No winners in the trade war, but Latin America not losing badly. Yet.

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President Trump’s trade war has begun,  and so far it doesn’t look “good, and easy to win.”

Chinese observers have focused on the impact on US soybean prices (美国挑起贸易战 中方强势反击美大豆两月跌18%); the need to turn from US soybeans to Argentina and Brazil (中储粮宣布:停止购买美国大豆!巴西、阿根廷等替补全体登场!); and that this makes the region a vital supplier of soybeans  (中国大豆进口间接帮助拉美成为世界农业出口重地).

Business leaders and policy-makers in the region that see opportunities face challenges. Argentina’s President Mauricio Macri is rumored to see the war as an opportunity for his country to make up lost ground in being China’s breadbasket. His problem is that Argentina "has nothing to sell" — the country lost 40% of its soybean crop this year to drought. Even Brazil — the world’s biggest soybean exporter — has been hampered by the end of its soybean harvest season and a 14% drop in prices over the past month, according to the Brazilian Foreign Trade Association.

Outside of soy, the immediate impact on Latin America has been limited. But observers in region sees bigger challenges the longer this drags on.

Mexico is the worst off, thanks to the double impact of the trade war and NAFTA uncertainty. Luis Miguel González Editor in Chief of Mexico’s respected El Economista lists five ways the trade war will affect his country: slower growth, higher inflation, supply chain disruption, tariff hikes, and a collapse in world trade. All this will make it difficult for Mexico’s ongoing efforts at diversification in the shadow of NAFTA negotiations — Japan’s Jtekt is putting on hold its plans for expansion in the Bajío automotive cluster until it knows how NAFTA will play out.

José Manuel Restrepo, economist and rector of Colombia’s Universidad del Rosario, sees three effects on his country and its consumers:

  • A slowdown in the economies tied up in the trade war (the US and China) will lessen demand for Colombia’s exports.

  • Exchange rate volatility that will dampen business confidence.

  • Tariffs on primary materials — like steel and aluminum — will adversely impact the industries that use those as inputs.

Trinidad and Tobago officials are sanguine. And Moody’s and ComexPerú don’t see bad news for Peru in the short term, thanks to a diversified group of export markets, with roughly a quarter of exports going to North America, Latin America, Europe, and Asia. However the country — along with Chile — has been impacted by a 10% decline in the price of copper over the past month due to commercial tensions.

Chilean observers note that not only will the decline in the price of copper impact the country, but that any benefit from tariff on US agriculture exports to China may be offset by increased US ag exports elsewhere — although wine exporters like Concha y Toro (智利葡萄酒生产商看到开拓中国市场的良机 ) are bullish. Says Association of Fruit Exporters (ASOEX) head Ronald Bown: “we don't know who is going to win or lose; we preferred that conditions were as they had always been."

Most expect the trade dispute over soon — Gustavo Oliveira at Swarthmore sees an agreement reached in months. And certainly Argentina hopes that Trump and Chinese President Xi Jinping will “smoke the peace pipe” at the G20 Summit in Buenos Aires in early December. In the words of Chilean Agricultural Antonio Walker, Latin America hopes “not to pay for the plates broken in this trade fight between” the US and China. Given Trump’s obstreperousness, however, it looks like Latin America and the world will have to pay before it’s over.

Top Stories

China negocia un TLC con Panamá con miras a toda América Latina — HISPANTV
China y Panamá negocian TLC pensando en expandirse a América Latina — El Economista
Panama and China Kick Off Free Trade Talks With Eye Regional Hub – gCaptain
China y Panamá negocian TLC, pero con la vista puesta en Latinoamérica — Estrategia y Negocios
China negocia acordo de livre-comércio com Panamá, de olho na América Latina — Jornal do Brasil
Empresarios panameños reconocen TLC con China como una oportunidad con desafíos — Xinhua
Taiwan isolation pays off for Panama as China opens free trade talks — SCMP
China and Panama began negotiations on a Free Trade Agreement (FTA) this week. In addition to the bilateral benefits, Chinese Foreign Minister Wang Yi sees Panama as a connection to deepen his country’s economic and diplomatic presence in Latin America.

