U.S.-Latin America Trade: Recent Trends and Policy Issues

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Trade is one of the more enduring issues in contemporary U.S.-Latin America relations. Latin America is far from the largest U.S. regional trade partner, but it is the fastest growing one, with the current exception of Africa, which has had strong export growth based largely on the rise of petroleum prices through mid-2008. Latin American countries have made noted progress in trade liberalization, reducing tariffs significantly and entering into their own regional agreements over the past two decades, although the pace has slowed of late. Over the last 15 years, the United States has implemented multiple free trade agreements (FTAs) with the region, which are more comprehensive than FTAs that include only Latin American countries. 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). The main problems involve disagreements over what trade disciplines should be included. The inability to consummate an FTAA, the growing skepticism of U.S. bilateral free trade agreements (FTAs), both abroad and in the United States, trade disputes, and the anxiety over the global economic downturn all contribute to a sense of uncertainty over the future path of hemispheric economic integration. The result in the Western Hemisphere has been the expanding system of disparate bilateral and plurilateral agreements, which are widely understood to be a second best solution for reaping the benefits of trade liberalization. The bilateral option may also have run its course for the United States. The United States has implemented FTAs with Mexico, Central America, the Dominican Republic, Chile, and Peru, and signed agreements with Panama and Colombia that await congressional action. The prospects for an FTA with Brazil, Argentina, Ecuador, Bolivia, and Venezuela, by contrast, seem unlikely. Alternatives to a new round of currently unpopular FTAs are being debated. In the United States, it has been suggested, for example, that FTAs be revised, enhancing controversial environment, labor, and other chapters.

Source: Congressional Research Service

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