November 12, 2009 / 12:33 PM / 10 years ago

Amid Asia trade rivalry, Latin America scores deals

* Export rivalries slow agreements for major economies

* Commodities help spur trade deals for Asia, Latin America

By Patrick Markey and Antonio de la Jara

SINGAPORE, Nov 12 (Reuters) - As the world’s major economies haggle over free trade, the appetite of China and other Asian nations for raw materials and commodities is allowing Latin American nations to secure a flurry of accords across the region.

Export rivalries between major economies mean some members of the Asia Pacific Economic Cooperation forum prefer bilateral deals to a regional free trade accord. But Latin America sees a string of trade deals as the path to a regional pact and a way to bolster Doha trade negotiations.

Thailand now views Peru as its gateway to Latin America thanks to a new free trade deal, and Chile wants to become a platform for Chinese investment as Latin Americans seek markets for raw material exports from copper to timber.

“Our bilateral accords are the building blocks,” for a regional trade pact, Chilean Foreign Minister Mariano Fernandez told Reuters at the Asia Pacific Economic Cooperation summit in Singapore this week.

China and other Asian nations have been eager to sign free trade agreements with resource-rich suppliers, but are more wary of countries with competing manufacturing bases within APEC, which accounts for 40 percent of the world’s population and nearly half of global trade.

A trade deal between China and ASEAN comes into effect next year, while China has removed tariffs on imports, primarily oil and minerals, from many African nations. It extended lower tariffs to others at a recent China-Africa summit in Egypt.

In contrast, South Korea and the U.S. delayed ratifying their trade deals as South Koreans fret over U.S. beef and U.S. politicians resist barriers to auto exports to South Korea.

Not all the rivalries are over manufacturing: China and Australia have held many rounds of free trade negotiations, but have stalled over agriculture and financial services.

For a FACTBOX on regional FTAs, click [ID:nPEK264677]

‘MESSY SPAGHETTI BOWL’

China’s first free trade deal in 2005 was with Chile, its top supplier of copper and a willing buyer of its manufactured goods. China has already become a major investor in Peru, pouring in more than $5 billion, mainly in the mining sector.

“Asia’s increasing demand for resources and commodities has natural synergies with Latin America’s energy and commodities producers,” Singapore’s senior minister for trade and industry S. Iswaran told a finance forum at the APEC summit.

“There is now a growing convergence of Asian and Latin American business interests,” he said.

With Doha world trade talks stalled, pragmatism rules in negotiations between Asian nations and Latin America.

“Countries in APEC are moving practically to secure trade and investment enabling agreements that are not perfect, that create a messy spaghetti-bowl of bilateral and multilateral agreements, but which serve them and their companies,” said Ernie Bower, at the Center for Strategic and International Studies in Washington.

Peru, whose main exports include copper, gold, zinc, and crude oil, expects to reach a trade deal with South Korea in the next few months and has stepped up talks with Japan. The Andean country will sign a free trade accord with Thailand on Friday.

“We aim to use Peru as our gateway to South America as it is a member of key regional trading blocs,” Deputy Thai Commerce Minister Alongkorn Ponlaboot said in Singapore announcing a free trade accord with Peru. “It already has FTAs with the United States, Canada and Mexico.”

Additional reporting by Lucy Hornby; Editing by Bill Tarrant

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