Last Saturday President Trump met Brazilian President Jair Bolsonaro at Mar-a-Lago in Florida.
Bolsonaro’s visit coincides with a resurgence of left-leaning governments in Latin America, marked by the victories of Manuel Lopez Obrador in Mexico and Alberto Fernandez in Argentina.
In 1994, at the Summit of the Americas in Miami, the Heads of State of the 34 countries in the region agreed to launch a Free Trade Area of the Americas, or FTAA, in which barriers to trade and investment would be progressively eliminated.
The election of left-wing leaders Chavez in Venezuela in 1998 and Lula da Silva in Brazil in 2002 generated a polarization of interests among three main blocks. While the USA supported the establishment of FTAA, Brazil strengthened Mercosur, an alternative free trade block with Argentina, Paraguay and Uruguay, and Venezuela pursued an alliance with Bolivia, Cuba and Nicaragua.
As a result of Brazil and Venezuela opposition to FTAA, the USA entered bilateral trade agreements with nations in the Pacific Rim, such as Chile, Colombia, Peru and Panama.
After Bolsonaro won the Brazilian elections, his country, which has the highest GDP in Latin America, aligned its policy with the USA, lifting the visa requirement for US tourists and increasing trade and military cooperation.
The US-Brazil partnership can change the geopolitical landscape in Latin America and boost US trade and investments in the region.
Trump and Bolsonaro are negotiating a deal that would reduce the trade barriers between the two countries. Such deal would pave the way for a free trade area of the Americas, because all the most important countries in the Americas would have trade agreements with the US: Brazil, Canada, Chile, Colombia, Mexico and Peru.
Reaching a trade deal with Brazil is not easy because the previous Brazilian governments implemented protectionist policies, imposing high import duties on American goods and restricting US investments in the Brazilian economy. Last year, after Brazil devaluated its currency, Trump threatened the South American country with tariffs on steel and aluminum.
Nevertheless, a trade deal between Brazil and the United States would be beneficial to both countries, and it is likely that Trump and Bolsonaro will reach it in the next future.
The only major opponent to a free trade area of the Americas remains Venezuela. The Trump- Bolsonaro meeting also covered the situation in Venezuela, where Russia’s support for Maduro has kept him in power, while the leader of the opposition, Juan Guaido was recognized by the majority of Western countries.
Last year, President Trump granted Brazil the status of military ally, one of the few non-NATO countries to receive such designation. While the status does not automatically include a mutual defense pact as NATO members have, it confers several military and financial benefits.
In case the Maduro regime falls, a domino effect would likely affect his allies, such as Cuba and Nicaragua, which are depending on Venezuela’s economic support, undermining the spread of left-wing governments in Latin America and removing the obstacles to FTAA.
If the Trump administration will lift trade barriers with Brazil, it would de facto implement a free trade area of the Americas, as the result of several bilateral trade deals rather than a single multilateral agreement.
Francesco Stipo is the President of the Houston Energy Club, a member of the National Press Club in Washington D.C., a Fellow of the World Academy of Art and Science, and recently joined the Bretton Woods Committee. Born in Italy in 1973, Dr. Stipo is a naturalized United States citizen. He holds a Ph.D. in International Law and a Master's Degree in Comparative Law from the University of Miami. To read more of his reports, Click Here Now.
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