Latin American exports declining

New U.S. government trade statistics are setting off alarm bells among international traders in this corner of the world: Latin American exports to the United States are showing no growth — and in many countries they are falling sharply — amid a worldwide increase in exports to the U.S. market.

Preliminary U.S. Commerce Department data show that Latin American and Caribbean merchandise exports to the U.S. fell by 0.17 percent during the first seven months of 2007, from the same period last year.

By comparison, worldwide exports to the United States rose by 5 percent over the same period.

If you exclude Mexico, the figures are even worse: The region’s exports to the United States fell by 5.73 percent.

Before we get into what Secretary of Commerce Carlos Gutierrez told me when I asked him about the region’s declining exports to the United States, let’s take a closer look at the figures:

UExports to the United States from South America’s Mercosur common market — Brazil, Argentina, Paraguay and Uruguay — dropped by nearly 2 percent through the end of July this year. The biggest drop was in Brazil’s exports.

UExports to the United States from the Andean Community — Bolivia, Colombia, Ecuador, Peru and Venezuela — fell by more than 12 percent. The biggest declines were in Ecuador (19 percent), Peru (18 percent), Colombia (14 percent) and Venezuela (10 percent).

UCaribbean exports to the United States fell by 1 percent, although the Dominican Republic, which was lumped with Central America, fell 5 percent.

UMexico’s exports to the United States rose by nearly 4 percent, while Central American exports rose by more than 2 percent.

What’s going on? I asked Gutierrez in a telephone interview last week, while he was on a tour of Peru, Panama and Colombia trying to get U.S. congressional approval of free-trade agreements with the three countries.

Gutierrez, who will be one of the keynote speakers at the Miami Herald Conference of the Americas in Miami on Thursday and Friday, said U.S.-Latin American trade is “growing quite extraordinarily” in part thanks to an increase in U.S. exports to the region. On the drop in Latin exports, he ventured “a theory.”

His guess is that some Latin American countries may be losing their market share in the United States.

“Latin American countries don’t compete with the United States: Latin American countries compete with Asia,” Gutierrez said.

“And what you find is a tremendous amount of competition between China accessing the U.S. market and Latin American countries accessing it.”

Gutierrez added that “Latin American countries have to become more competitive, and these free trade agreements (with Peru, Panama and Colombia) give them a better shot at the U.S. market.”

My opinion: While I’m no fan of the Bush administration’s policies in Latin America (in addition to neglecting the region, the Bush government has until recently acted with semi-imperial arrogance and has paid scant attention to the region’s poor), Gutierrez is right.

Cheap U.S. dollar

Granted, the drop in Latin exports may be partly due to a cheap U.S. dollar, or a temporary drop in oil prices, but it could also signal that Latin America is losing competitiveness.

This should prompt Latin American countries, including those benefiting from record commodity prices, to become more competitive and should move skeptical U.S. legislators to approve the pending free trade deals.

There is enough evidence by now that Latin American countries with free trade deals with Washington benefit from huge export increases, just as the United States does with its free-trade partners.

Mexico’s exports to the United States have soared by 397 percent since the 1994 free-trade agreement, and Chile’s exports have increased by 167 percent since the 2003 U.S-Chile free trade agreement.

Unless Latin American countries become more competitive with China, India and Eastern Europe, and more U.S. legislators realize that an economically strong Latin America is good for the United States, the new trade figures may be the beginning of a downward trend after several years of steady trade growth.

X Andres Oppenheimer is a Latin America correspondent for the Miami Herald. Distributed by McClatchy-Tribune.Information Service.