Asia and Latin America

Political, Economic and Multilateral Relations

Jörn Dosch, Olaf Jacob, Jörn Dosch, Olaf Jacob

• Publisher: Taylor & Francis
• Year: 2010
• eBook ISBN: 9781135273224
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Comparative Politics
• Index: Politics & International Relations

Until the late 1980s, Japan was the only country in Asia with notable political and economic relations. Since then, however, several Asian nations have perceived growing links with the Latin American region as a means of diversifying their political and particularly economic relations while many Latin American decision-makers have increasingly recognised the strategic importance of East Asia in their foreign policy and foreign economic policy designs.

This book analyses the economic, political and socio-cultural relations between Asia and Latin America and examines their growing importance in international relations. In the first part of the book the contributors look at the policies, interests and strategies of individual Asian and Latin American states, while the second part delves into the analysis of multilateral institution-building in Asia-Latin America relations,. As such, Asia and Latin America will be of interest to undergraduate and postgraduate scholars of comparative politics, international relations, Asian politics and Latin American politics.

1
Introduction

The three-phase encounter of two continents

Jörn Dosch

The encounter of Asia and Latin America is the story of globalization. If we accept that European colonialism and imperialism constituted the first phase of the phenomenon for which the term globalization has been coined, it was the Spanish colonization of the Philippines that resulted in the earliest contact between Latin America and Asia in the second half of the sixteenth century as part of a worldwide operation. The enormous increase in output of the silver mines in Spanish America in the 1570s finally had its effect on Asia. Some of the silver was carried directly to Manila from Acapulco, to buy Southeast Asian spices and Chinese goods. This sea trading route existed for more than two centuries before the Spanish Pacific fleet ceased its service in 1815. According to Chinese accounts, contacts between the two continents even pre-date the Spanish empire and go back to Chinese expeditions reaching the American continent as early as the fifth century AD (see Chapter 2 in this book). Legend or fact – there is little doubt that the pre-modern encounter between the two continents was a sporadic one.

Fast forward to the Cold War era and the ideologically motivated and balance of power-driven second phase of the encounter, which is prominently associated with, first, the Non-Aligned Movement (NAM) and, second, the dynamics of Sino-American and Sino-Soviet relations respectively. While it was Argentine President Juan Domingo Perón who pioneered the principles of non-alignment and peaceful co-existence from 1946 within the context of the ‘Third Position’ ideology, Latin America never quite managed to match the influence of Asia in the NAM. Only in Fidel Castro did the continent have a protagonist of as equal status as Nehru of India or Sukarno of Indonesia within the movement that was de facto inaugurated by the Bandung Conference in 1955 and put on an institutional basis at the Belgrade summit meeting in 1961. But Castro was also Latin America’s dilemma: the position of members from the Western Hemisphere – with Bolivia, Brazil and Mexico being the most active in the early 1960s – had been made more difficult by Cuban ambiguity about what was meant by non-alignment and Castro’s refusal to renounce the advocacy of revolution (Calvert 1994: 212–13). This position, in turn, and the Cuban revolution in general opened a window of opportunity for Mao’s China. In the early 1960s the motivation of the Chinese leadership to include Latin America in its foreign policy, albeit in a distant third position behind Asia and Africa, was mainly linked to Beijing’s anti-US stance and the quest to counter Washington’s economic blockade and political hostility (Xu 1994: 151). China showed great interest in Castro’s rise and hoped to see the emergence of the Cuban Revolution as a model for other parts of the region. However, China’s flirtation with other communist parties and movements made only very limited impression in Central and South America (Lawrance 1975: 152); and once the Sino-Soviet split had escalated into full-scale political and military antagonism towards the end of the decade, ‘China began to discard political biases, distance itself from radical movements and guerrilla bands, and develop relations with established national governments in Latin America’ in an attempt to secure more support for its international position (Xu 1994: 152). The Kissinger and Nixon visits to China in 1971–2 eventually paved the way for pragmatic and issues-oriented relations between Beijing and Latin American capitals, free of any ideological ballast. By the end of the decade China had established diplomatic relations with most major Latin American states, including Argentina, Brazil, Chile, Mexico and Peru. Chinese–Latin American relations in the 1970s and 1980s were predominantly politically motivated and driven by quid pro quo strategies. For example, most Latin American governments voted for China’s entry into the United Nations while Beijing supported Latin American claims for 200-mile territorial sea limits in the Law of the Sea Negotiations (ibid). A core strategic issue in this context is the Taiwan factor. The diplomatic isolation of Taiwan has been among the – perhaps even the highest-ranking of the – key political objectives in Latin America where Beijing and Taipei have competed fiercely with each other, mobilizing extensive diplomatic and economic resources to hold their camps together (Teng 2007: 102). Currently, only 23 national governments maintain diplomatic relations with Taiwan, 11 of which are in Latin America, including some small Caribbean nations.¹ The most recent state to switch diplomatic relations from Taiwan to China was Costa Rica in 2007.

