More Than A Stone’s Throw Away: Where in the Indo-Pacific is Latin America?

Ariel Castro-Martinez | Latin America Fellow

Latin America is a continent caught with its back to the Pacific.


A history of trans-Atlanticism and a mountain range along its western spine limits South America’s Pacific access. In Central America, the United States dominates geopolitical decision making. Throughout the continent, internal instability is pulling attention away from international opportunities. Meanwhile, across the Pacific, a dynamic regional order centred on China is outpacing Latin America’s ability to reorient its focus.


So why is Latin America being left behind, and how can it re-insert itself into a Pacific century?


An Ascendant Asia-Pacific


The recently signed Regional Comprehensive Economic Partnership (RCEP) is the victory of one Pacific vision over another. When ratified, the RCEP would unify the network of bilateral trade deals that exist between ASEAN and five of its neighbouring Pacific economies: China, Japan, South Korea, Australia, and New Zealand. The deal stands in contrast to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a salvaged version of the Trans-Pacific Partnership (TPP) agreement. Launched and subsequently aborted by the United States, the TPP would have more deeply integrated the Pacific rim under American leadership in an effort to counterbalance China.


Instead, the RCEP and downgraded CPTPP geoeconomically narrows the Indo-Pacific idea into an Asia-Pacific reality, eschewing India and the Americas.


Accelerating this global reorientation is the COVID-19 pandemic’s more devastating impact outside the Asia-Pacific region. Castaway in this consolidation of a once expansive Indo-Pacific is Latin America: the region that stands to gain the most from the promises of trans-Pacific economic opportunity.


A Lagging Latin America


The difficulties of integrating Latin America into the Pacific economy are demonstrated in its reluctance to enter into the CPTPP agreement. So far, Mexico is the only Latin American of the seven Pacific economies to ratify the CPTPP, which came into effect in December 2018. For potential signatory Peru, internal political instability at the national level has pushed the trade deal to the sidelines as the country struggles to steady itself amidst protest and pandemic. In Chile––perhaps Latin America’s most externally facing economy––social demands from protestors have stalled the treaty at its final step before approval.


The CPTPP binds signatory countries more tightly than the RCEP, which does not seek to harmonise labour or environmental conditions across its member economies. This makes it harder for governments to sell domestically. While the CPTPP may sacrifice speed for depth in Pacific relations, internal disharmony in Latin America is stalling its Pacific entry altogether as Asia powers ahead.


Outside the CPTPP, Latin America’s few links to Asia are nascent, asymmetric, or one dimensional. Amongst South America’s Pacific countries and Mexico, each lags behind the Pacific average on various measures of trans-Pacific connectivity. The bulk of Latin America’s Asian exchange consists of extracting commodities through bilateral arrangements. Mercosur––a trade bloc of Latin America’s Atlantic-facing economies––has struggled to ratify deals with all but four Middle Eastern countries in its almost 30-year history.


In Central America and the Caribbean, most trade flows north. Mexico’s close integration into the North American market complicates its trans-Pacific relationships and opportunities. As a member of the United States-Mexico-Canada Agreement (USMCA), it stands to both benefit and lose from ongoing U.S trade tensions.


A Trans-Pacific, Trans-American Alliance


Where Latin America can engineer more balanced, unified, and future-oriented trading relations is through its Pacific Alliance trade bloc. The four ‘Pacific Pumas’ of macroeconomically stable and, until recently, fast growing economies––Chile, Peru, Colombia, and Mexico––are cooperating to attract international economic attention. Together, they constitute half of Latin America’s trade, little of which is intra-bloc. This means that Pacific Alliance growth will depend on building richer external connections.


Where ASEAN succeeded in the East, the Pacific Alliance may replicate its success in the West. The incomplete integration of the Pacific demonstrates that middle power cooperation can unite where superpower competition divides. Here, there is an opportunity for Latin America’s Pacific Alliance to begin building the bridge across the ocean it seeks to cross. To begin, the Alliance’s efforts to include Panama and Costa Rica––two Central American economies with similarly open trading relationships––would bolster its international connectivity, and help open greater Latin America to Pacific flows. In 2021, the Pacific Alliance will sign its first external trade deal with Singapore. Ongoing negotiations with Australia, New Zealand, and South Korea will help deepen Latin America’s Asia-Pacific ties.


Great potential exists for Latin America to turn from a peripheral player to an essential catalyst in the trans-Pacific project. The infrastructure for greater trans-Pacific integration has already been built. If Peru and Chile ratify the CPTPP, then all four continents of the Pacific will be linked under a single agreement for the first time. An impulse towards greater Pacific partnership would likely radiate up the Andes into Colombia, Panama, Costa Rica, and perhaps even into a Biden administration looking to de-escalate trans-Pacific trade tensions. China and South Korea’s expressed interest in joining the pact would, if fulfilled, cement it as the most consequential in history. Latin America must be proactively open and engaged if it wants a place in a wider Pacific century.


Ariel Castro-Martinez is the Latin America Fellow for Young Australians in International Affairs