Gov. Romney’s promise to ‘dramatically expand trade with Latin America’ through additional free-trade agreements between the United States and the region doesn’t carry much weight given the existing and future prospects of commercial ties with most of the region.
The United States is part of the North American Free Trade Agreement (NAFTA) which has led to dramatic increases in trade with and among its two other partners, Canada and Mexico (currently the first- and second-largest export markets for the United States). However, little has been added to NAFTA since it was signed 20 years ago and the concept of ‘North America’ in Washington has almost no support from the political establishment of either party.
In addition to NAFTA, the United States has free-trade arrangements with Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Peru and–as of next week—Panama. Together with Mexico, these countries account for a significant portion of trade that the United States could eventually grow within Latin America. The two missing regional economies are Brazil and Argentina, with which the United States has relatively important trade ties. Although they represent significant potential partners in new free-trade accords, both primarily sell commodities to the outside world and would not be exceptionally large new markets for American exports given their generally protected economies.