Perú planea crear reserva natural frente a costa norte del Pacífico en el primer trimestre de 2019 — América Economía
Peru will create a 1040-square kilometer oceanic reserve off its north coast in the first quarter of 2019. Fishing and oil exploration and production will continue to be allowed in the region, as long as it does not impact the maritime ecosystem, according to Environmental Minister Fabiola Muñoz. Currently Korea’s KNOC, Australia’s Karoon Gas, and China's CNPC all have E&P licenses for the region.

Brazil sees China investment slowing after soaring in year's first half — Reuters
Secretary for International Affairs at the Brazilian Ministry of Planning Jorge Arbache rains on our parade. After growing 2.5x in the first half of the year, he expects Chinese investment in Brazil to slow out of uncertainty surrounding the coming October presidential election:

“It’s possible they would invest more than last year. It wouldn’t surprise me. But from the conversations we are having with Chinese and non-Chinese, the tendency is to postpone until next year.”

Cancillería japonesa destaca el interés de Colombia por hacer parte del TPP — La República
Japan’s Foreign Ministry Director General for Latin America and the Caribbean Takahiro Nakamae says that bringing Colombia into the soon-to-be-launched Trans-Pacific Partnership is “very important."

China — LAC

矿业部副部长鼓励中国银行对智利进行投资 — SAO News
Bank of China busca opciones de negocio en Chile tras recibir permiso para operar — La Tercera
Subsecretario de Minería se reúne con representantes de Bank of China — Minería en Línea
Bank of China looks to expand it’s operations in Chile. After getting permission to operate in March, this week the bank sat down with Mining Sub-secretary Pablo Terrazas to explore lending to the sector.

中远航运有意投资秘鲁港口 — Gangkou CNSS
According to Peruvian Deputy Transportation Minister Carlos Estremadoyro, COSCOhas begun evaluating a $2b investment in Chancay port.

Se ha firmado contratos de parque eólico Loma Blanca y Miramar con Goldwind, 355MW en total. Con una inversión de más de 800 millones de dólares. O sea una de las inversiones más grande del año 2018 en Argentina. — Powerchina Argentina
Powerchina has signed a $800m deal to help Goldwind build the Loma Blanca and Miramar windfarms in Argentina.

比亚迪向圣地亚哥公交系统出售百辆电动车 — MOFCOM
Empresa china aumenta exportación de autobuses eléctricos a Chile — People’s Daily
Further news on BYD’s sale of 100 electric buses to the Transantiago system.

Chile impulsa el proceso de apertura para las peras en el mercad — Marco Trade News
Chile espera poder exportar peras a China en 2019 — Xinhua
Chile’s Fruit Exporters Association (ASOEX) says it has gotten approval to begin the exporting of Chilean pears to China in March of next year.

报告显示中企成为拉美企业并购重要投资者 — JRJ
A read out of last week’s ECLAC FDI report.

Brazil mulls WTO complaint over China poultry, sugar barriers — Reuters
Brazil says it may escalate the ongoing dispute with China on sugar and chicken to the World Trade Organization. It’s almost like the WTO was designed to handle these disputes.

U.S. May Not Want Free Trade With China, But Uruguay Sure Does — Bloomberg
Bloomberg notices that Uruguay is chomping at the bit for an FTA with China.

Bolivia abre las puertas a Chile para que se sume al tren bioceánico de $us 14.000 millones — Consulado General de Bolivia en Buenos Aires
To make the troubled Bi-oceanic train to happen, Bolivia is apparently willing to overlook its enmity and loop in Chile.

Iberia prevé aumento de 6% en asientos en vuelos con América Latina en 2018 — Estrategia y Negocios
Iberia sees its Madrid-Shanghai flight connecting to its many flights to Latin America as a key axis in the growing Latin America-China relationship.

El mercado del vino argentino crece lentamente en China — Los Andes
Argentine wines struggle to gain market share in China. In addition to the 14% tariffs they face, taxes and transport costs all add up to an almost 50% mark-up.

Relato de una visita histórica a China — El Día
China en hora crucial ante EE.UU. y la expectativa en el Caribe, incluyendo RD — Noticias SIN
China: Una potencia que crece constantemente — el Caribe
China invited a gaggle of journalists from the Dominican Republic to visit their country in the soft-power hard sell following the establishment of diplomatic relations.

Barrick y china Shandong Gold evalúan potenciales adquisiciones conjuntas — La Tercera
Barrick Gold and Shandong Gold are going to deepen their partnership at looking at mining opportunities in Latin America.

