expanding middle classes in the BRICS zone nations.

The smaller Caribbean nations within the LAC bloc do not all receive the same large-scale China trade benefits as their larger neighbors to the north in South America. But the past September China attended an economic cooperation summit meeting with Caribbean leaders in Trinidad & Tobago. At the meeting, Beijing pledged one billion US dollars in aid to the comparatively much smaller Caribbean states, through their multilateral institutions, over the coming period.

The smaller Caribbean tends to get lost in the figures on China's trade with the region. But an increasing number of leading Caribbean minds are coming up with interesting proposals for new areas of cooperation between the Caribbean and China. Such proposals could compensate for the smaller islands' absence of raw materials in the quantities and volumes needed by China.

New factors in world trade are changing the name of the game globally. The new moves by groups of developing states to reorganize and realign their trade and other relations – as CELAC has just done -- must be seen as a natural reaction to costly and harmful global financial and economic changes that were not of their making.

The author is a columnist with China.org.cn. For more information please visit:

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