Asian crisis hits Latin America

NAFTA & Inter-American Trade Monitor, Vol. 5 no. 4, 20 February 1998

As Mexico reported a December trade deficit of $722 million, Argentina, Brazil and Chile also looked at widening trade deficits for 1997. The Asian financial crisis has driven down the prices of commodities that Latin America exports while improvement in some sectors of national economies has increased consumer demand for exports. For example, Argentina imported 340,000 pairs of shoes from Asia in July 1997, but the number had risen to more than 2 million per month by October and November.

In addition, Asian exports are taking U.S. market share from Latin American exporters, according to Mauricio Gonzalez, a director at the Mexico City economics firm Grupo de Economistas y Asociados. Mexican President Zedillo acknowledged in late January that the Asian financial crisis will toughen international trade competition.

Mexican Trade and Economy Minister Herminio Blanco announced in late January that Mexico would monitor any rise in Asian imports and impose compensatory tariffs if it found signs of dumping.

Even austerity measures, such as Brazil's dramatic response to the Asian crisis, may not be enough to counter the problems stemming from the Asian financial crisis. Brazilian planning minister Antonio Kandir said in a January interview with the daily newspaper O Globo that goods from Asian markets have become more competitive in recent months, and warned that If it is necessary to adopt any measure related to our imports from Asia, the government will do it. Brazilian toy manufacturers complain of recent 30 percent discounts on Asian toy imports.