On August 7, India’s foreign minister held the country’s first dialogue with a troika representing a recently formed 33-nation Latin American group, the Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC). The meeting drew little attention, and most media outlets dismissed it as a routine affair, akin to India’s engagements with other multilateral blocs. A more nuanced look, however, indicates a window of opportunity for both India and Latin America.
First, we must explore Latin America’s changing geopolitical priorities over the past few years.
The very nature of the CELAC grouping is reflective of this shift: it was formed in defiance of the Organization of American States to leave out the United States from its political confabulations. Latin America now looks less to its traditional trade partners—Europe and the U.S.—which are preoccupied with their debt crises and political transitions, and the region also no longer sees them as a model they can emulate.
As a result, China is a dominant player in Latin America, with an annual trade of $240 billion. The Chinese presence there is maintained by two pillars: primarily, by a massive exchange of commodities and natural resources, and secondly, by a large Chinese diaspora totaling upwards of 2 million people. This will continue to sustain China’s relationship with Latin America, though more recently there has been a subtle change of policy positioning toward Beijing. Some perceive the flooding of Chinese goods into their markets as a risk; others simply want to engage with new markets.
This is where India comes in. It presents Latin America with an opportunity to diversify and opens the door to a large and promising market.
Local markets are one of the more quintessential Colombian scenes. Strolling through one, a visitor will find colorful and juicy fruits, aromatic species and herbs, fresh produce and diary. Due to its tropical location, Colombia is privileged to be able to produce these goods all year long. But today most of these products come from abroad. In Bogota's Corabastos, the largest wholesale market in Colombia and second-largest in Latin America, it is hard to find the label "Product of Colombia."
Beans, lentils and chickpeas come from Canada and the United States. Canned sardines and tuna are products of Ecuador and Peru. Apples, prunes, cherries, and peaches arrive from the U.S and Chile. Garlic and onions are from Japan and Mexico.
Even bocachico and bagre, two landmark fishes from the Magdalena River, now come from Argentina and Vietnam. Even coffee, Colombia's most famous export and international trademark, is imported.
The picture is worsening for local producers. Last week the government revealed that the country’s food imports climbed 52 percent in the first trimester of 2012 versus the same period last year—from 253 tons to 385 tons. The most dramatic rise in imports included milk, whey and dairy products, skyrocketing 543 percent. Sugar imports jumped by 217 percent.
Why is this happening? Not even local officials seem to know. Luis Fernando Salcedo, head of the Cámara Gremial de la Leche, a local daily producers’ guild, told the Colombian business newspaper Portafolio, “I don’t have any explanation for this increase,” adding, “My guess is that the Dirección de Impuestos y Aduanas Nacionales [Colombia’s customs administration] is not controlling the approved import quotas."
Argentine government sources confirmed yesterday that despite the recent signing of a much lauded treaty between Argentina and China to promote food exports—particularly maize (corn) to China, access to the Chinese market will still be restricted due to inconsistencies in health and safety regulations between both countries.
Argentina is the second-largest exporter of corn in the world, after the United States. At current market prices, the Argentine Ministry of Agriculture’s 2012 estimates for corn—between 20.5 and 22 million tons—could generate up to $6.2 billion in revenues for both the private sector and additional tax revenues for the government.
Several Argentine firms have complained anonymously about the disputed health and safety clauses, including one senior executive who said, “No company will risk exporting maize to China because they have the power to reject the shipment once it arrives.” The Argentine Ministry of Agriculture quickly rebuked this claim, saying that “companies should not worry since [such clauses] are very common in bilateral treaties, and will probably not affect overall corn trade.”
Brazilian President Dilma Rousseff yesterday announced the creation of a $10 billion fund to help small-scale agricultural producers maximize output and revenues during the 2011–2012 growing season. The fund, which was a major promise when Rousseff was campaigning for office, is targeted at rural family farms and is designed to curb poverty and reduce urban migration.
Brazil is currently the world’s largest producer of coffee, oranges and sugar and is one of few countries whose agricultural exports continue to grow rapidly. In addition to the small-farmer fund, Ms. Rousseff has also announced nearly $64 billion in government spending to support commercial farming nationwide. Family farms produce approximately 70 percent of Brazil’s total domestic food consumption and nearly 70 percent of rural Brazilians work in some capacity in the agricultural sector.
The announcement of the fund is consistent with decades of Brazilian government policy which, since the mid-1970s, has played an active role in supporting agricultural development.
For more on Brazil’s agricultural boom, check out the forthcoming AQ—coming out August 10, 2011—which includes a policy update on the topic.
From the Americas Society/Council of the Americas. AS/COA Online's news brief examines the major—as well as some of the overlooked—events and stories occurring across the Americas. Check back every Wednesday for the weekly roundup.
The New LatAm Group on the Bloc
Latin American leaders convened in Cancun, Mexico on February 22 and 23 for the 2010 Rio Group summit, where they agreed to form a new regional alternative that excludes the United States and Canada and that some posit could serve as an alternative to the Organization of American States. The specific details of the body will most likely be figured out at a 2011 summit in Caracas.
AS/COA’s Christopher Sabatini discusses the newly created Latin American body on Worldfocus. “[The region’s] feeling its own diplomatic muscle and it wants to assert that,” says Sabatini.
Farm state senators Max Baucus (D-MT) and Byron Dorgan (D-ND), along with at least 13 other senators, are expected to announce legislation this week that would lift restrictions imposed by the Bush administration requiring all shipments of U.S. agricultural goods to Cuba to be paid for before they were left port. If lifted, the change would increase
Baucus, chairman of the Senate Finance Committee, has introduced similar legislation in previous years. In 2007, he sponsored the Promoting American Agricultural and Medical Exports to Cuba Act, which would have prohibited restrictions on payments from Cuban financial institutions and directed the Agriculture Department to promote exports to the island. According to Parr Rosson of Texas A&M University, agricultural sales to Cuba could reach $1 billion per year if restrictions were lifted.