We are in the early years of the third phase of post-World War II global economics.

The immediate postwar period was marked by a divided world in which the countries within the Organization of Economic Cooperation and Development mostly traded and invested amongst each other. China and the Soviet bloc were largely outside the scope of Western business. Meanwhile, the developing countries of the “third world”—often marred by political instability and protectionist trade policies—were challenging venues for American and European trade and investment, although firms producing natural resources by necessity invested where the resources existed. But as various General Agreement on Tariffs and Trade (GATT) rounds gradually reduced tariffs and strengthened rules governing trade, while countries made incremental improvements in their own rule of law, trade and investment between the North and the South began to grow.

Finding and implementing the best path forward in the face of competing policy objectives is among the most difficult challenges facing any government. This is particularly apparent as the United States seeks to devise a trade and foreign policy strategy that addresses, inter alia, to reduce the United States and allies’ dependence on China for key supply chains; enhance U.S. economic and political relations with developing countries/emerging markets that have become increasingly dependent on China for trade and investment, especially in Asia and Latin America; and respect the domestic U.S. political constraint brought on by many progressive Democrats, Labor Union leaders, and populist Republicans opposition to trade agreements that involve opening U.S. markets to foreign countries.

Excerpted from an article published in the print version of The Dialogue's Latin America Advisor. 

David D. Nelson, CEO of Global Business Policy-DC, LLC and former U.S. ambassador to Uruguay:

“Political leaders throughout Latin America are being rocked by scandals, from Lava Jato in Brazil to the extensive tentacles of Odebrecht, which brought down presidents in Brazil and Peru and numerous senior officials including the former CEO of Pemex in Mexico—not to mention the wholesale looting of PDVSA in Venezuela. Even relatively transparent Costa Rica has been rocked by the ‘cementazo’ scandal. The central theme of this year’s Summit of the Americas is anti-corruption—a response to the demands of the growing and increasingly empowered middle classes in Latin America. In that context, the case against Raúl Sendic can be viewed as a demonstration of the need for constant vigilance even in a country rated by Transparency International as the least corrupt in Latin America.”

A wave of interest in the Cuban market gripped many US companies after the surprise December 2014 diplomatic opening. Hundreds of US companies jumped at the opportunity to attempt to enter a market so close to home yet forbidden for the past 60 years.

That first phase of enthusiasm, however, waned in 2017, as most companies found it difficult to actually close substantive deals, and expectations for a ‘quick buck’ proved overblown. Furthermore, the new US President announced policy changes that seemed intended to dampen enthusiasm and slow down if not reverse the economic opening.

Nevertheless, now is the time for companies to rethink their Cuba strategy, with a more realistic viewpoint. If your goal is a quick buck, hitting sales targets this quarter, Cuba is probably not the right target. But this is the moment for firms with the interest and patience to pursue a strategic opportunity in a nearby country that has the potential to grow dramatically over the next decade, possibly becoming the largest economy in the Caribbean.

Modernization of NAFTA is broadly supported by political and private sector leaders from all three countries.  After 7 rounds of negotiations, it is clear that a meaningful modernization is within reach - but is also at risk due largely (albeit not exclusively) to “unconventional” proposals from the US.  Most of these proposals have little if any support from the US business community and are strongly rejected by Canada and Mexico.  Perhaps even more concerning to the business community and trading partners is what the US proposals in NAFTA reveal about the direction of trade policy in the current US Administration — a policy that may rely more on trade litigation than trade negotiations.

The biggest benefit of trade agreements for most countries may be their ability to ‘lock in’ policy reforms.  Major reforms to significant economic sectors, such as agriculture or manufacturing, are rarely achieved via trade negotiations; few governments would welcome the appearance of being obliged to disrupt important domestic constituencies by surrendering their interests to foreign trading partners.  Sometimes governments desiring to make difficult reforms do use trade negotiations as leverage to support their own domestic goals.