While economic incentives have played a part in the competition over diplomatic recognition, bilateral trade and investment in China’s relations with most Latin American countries was an insignificant factor until well into the 1990s. It was Japan, not China, that spearheaded the third and current phase in the inter-continental encounter which I call the ‘mercantilist plus’ era, because it is primarily characterized by a substantial increase in economic links in a globalizing world with political, diplomatic and strategic considerations (the ‘plus’) still blending in. The eventual failure of import substitution in Latin America and the concurrent success of East Asian economies with outward and more market-oriented policies in the 1980s and 1990s led Latin America to look to East Asia as a source of stimulation if not a model. The so-called Asian Miracle is even said to have contributed to Latin America’s shift towards more openness in the late 1980s and throughout the 1990s (Edwards 1995; Tussie 2004; Kay 2002).

By the early 1990s Japan had established itself as the second largest trade partner of most Latin American economies and Tokyo had become the largest lender to Latin America, both bilaterally and through its contributions to international financial institutions (Stallings and Horisaka 1994: 126). Japan did not abruptly emerge in the Western Hemisphere though. The country’s first interest in Latin America dates back to the late nineteenth century, when the region became an important destination for Japanese emigrants who escaped poverty, overpopulation and unemployment at home. At the time of the Second World War some 200,000 Japanese citizens (known as Nikkei) were living in Brazil, Peru and Mexico. While emigration flows decreased after the War, Japan rapidly gained importance as a trade partner from the 1950s onwards (ibid: 130). In this process Latin America’s importance changed from a supplier of raw materials to a market for Japanese exports and destination of foreign direct investment (FDI) which reached its relative peak in the 1981–5 period, when Latin America absorbed 20.1 per cent of Japanese global FDI (Horisaka 2005; this share declined to 11.6 per cent in 1996–2001). Overseas Development Assistance (ODA) also played an important role, with Peru receiving 10 per cent of the entire Japanese ODA budget in the early 1990s – the Japanese origins of then Peruvian President Fujimori were a contributing factor – and Brazil and Mexico, Bolivia and Paraguay (all countries with large numbers of Nikkei) also benefiting from direct aid or low-cost loans (Franke 2004: 70).

However, the more other Asian states took an interest in Latin America, the more was Japan’s economic and political status weakened and the country’s relations with the region declined from the late 1990s. Japan accounted for 11.4 per cent of Latin America’s total trade in 1990. By 2005 this had reduced to 6.5 per cent, whereas other Asian countries showed a rapid increase from 7.6 per cent to 22.5 per cent, as Caroline Rose outlines in Chapter 4. South Korea particularly benefited as Asian firms were looking ‘for new frontiers beyond the increasingly conflictive industrial markets of the US and Europe, and needed to think more globally in the era of the new division of labour made possible by new information and communication technologies. They also, particularly those from the post-democratization Korea, had to move abroad to escape from the high-wage domestic environment with its consequent loss of international competitiveness’ (Kim 2004: 5). In the mid-1990s, South Korea’s trade volume with Latin America accounted for roughly 4 per cent of the country’s total trade – a small figure but nevertheless the highest ratio among Asian countries. This meant that the Latin American market became more important to the South Korean economy than to any other Asian nation, including Japan (ibid: 6). Empirical facts like this one, however, went largely unnoticed beyond a small circle of specialists.

For the past two decades, several Asian nations have perceived growing links with the Latin American region as a means of diversifying their political and particularly economic relations while many Latin American decision-makers have increasingly recognized the strategic importance of Asia in their foreign policy and foreign economic policy designs. The ensuing new strategic outlooks resulted in a substantial increase in interregional trade, investments and institution-building. Free Trade Agreements (FTA) have been signed between Japan and Mexico, Chile and Korea, and Peru and Thailand, respectively; a Preferential Trade Agreement (PTA) has come into effect between India and MERCOSUR (Common Market of the Cono Sur, grouping Argentina, Brazil, Paraguay and Uruguay). A number of bilateral arrangements are also being explored between various Asian countries such as Japan, Korea and Singapore, on the one hand, and Latin American countries such as Brazil, Chile and Mexico, on the other.

