Anti-Trump (II)


BERLIN/CIUDAD DE MÉXICO/BUENOS AIRES (Own report) - On her trip to Argentina and Mexico last week, Chancellor Angela Merkel sought to use the tensions between US President Donald Trump and Latin America to strengthen German influence on the subcontinent, by expanding business relations. Berlin would like to knit closer ties to Argentina through a free trade agreement with the South American Mercosur alliance and is planning to expand bi-lateral trade with Mexico, on the basis of the existing free trade agreement. Already long before Trump's electoral victory, the German government had been seeking to strengthen its trade with Latin America. Trump's threats to fortify the Mexican border with a wall and the revocation of the NAFTA free trade agreement have practically driven the countries of this region into Berlin's arms. This was even reinforced, when Chancellor Merkel publicly criticized the wall project. The coup had the desired effect, despite the fact that the EU - under German pressure - is surrounding itself with wall-like border fortifications. The German effort to expand its Latin American influence is also directed at China.

"New Best Friend"

Chancellor Angela Merkel's trip to Argentina and Mexico last week was heavily marked by tensions between Latin America and the United States. President Donald Trump's plans to build a wall at the US' southern border are still arousing anger on the subcontinent. Berlin is fanning the flames of this anger with Merkel declaring in Mexico, "building walls and cutting oneself off will not solve the problem."[1] Only a few days before Merkel's visit, the Dresden Symphony Orchestra gave a concert in protest of the wall at the Mexican-US border in Tijuana.[2] This protest would have been more credible, had it also included the wall-like border fortifications along the EU's outer borders, in the Spanish North African exclaves Ceuta and Melilla, along with the other measures imposed by Germany to seal off the EU. In Argentina and Mexico, Merkel was received as if she were Trump's antithesis, despite her pushing to seal off her own continent. Mexican media celebrated her as the country's "new best friend" and "savior,"[3] and some already see her as "the most important politician in the world."[4]

Failed Because of EU Agriculture Lobby

In Argentina, as well as in Mexico, Merkel was seeking to use the anger against Trump to improve conditions for German-European business expansion - in Argentina through a free trade agreement between the EU and Mercosur, the South American alliance.[5] This project is old and was already officially confirmed in 1994. However, the negotiations on the agreement, which began in 1999 were put on the back burner in 2004, because the EU, which is demanding for its industrial products comprehensive access to Mercosur could not agree on opening its markets for South American agricultural products. The negotiations received a new impetus through the right-wing liberal late 2015 change of government in Argentina, and the cold putsch in Brazil, in May 2016. ( reported.[6]) The tensions with the Trump administration are intensifying efforts to reach an agreement. This again is hampered not so much by the interests of South American industry but by the EU's agriculture lobby, as reported by correspondents.[7]

Number One Customer

Berlin's plans to intensify its cooperation with Mexico long predate President Trump's election, as well. Last spring both countries' governments had already announced a "Year of Germany" in Mexico and a "Year of Mexico" in Germany, to promote the bilateral exchange in various fields ranging from economics and the sciences to culture. This is in support of the efforts to strengthen German companies' presence on the Mexican market and to intensify cooperation with Mexico's law and order sectors, which have been accused of serious human rights abuses. ( reported.[8]) Experts are predicting that Mexico's economy will significantly grow over the next few years and decades. According to an analysis by the business consulting firm, PricewaterhouseCoopers (PwC), that country could become the world's seventh national economy by mid-century. The country already has a great significance for German industry. More than 1,800 enterprises with a German background are operating in Mexico. German companies have nearly ten billion euros in direct investments, and Mexico is Latin America's number one customer for German exports.

Risks of Dependence

The Trump Administration's threats of punitive tariffs or a revocation of the NAFTA free trade agreement has considerably intensified pressure on Mexico, to find foreign trade alternatives.[9] Immediately preceding the chancellor's current visit, the CEO of the Mexican-German Chamber of Industry and Commerce (CAMEXA) confirmed the fact that with Germany, Mexico has "a strong ally at its side." That is "an important signal" for the country and it will "surely be received with great applause and satisfaction."[10] "We expect an unambiguous reorientation of the Mexicans toward Europe - and toward Germany," one spokesperson for Camexa was quoted. "The Mexicans have realized that the exaggerated dependence on the USA carries very great risks."[11] The expansion of the relationship is being vigorously pursued, even though it has meanwhile become clear that the Trump administration's revocation of NAFTA threat is no longer likely and experts are expecting merely modifications to the agreement. To reinforce cooperation, Mexico will be next year's partner country at the Hanover Fair.

Chinese Competition

Public focus on current tensions between the Trump Administration and Latin America has obscured the fact that Berlin must make a greater effort toward Latin America to avoid falling far behind China. Over the past few years, the People's Republic of China has rapidly and comprehensively expanded its trade with Latin America and it is expected to continue to do so. Already in 2013, Latin America was shipping around ten percent of its exports to the People's Republic of China and receiving around 16% of its imports from there. Since 2010, Chinese investments in Latin America have also massively grown to range between seven and US $14 billion annually. This has long since had an effect on opportunities open to German companies. For example, in Buenos Aires, Chancellor Merkel had pleaded in favor of Siemens receiving contracts estimated at a total of around US $200 billion for Argentinean infrastructure projects. Just recently, during his visit to Beijing, President Mauricio Macri awarded contracts valued at US $17 billion to Chinese enterprises.[12] Siemens fears that it could eventually go under.

Fighting to Stay Afloat

The economist Enrique Dussel Peters, who teaches at the Universidad Nacional Autónoma de México (UNAM), recently spoke of the consequences of China's rapidly growing business relations with Latin America. "The EU is one of those blocks that, in light of the Chinese presence, has suffered the biggest losses, even its strategic presence," Dussel Peters explained. "There is little to be seen of an EU-Latin American dialogue." This is mainly due to the EU's internal problems. "To put it mildly," argues Dussel Peters, "one can speak of a relative constant and stable EU-Latin American relationship - to a declining degree."[13] This is confirmation that in Latin America, Berlin is not only in competition with Washington, but it is fighting to stay afloat, in relationship to Beijing.

[1] Merkel: "Eine Mauer löst keine Probleme". 10.06.2017.
[2] Anne-Katrin Mellmann: Große Töne gegen Trumps Mauer. 04.06.2017.
[3] Anne-Katrin Mellmann: Neue beste Freundin? 09.06.2017.
[4] Michaela Küfner: Lateinamerika feiert Merkel. 11.06.2017.
[5] Mercosur is comprised of Argentina, Brazil, Paraguay, Uruguay, and Venezuela.
[6] See Wende in Lateinamerika (I) and Wende in Lateinamerika (II).
[7] Matthias Rüb: Von Mauern und Brücken. Frankfurter Allgemeine Zeitung 12.06.2017.
[8] See Germany's Leading Role and Assault Rifles and Human Rights.
[9] See Driven into their Arms.
[10] Anne-Katrin Mellmann: Neue beste Freundin? 09.06.2017.
[11] Astrid Prange: Deutschland wirbt um Mexiko. 09.06.2017.
[12] Merkel zu Besuch bei Freunden. Frankfurter Allgemeine Zeitung 08.06.2017.
[13] NAFTA: "Für Mexiko gibt es nichts zu gewinnen". 15.02.2017.