The Vice President and Dr. Jill Biden head to Brazil, Colombia and Trinidad and Tobago the week of May 26th “to see a much deeper engagement within the Western Hemisphere.” After President Obama’s visit to Mexico and Central America in late April, why is the Vice President heading back to this hemisphere? Have not the issues of trade and immigration been addressed sufficiently? No, is the answer. Biden believes that:
[T]his is a moment to look forward to build – build the friendships and partnerships that are going to allow us to deal with the share challenges and shape – jointly shape a global system 10, 20, 50 years from now. It all begins now, it seems to me.
(Speech to the Americas Society/Council of the Americas, Washington, D.C., May 9, 2013)
What is the nature of these partnerships and why are they new? The United States has not cultivated partnerships in South America since Vice President Nixon visited Venezuela on May 13, 1958. That trip ended with anti-American demonstrators rocking the Vice President’s limousine and unnerving both the VP and Mrs. Nixon. They never went back to South America.
Both the Alliance for Progress and the Cold War are over. Communism is no longer considered a threat. Instead, the growing middle class in the Western Hemisphere is seen as a rising market of 225 million consumers in the Latin America and the Caribbean. Biden is wrong to anticipate that this emerging group of citizens is wealthy enough and “could qualify for a gold card.” According to categories established by the Mexican Association of Market Research & Public Opinion Agencies (AMAI) the middle class is found in the socioeconomic C and D+ categories. They are urban, possess a car, take one vacation a year away from home and own cell phones, but they are not yet middle class in U.S. terms. Nevertheless, Biden is right in recognizing that this group of citizens accounts for approximately 40 percent of citizens in Latin America. They seek quality education and will over time become the professional class that holds that gold credit card.
This changing societal landscape will continue to place great demands on energy, transport and electronic goods. Thus the opportunity for U.S. businesses to invest in infrastructure, participate in the design of urban transportation, establish enterprises to produce the sophisticated electrical goods that consumers need. The Western Hemisphere will continue to provide the opportunity for increased trade and investment. Already, U.S. exports to the hemisphere have risen from $490 billion in 2007 to $650 billion in 2011. In 2013, U.S. trade with Canada and Mexico represents a trillion-dollar trading partnership. This translates into more U.S. jobs; quality jobs that design products, engineer projects, market goods and research means to reduce the carbon footprint. These benefits result, in large part, from trade in goods and services.
Former Brookings Expert
U.S. exports to both Brazil and Colombia have grown at a rapid pace, but there is room for further growth. According to the office of the U.S. Trade Representative, in 2012, Brazil was the 8th largest market for U.S. goods and services. In that year, the U.S. exported goods valued at $43.7 billion and in the three months ending March 31 2013, U.S. export of goods totaled $10.4 billion. This accounted for a U.S. trade surplus with Brazil of $11.6 billion, up 3.57 percent from 2011. In relative terms, the value of U.S. exports in private sector goods – not including U.S. military sales and defense expenditures – has increased by 183 percent from 2000 to 2012. More significant than total trade numbers is the nature of our exports. Over this period, the top value of U.S. exports to Brazil was in electrical machinery, plastics, aircraft and aircraft parts. Agricultural exports continued, but the growth is in sophisticated manufactured products. That explains Washington’s determination to build upon the Action Plan on Science and Technology Cooperation, the MOU on Aviation Partnership and Partnership for the Development of Aviation Biofuels with Brazil. Similar trading patterns and partnerships occur with Colombia.
Since the entry into force of the Colombia Free Trade Agreement in May 2012, exports of U.S. aircraft and aircraft parts have increased by 179 percent. Exports of U.S. railway locomotives and track fixtures have increased by 79 percent, and iron and steel articles have increased by 50 percent. Although agricultural exports have increased by 68 percent with soybean meal, rice and pork leading the way, the growth path will be found in electrical machinery and equipment. Colombia seeks U.S. government help in gaining membership to the OECD. Recent initiatives, such as negotiations with the FARC, early start on implementing a hemispheric-wide electrical grid, and significant reforms to Colombia’s education system justify its membership of this 34-member club. Biden should support Colombia’s entry into an association that shares a commitment to market economies backed by democratic institutions and focused on the wellbeing of all its citizens.
In his speech to the Council of the Americas, Biden identified the Western Hemisphere as democratic. He is right in identifying the rejection of military dictators who ruled most South American nations from the 1970s to the early 1980s. Electoral democracy is firmly established. In its Freedom of the World 2013 report, Freedom House categorizes Brazil and Trinidad & Tobago has “free.” Colombia is classified as “partly free” as it awaits a full investigation and prosecution of suspects in the murder of a local community activist and the director of a Colombian radio station. There is also concern regarding the independence of the judiciary in a case involving a newspaper editor charged with criminal libel. Apart from these three Colombian cases which occurred in 2012, Freedom House recognizes that the great majority of nations in the Western Hemisphere respect the rule of law, freedom of expression and the right of assembly.
However, Biden has also noted that Venezuela is not free and that its citizens, while given electoral democracy, do not currently enjoy “freedoms of expression and assembly” and protection from violence. A second reason for visiting the hemisphere at this time is to recognize that liberal democracy can better ensure the security of citizens, opportunity for economic growth and political stability through non-violent discourse. Three nations in South America are in danger of rejecting these values, preferring controlled economies and centralized power to benefit populist leaders. Biden is expected to address this divide and call for increased dialogue among neighboring countries.
Energy is an important theme for Biden in all of the host nations. Trinidad and Tobago is the leading Caribbean producer of oil and gas and its economy is heavily dependent upon these resources. Forty percent of GDP and 80 percent of exports come from oil and gas, but that industry only provides employment for 5 percent of its citizens, according to the World Bank. Consequently, there is more focus on the production of liquid natural gas (LNG) and renewable energy sources. Trinidad and Tobago claims to be the most advanced and dynamic economy in the English-speaking Caribbean, demonstrated by its high mobile phone penetration of over 120 percent. The potential use of mobile phones for banking, health and education services, as well as its energy potential should encourage Biden to consolidate a strong relationship with this leading CARICOM nation.
Finally, education is a critical theme, which is strengthened by Dr. Jill Biden’s presence on the trip. She is a professional teacher at community colleges where thousands of young Americans acquire the technical skills necessary to move into engineering and scientific jobs. She is also a strong advocate for industry partnerships between community colleges and employers. As President Obama seeks to develop the “100,000 Strong in the Americas,” a State Department program to increase international study in Latin America and the Caribbean through greater international exchange of students, he finds a strong partner in Jill Biden. She knows the advantages of public-private partnerships in education. Her visits to university campuses throughout this visit will focus attention on the importance of education in achieving social inclusion, healthier citizens and environmental sustainability.
The trip should consolidate U.S. partnerships not just with these three nations, but send a message that a new form of engagement with the United States is now possible. The days of U.S. hegemony in the Western Hemisphere are over, and a president and vice president no longer travel with a packet of aid. Indeed it was notable that President Obama offered no financial assistance during his visit to Mexico and Central America despite the recognition of “shared responsibility” for the drug-related violence. Instead, constructive partnerships are sought with offers to develop technology, share scientific practices and encourage our students to seek quality education both at home and in the United States. Biden can rightly conclude that this trip represents “…the most active stretch of high-level engagement on Latin America in a long, longtime.”