The US Secretary of Commerce Wilbur Ross during his participation in the VIII Summit of the Americas in Lima said that Latin America should look to the US and not to China because it is better for them. To support his claim he said that Latin America has a trade surplus with the US while it has a trade deficit with China. He also said that Latin America exports manufactures to the US but only raw materials to China . What he said is not true, it is a half-truth (or even a lie).

1. Trade and economic relations of Latin AmericawithChinaand the US:
Who is the best partner?
CarlosAquinoandMaría Osterloh*
The US Secretary of Commerce Wilbur Ross during his participation in the VIII Summit
of the Americas in Lima said that Latin America should look to the US and not to China
because it is better for them. To support his claim he said that Latin America has a
trade surplus with the US while it has a trade deficit with China. He also said that Latin
America exports manufactures to the US but only raw materials to China1. What he
said is not true, it is a half-truth (or even a lie).
Wilbur Ross said that Latin America has a trade surplus of 117 billion dollars with the
US and a deficit of 67 billion dollars with China. He did not say for which year the figure
is. But these figures hide a different reality. Although Latin America as a region had a
trade surplus with the US of 125.875 billion dollars in 2017 and had a trade deficit with
China of 63.316 billion dollars that same year (see Table attached), the figures are
distorted by the large trade surplus that Mexico has with the US and the large trade
deficit that Mexico has with China.
As seen in that table, which also shows the trade balance of China and the US with
most of the countries in the region, Mexico had a trade surplus with the US of 132.415
billion dollars in 2017, and with China had a trade deficit of 67.433 billion dollars. But
many Latin American countries had a trade deficit with the US. For example Argentina,
Chile, Colombia, Guatemala, Honduras, Panama, Peru, Uruguay, Paraguay, among
others. And several countries had trade surplus with China, such as Brazil (20.166
billion dollars), Chile, Peru, Venezuela. Then Mexico distorts the figures, and if this
country is excluded from the figures of the region, then the trade balance of China and
the US with the region is quite different, where the region had a large trade deficit
with the US and a small one with China in 2017. The trade deficit of Latin America with
the US (excluding Mexico) was 9.432 billion dollars, while the figure with China was
2.466 billion dollars (figures for 2017 or the last available year, see Table below)
As for the assertion that Latin America sells mostly manufactured goods to the US and
raw materials to China, this is also half true or not true. Once again, if Mexico is
excluded (this country mostly sells manufactured goods to the US) it will be found that
the region sells to China and the United States mainly raw materials and import of
them manufactures. Neither China nor the US are to be blame for the fact that Latin
America sell to them mostly raw materials, because the region unfortunately has not
developed a competitive industry. If you still want to find a culprit, this would be the
US and not China, because the region has only increased trade with China in the last
decade, while with the US it has been trading for a long time.
1 https://elcomercio.pe/economia/peru/wilbur-ross-china-pais-proteccionista-mundo-noticia-511766

2. Instead, the region has benefited from trade with China because that country buys
more and more products from the region. Thanks to China, the prices of raw materials
have risen and this has undoubtedly benefited the region. In addition China is investing
a lot of money in the region, mostly in the extraction of natural resources but lately
also invests in infrastructure, agriculture, finance and other sectors.
In any case nobody can tell the region to trade with one country and not with another.
The region must trade with all countries, especially more with the countries that grow
the fastest, as is the case of China. Rather, the US has lately become protectionist,
having withdrawn from the TPP agreement where it was together with Chile, Mexico
and Peru, and is renegotiating the NAFTA agreement where it is with Canada and
Mexico. In contrast, China has stated that it is in favor of an environment where free
trade and investment are the norm and has expressed its willingness to continue
opening its country to the world.
Table 1: Trade surplus (or deficit) of Latin America and countries in the region with
China and US (million dollars)
2016 2017
Latin America
- US
- China
105,894
-81,927
125,875
-63,316
Argentina
- US
- China
-2,501
-6,042
-3,074
-7,999
Bolivia**
- US
- China
19
-1,281
146
-1,212
Brazil
- US
- China
-799
11,769
1,959
20,166
Chile
- US
- China
-1,711
3,112
-1,074
4,614
Colombia
- US
- China
-1,826
-7,523
-1,120
-6,750
Costa Rica**
- US
- China
-1,647
-2,036
Ecuador
- US
- China
1,682
-2,433
2,096
-2,913
El Salvador
- US
- China
-1,099
-849
-2,112
-758
Guatemala**
- US
- China
-2,813
-1,661
-2,884
-1,771

3. Haití**
- US
- China
-848
-226
-718
-275
Honduras**
- US
- China
-1,083
-1,261
-978
-1,127
México
- US
- China
122,953
-64,109
132,415
-67,433
Nicaragua***
- US
- China
1,450
-823
Panamá**
- US
- China
-1,490
-4,650
-1,574
-3,927
Peru
- US
- China
-872
239
-1,1822
2,736
Uruguay
- US
- China
-113
-640
-413
9
Paraguay
- US
- China
-557
-2,624
-1,782
-2,048
Dominican
Republic**
- US
- China
-2,662
-2,199
-2,926
-2,219
Venezuela*
- US
- China
6,204
3,044
Source: Trademap3; for Peru the 2017 figures are from Mincetur, and for Venezuela the 2016 figures are
the ones declared by its trade partners
** 2015 and 2016 figures ***2015 figures
April 14, 2018
2 Fuente. Mincetur https://www.mincetur.gob.pe/wp-
content/uploads/documentos/comercio_exterior/estadisticas_y_publicaciones/estadisticas/exportacion
es/2017/RMC_Diciembre_2017.pdf
3 https://www.trademap.org/Bilateral_TS.aspx?nvpm=1|340||156||TOTAL|||2|1|1|3|2|1|1|1|1

4. * CarlosAquinoisProfessorof Economicsat San Marcos National University(UNMSM) anda
specialistinAsianEconomics.MaríaOsterlohholdsanMBA fromthe Normal Universityof
Beijingand isa researcherin IEPA
E-mail:carloskobe2005@yahoo.com