El litio, China y el interés nacional — El Mostrador
In a long op-ed, El Mostrador cautions against letting Tianqui buy the stake in SQM that it wants without a clear understanding of the threats to Chile’s sovereignty and making sure the deal is even-handed.

China’s Belt and Road difficulties are proliferating across the world — FT
China’s Belt and Road lands in Latin America — Diálogo Chino
The Dialogue’s Ricardo Barrios profiles what the opening of the Belt and Road Initiative to Latn America means, and the challenges the region can face, which reflect growing pains for the BRI around the world.

Chinese Media and Latin America: “Borrowing a Boat” to Set Sail — Jamestown
China is also using soft power to sell Latin American journalists on the Belt and Road.

Cumbre China-LAC afianzará relación comercial con países de Latinoamérica y El Caribe — Agencia Andina
The 12th China-LAC Business Summit — set for Zhuhai November 1-3 — was officially launched this week.

China loans make Venezuela’s outlook more precarious — Petroleum Economist
Another look at how Venezuela’s China lifeline is looking evermore tenuous.

China envía una misión de Defensa a la Argentina para avanzar en un acuerdo de producción militar conjunto — Info BAE
China y Argentina avanzan en un acuerdo de producción militar — La Radio de Martín Grande
China and Argentina are planning on signing an agreement early September to jointly build military planes and boats in Argentina.

Macri resalta beneficios para Argentina de línea ferroviaria en la que colabora China — Xinhua
Argentina’s President Macri likes the locomotives that the Belgrano Line got from China.

Korea — LAC

Exclusivo: divórcio da Hyundai pode render US$ 10 bi ao Grupo Caoa — Estadão
Hyundai’s messy litigation with Caoa in Brazil could cost it $10b — or more — and has been kicked up to arbitration in Frankfurt.

Colombia aumenta sus ventas de claveles a Corea del Sur — 20 Minutos
Colombia sold 65% more carnations to South Korea in 2017 than it did the year before.

"Está naciendo la nueva cooperación de la diplomacia” — BAE Negocios
At the Korea-LAC Future Cooperation Forum, South Korean Foreign Minster Kang Kyung-wha says it’s important to connect Korea with Latin America, and he sees the coming Mercosur-Korea FTA talks as a  key component of that connection.

7° Fórum Brasil Coreia — Unisinos
Unisinos University in Porto Alegre will host it’s Seventh Brazil-Korea forum this August 22-24.

Adex: Exportaciones peruanas a Corea del Sur suman unos US$ 950 millones entre enero y abril — En Linea
Peruvian exports to South Korea for the first four months of the year were just under $1b, up 90% over the year before. Natural gas and copper drive the exports.

Japan — LAC

Argentina inicia la exportación de carnes a Japón — El Observador
Argentina will begin exporting beef to Japan with some fine cuts sent on a flight August 16th.

Japón, el segundo mercado más importante para el tequila mexicano — El Financiero
With two million liters (worth $23.6m) imported last year — a 53% increase on the year before — Japan is tequila’s second largest export market. ¡Salud!

El gigante japonés Dentsu se expande en la argentina y compra la agencia Global Mind — La Nación
Japanese PR giant Dentsu Aegis Network has bought Argentina’s Global Mind.

India — LAC

Sterlite Power to invest $4 billion in Latin America in transmission projects — Moneycontrol
Sterlite continues to eye expansion in Latin America.

Chile launches campaign to promote kiwifruit in India — The Hindu Businessline
Buying into the idea that “India is the next China,” Chile’s ASOEX is beginning to push kiwis to India.

ASEAN & Oceania — LAC

Fruta fresca nacional: misión de Malasia en Perú para tratar exportación — Agencia Andina
Malaysia tries to get in on the game. Sanitary specialists from Malaysia’s Agriculture Department are visiting Peru this week to discuss opening exports to their market of avocado, blueberries, grapes, and citrus. Export of grapes to Malaysia was suspended last year due to fungal fears. Peru is also discussing access for its fruit exports to Thailand, the Philippines, Japan, Vietnam, India, China, and South Korea, among other countries.

GCC — LAC

UAE and Chile bolster relations, will build new facilities, rep offices — Khaleej Times
The United Arab Emirates and Chile plan to set up a huge storage and logistics facility in the UAE for perishable goods, supposedly to be built in three years. The two countries also plan to exchange trade rep offices.

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