The TPP Will Change Latin America

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We live in an era of ideological trade blocs. From the perspective of politicians in Berlin or Paris, little counts for more than the summit games over who wins what at the European Union.

Meanwhile, on the other side of the Atlantic, the EU has a Doppelganger: Mercosur, the South American economic and political bloc.

Like the European Union, Mercosur covers most of its geographical region, South America. Seven in 10 South Americans have a Mercosur passport.

Mercosur is based on similar values to the European Unions. The organisation's founding agreement promotes the free movement of goods and productive factors – such as labour. That means most South Americans can choose where they want to live.

Along with liberal exchange, the EU and Mercosur both share a commitment to democracy. So when Paraguay's democratically elected president was ousted after a brawl with parliament last year, Mercosur suspended its smallest and poorest member.

Lastly, like the EU, Mercosur now has a clear political leader and paymaster: Brazil. For example, Brazil's president Dilma Rousseff last month indicated she was willing to direct food exports to Venezuela, where inflation and shortages of basic goods threaten President Nicolas Maduro's government.

Now, on all evidence, the proposed Trans-Pacific Partnership Agreement looks more limited than Mercosur in its ambit.

However, on an economic level, the TPP represents a strategic challenge to Brazil and its Mercosur here in Latin America. The proposed agreement would co-involve the United States, leading East Asian powers and Latin America's most conservative nations, such as Chile and Mexico.

The TPP, says Peruvian business paper Gestion, is being guided by the US, which aims to “diffuse its rules and regulations” throughout the bloc. Meanwhile, Asian powers are keen to sign onto the deal “as a way to consolidate relations with Asian-US relations even further, so as to balance out the growing presence of China”.

What is true for Asia also seems true for Latin America, which is dominated by Mercosur. Outside the bloc, nations such as Chile, Columbia, Peru and Mexico face far greater hurdles to their exports.

Uninhibited access to the US market, the world's largest market, might appear a lure given all of this. But in light of the agreement's provisions, proposed Latin American TPP members are facing more and more opposition at home.

In Mexico, business is concerned over the implications of the proposed pact for Mexican health care. Provisions in the agreement extending drug patents in certain instances threaten to “increase the health costs we pay in this country, especially for the middle class”, which does not have access to Mexican social security, daily El Economista quotes a peak exporter association as saying.

Meanwhile, although Mexican agriculture could theoretically boost exports to the United States and Japan if the proposed treaty comes into effect, this may not turn out to be the case, El Economista adds, regarding sugar exports:

“The two most important economies participating in the negotiations, the US and Japan, reserve the right to exempt certain products, which will have grave consequences for [Mexico].”

In addition, Washington may attempt to use the free trade agreement to open dialogue over further liberalisation of investment in Mexico, says leftist Mexican daily La Jornada. Specifically, the US has its eye on state-owned petroleum giant Pemex, the paper quotes a US Congressional report as saying:

“The negotiations over the Trans-Pacific Agreement could open a space to address additional questions, such as a [potential]reconsideration on Mexico's part of its ban on private investment in its oil industry.”

The accord could also further increase the power of US agribusiness giants like Monsanto, because it contains similar provisions to Washington's most recent bilateral trade agreements, similar to the one signed with Colombia in 2006, says Argentinian aggregator Argenpress.

“There, the producers of cereals have been ruined due to the patent of rice by Monsanto and other private businesses,” the site says. That is because the deal has obliged poor peasants to use “registered” or patented seeds, the website explains.

Concerns over a possible loss of sovereignty have triggered massive parliamentary protests in Chile in recent days. There, leaders of returning Socialist president Michelle Bachelet have asked her to stop negotiations, writes Chilean paper El Mostrador. One opponent of the TPP is former Chilean president Ricardo Lago, who has now returned to parliament:

“Many say what is being strengthened greatly [in the deal]is intellectual property. And this is an issue that is very sensitive,” El Mostrador quotes Lago as saying. Chile already has free trade deals with many of the countries involved in the TPP, such as Australia.

But it may not be opposition from Latin America or Asia that puts an end to talks of a Asian-American free trade deal, writes Chilean economic paper Diario Financiero. Instead, Congressional wrangling with the executive in Washington may leave Barack Obama with his hands tied in the talks, DF says.

Both Republicans and Democrats in Congress oppose Obama's attempts to pass a bill that would allow him to conclude a watertight TPP deal, one that could not be modified by Congress, the Chilean paper says.

The possible failure of the fast track provision in Congress has “put a deadline of the end of 2013 – imposed by TPP negotiators themselves – at risk,” Diario Financiero says.

If negotiators fail to reach an agreement in Singapore in the coming days, then this will likely further boost Brazil's grip on Latin America. Many South American leaders – like Chile's Lagos and former Brazilian president Luis Inacio Lula da Silva, argue that Latin America ought to move closer and become “a pole of development, peace and social justice”.

Like in the EU, this argument goes, South American nations need to increase trade. Because with trade comes cultural exchange and with cultural exchange the sharing of values, such as social justice.

It remains to be seen who will win a new tussle for today's Latin America – Brazil's developmental socialists or the United States.

ABOUT BEST OF THE REST: It's a big world out there and plenty of commentators and journalists are writing about it — but not always in English. And not surprisingly, ideas about big events of the day shift when you move away from the Anglosphere. Best of the Rest is a fortnightly NM feature by Berlin-based journalist Charles McPhedran. Charles reads the news in French, German, Spanish and Portuguese and reports on what the rest of the world is saying about the big stories. 

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