Daily Israel Report

Latin America Gratified By Chinese Attention Balks At Free Trade

Wen Jiabao hopes to improve China's trade with Latin America but his hosts are leery of opening their domestic market to Chinese competition
By Amiel Ungar
First Publish: 6/28/2012, 6:25 PM

Wen in Chile
Wen in Chile
Reuters

After many years of living in the shadow of the United States the Latin American countries are undoubtedly gratified by the fact that China has come courting South America. However, the Latin American countries are wary of being overwhelmed by the Chinese juggernaut particularly as they themselves would like to industrialize and create jobs.

Chinese Premier Wen Jiabao is concluding a tour of Latin America that included the ABC powers – Argentina, Brazil and Chile --plus Uruguay. In all the countries that he visited Wen proclaimed the establishment of a strategic relationship or partnership. That is standard fare for Chinese state visits. One would expect that if a Chinese dignitary visited Lichtenstein or Andorra they too would be offered a strategic partnership.

The Chinese premier offered Latin America a $10 billion credit line for infrastructure development. This could serve Chinese interest in two ways: Chinese companies and contractors could perform the infrastructure work; materials shipped from the Latin American continent to China would be more accessible and rendered less costly with improved infrastructure. China is interested in access to raw materials and foodstuffs.

Argentina has a diplomatic dispute with Great Britain regarding sovereignty over the Falklands Islands and therefore welcomes Chinese cooperation in what Wen described as "an increasingly complex international situation fraught with serious challenges."

The Chinese visitor hit a snag however when he urged his hosts to renounce the idea of economic protectionism. He offered Latin America a free-trade agreement with China. Latin America however does not need a free-trade agreement. Argentine wheat and perhaps in the future oil will be sufficiently attractive to the Chinese even without the benefit of a free-trade agreement and the same holds true for Brazilian soybeans and iron ore.

On the other hand a free-trade agreement means that the products of Chinese industry will have easy access to Latin American markets and this the Latin American countries are loath to agree to. Brazil has never signed a free-trade agreement monitor with the United States nor with the European Union. It is not about to break that practice with China.