Of all these activities it was especially China’s charm offensive of the early twenty-first century, which saw a first peak with President Hu Jintao’s first tour of Latin America in 2004 (it had made a much stronger impact than the trip of his predecessor Jiang Zemin in 2001) and increasing levels of diplomatic and economic activity since then, that has caught everyone’s imagination. Gonzalo S. Paz (2006: 96) noted that ‘Hu Jintao has spent more time travelling in Latin America than [then] President Bush, and many Latin American presidents – among them, Brazil’s Lula da Silva, Argentina’s Nestor Kirchner, and Venezuela’s Hugo Chávez – have spent more time in Beijing than in Washington’. The sharp growth of the China–Latin America trade volume from US$13 billion in 2000 to US$102.6 billion in 2007 (Li He 2008a: 3) and the fact that bilateral trade has already exceeded Hu’s original benchmark of $100 billion set for 2010 (Xinhua News Agency, 6 November 2008); the frantic and in most cases successful attempts of Chinese state-owned corporations, such as PetroChina and Sinopec, to get their hands on Latin American oil; the establishment of ‘strategic partnerships’ and ‘strategic dialogues’ with several states in the region; China’s training of increasing numbers of Latin American military personnel; extensive party-to-party ties of the Chinese Communist Party (CCP) with political parties across the continent and other examples for intensifying Sino-Latin American links seemingly support the neo-realist notion of China following a ‘containment through surrogates’ strategy (Malik 2006). According to this view, Beijing counters the perceived containment of its regional and global aspirations by the United States and Washington’s allies and engages in soft balancing of the OECD world through trade, investment and development aid. China, so the argument goes, takes advantage of a power vacuum in the region that had been created by the United States’ and also Russia’s declining interest in Latin America (Li He 2008b: 195). June Teufel Dreyer (2006: 2) suggests that ‘Latin America and the Caribbean are crucial to the evolution of the world order that the Chinese leadership would like to see’. Do Latin American governments concur? According to some analysts China is already being seriously looked at as an ‘alternative diplomatic and economic partner to Washington’ (Lanteigne 2009: 139) [emphasis added].

There can be little doubt that particularly some of the left-wing and, as it seems, by default more Washington-critical Latin American governments such as those of Venezuela, Brazil, Ecuador or Bolivia, perceive a partnership with Beijing as a welcome means of soft balancing or at least hedging against traditional US hegemony in Latin America. However, as Paul Schroeder reminded us in one of the most refreshing critiques of neo-realism ever written,

the [neo-realists’] insistence on the sameness effect and on the unchanging, structurally determined nature of international politics make it unhistorical, perhaps anti-historical … Neo-realist theory not only prevents scholars from seeing and explaining the various strategies alternative to balancing, or the different functions and roles of various actors within the system, but even blocks a genuine historical understanding of balancing conduct and the balance of power itself as a historical variable, changing over time, conditioned by historical circumstances, and freighted with ideological assumptions.

(Schroeder 1994: 148)

Latin American governments may rightly complain about a frequent lack of serious attention on the part of the United States and Washington’s rather narrowly defined national security interests in its relations with the hemispheric neighbours, but why should they be interested in replacing a decades-long dependency on the United States by a new dependency on China? Would there be any convincing economic reason to play the China card in an attempt to balance against the United States given that in 2006 US–Latin America trade was ten times larger than China–Latin America trade and US companies invested US$300 billion compared to just US$8 billion Chinese FDI in Latin America?

China is an increasingly important factor in Latin America but it is one actor among others. David Shambaugh (2008) accurately stresses that Latin American countries ‘embrace China as part of their new multidirectional diplomacy’. Multidirectional is the key word here. All Latin American governments have diversified their foreign relations. Their main interest is directed at moderating US hegemony, not substituting it. As part of this strategy and particularly in times of economic hardship such as the current global economic crisis, every trade and investment opportunity is welcome. Modern and post-modern states in the era of globalization are best described as rational opportunity maximizers. This applies to Latin America as much as East Asia; it is true for Vietnam or South Korea in the same way as Peru or Mexico. The result of opportunity maximizing in Asia– Latin America relations is a growing and fast-tightening (but not yet deeply institutionalized) transpacific network comprising trade, investment, political and even security links in both bilateral and increasingly multilateral contexts. This is the book’s red thread, the general argument it wants to make. The following chapters are not – and cannot – be guided by a narrowly defined comparative framework. The empirically observable reality of Japan’s approach vis-à-vis Latin America is embedded in a different set of structures, actor interests and policy processes than Mexico’s strategy towards South Korea, to give just one example. By systematically analysing the specific factors that influence bilateral and multilateral interregional interactions they provide – as far as possible – a holistic perspective on the Asian–Latin American encounter at the beginning of the twenty-first century.

The book’s structure

While the first part of the book looks at the policies, interests and strategies of individual Asian and Latin American states, the second part delves into the analysis of multilateral institution-building in Asia–Latin America relations, which has not been widely studied yet – with the exception of the Asia–Pacific Economic Cooperation forum (APEC) whose membership, however, goes beyond an Asian and Latin American constituency. As the most visible actors of the transcontinental encounter, China, Japan and Mexico are covered in particular detail.

In Chapter 2 of this book Manfred Mols highlights an important difference between China’s pre-modern and current aspirations to international pre-eminence. While in the past, proximity and vicinity to the centre (the Middle Kingdom) were the main criteria for collating the sequence and structure of the concentric circles, China nowadays reflects on the importance of the surrounding international world in terms of power and global influence without entering herself into an open global power contest. ‘To be a rule-maker, and no longer a rule-taker in the process of globalization, is what real...

Table of contents

• Routledge Contemporary Asia Series
• Contents
• Figures
• Tables
• Contributors
• Preface
• Abbreviations
• 1 Introduction
• Part I The interests and strategies of states and their actors
• Part II Multilateral and interregional relations
• Index