How Sensitive Are Latin American Exports to Chinese Competition in the U.S. Market?

Chinese exports increasingly compete with Latin American and Caribbean products in world markets.¹ Competition in the U.S. market is particularly relevant. The United States has been Latin America’s most important trade partner throughout the postwar era. Trade with the United States stood at 60 percent of the region’s total world trade in 2000, up from less than 47 percent in 1960 and a low of 37 percent in 1978.² Latin America has also been an important trade partner for the United States, although the region’s share has fluctuated over the last three decades. Trade with Latin America as a share of total trade fell in the 1980s, but it has picked up since then. U.S.-China trade has also increased its share, growing from basically zero in the 1960s to more than 5 percent currently.

The remarkable growth of U.S. trade with China and the challenges it portends for Latin American countries are evident in U.S. import data (see table 1). From 1990 to 2003, Latin American exports to the United States increased from $58 billion to $196 billion, growing at an annual rate of 6.9 percent in real terms. Since U.S. imports from the world as a whole grew at 4.8 percent over the same period, Latin America’s share of the U.S. market rose from 13.5 in 1990 to 17.5 in 2003. Chinese sales to the United States, however, grew at a breakneck 16.6 percent annually, reaching $147 billion in 2003. China’s dynamic export performance led to a fourfold increase in the country’s share of U.S. imports to 13.2 percent in 2003.

Although Latin America as a whole had a fair export performance over the last decade, aggregate figures mask important differences among countries

Table 1.

U.S. Imports and Average Tariffs, by Origina

Region of origin	Volume (millions of dollars)			Distribution (percent)			Annual real growth rate (percent)			Average tariff (percent)
	1990	2000	2003	1990	2000	2003	1990–2000	1990–2003	2000–03	1990	2000	2003
Total trade
World	431,318	1,152,203	1,116,347	100.0	100.0	100.0	7.3	4.8	−3.2	4.6	2.5	2.1
Latin America and the Caribbean	58,286	198,906	195,848	13.5	17.3	17.5	10.0	6.9	−2.7	3.0	1.3	0.8
Mexico	25,872	128,408	128,430	6.0	11.1	11.5	14.2	10.2	−2.2	2.8	0.8	0.4
Central America	2,704	11,824	11,654	0.6	1.0	1.0	12.7	9.0	−2.7	5.0	5.2	4.4
Caribbean	4,494	9,770	9,193	1.0	0.8	0.8	5.1	2.9	−4.1	4.9	3.3	2.2
Andean	14,670	29,295	25,011	3.4	2.5	2.2	4.2	1.5	−7.2	1.4	0.7	0.5
South America	10,546	19,609	21,560	2.4	1.7	1.9	3.5	2.9	1.0	4.3	2.4	1.6
China	14,254	98,267	146,989	3.3	8.5	13.2	18.0	16.6	11.9	7.8	4.7	3.6
Rest of the world	358,778	855,030	773,510	83.2	74.2	69.3	6.1	3.3	−5.4	4.7	2.6	2.2

Source: Authors’ calculations, based on U.S. Customs import data.

a. Annual real growth rates calculated using U.S. consumer price index (CPI) as a deflator. Average tariffs are calculated as duties divided by the value of imports. The regions are defined as follows: South America is composed of Argentina, Brazil, Chile, French Guiana, Guyana, Paraguay, Suriname, and Uruguay. The Andean countries are Bolivia, Colombia, Ecuador, Peru, and Venezuela. The set of Central American countries includes Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama...