Latin America: The New World of Pacific Free Trade

Rudy Martin

Politicians around the globe absolutely love to talk about free trade. Usually that’s all it is: talk.

Most recently, President Obama teamed up with European leaders Jose Manuel Barroso and Herman Van Rompuy to announce negotiations for a “Transatlantic Trade and Investment Partnership.”

Every trade agreement needs a clever acronym. This one will be “T-TIP.”

Building these agreements is slow even in the best of conditions. For example, start to finish, the U.S. required five to seven years to complete one-on-one free trade agreements with Panama, South Korea and Colombia. A deal between the U.S. and the European Union will be even more complicated.

I’m not a gambler … but if you believe all the parties will agree and implement T-TIP before 2025, I’ll gladly take the other side of that bet!

Free trade has better prospects elsewhere. Growing economies in Latin America and Asia are forging a new “Pacific Alliance” right now.

There’s no clever acronym for this partnership but frankly it doesn’t need one. That’s because, where it lacks a name with some style, its mission and action plan contain plenty of substance … and a potentially very profitable payoff!

Latin America’s Free-Trade Champions

Economists don’t always believe in free trade. Average citizens are hard to convince, too — and I don’t blame them.

While free trade deals usually help everyone in some way, the adjustment can be slow and painful. Agriculture, manufacturing and other key business sectors are especially vulnerable. Environmental and labor organizations tend to be skeptical, too. The political power of these groups is one reason the U.S. moves so slowly.

Some export-oriented Latin American countries — where the benefits of free trade are more obvious — are moving forward aggressively. New partnership ideas pop up all the time, both within Latin America and overseas with Asian, African and European nations.

You may be stunned to know how far behind the curve the U.S. really is.

  • According to the Organization of American States, the U.S. is party to 12 free-trade agreements. Several are with relatively small nations like Bahrain and Morocco.
  • Mexico matches the U.S. with 12 trade partnerships.
  • Mineral-rich Chile has 17 active trade pacts.
  • Peru has 14 trade agreements in force.

Going by these numbers, the U.S. sure doesn’t look like a free-trade powerhouse. Much-smaller Latin American countries are beating us by a mile!

Brazil, Colombia and Argentina are leading the way through regional alliances like:

  • MercoSur (Argentina, Brazil, Paraguay, Uruguay and Venezuela)
  • The Andean Community of Nations (Bolivia, Colombia, Ecuador, Peru and Venezuela)
  • The Central America Free Trade Agreement (Costa Rica, Honduras, Nicaragua, El Salvador, Guatemala, the Dominican Republic and the U.S.)

All these pacts are important — but another one is just getting off the ground. I predict it will make jaws drop everywhere.

Get Ready for the Pacific Alliance!

Launched in June of last year, the Pacific Alliance has four charter members: Chile, Colombia, Mexico and Peru. Costa Rica is set to be the fifth member nation soon. Panama wants to join.

When he visited Bogota two months ago, Vice President Joe Biden told Colombian President Juan Manuel Santos the U.S. would like to join, too.

I’m sure Biden was serious — but he simply can’t deliver. The U.S. is years, maybe decades away from joining anything like the Pacific Alliance.

We’re missing a big opportunity, too. That’s because …

The Pacific Alliance is the best chance for cross-Pacific free trade with China, India and Asia’s other fast-growing economies.

These emerging states have huge populations, rapidly expanding middle-classes and affluent consumer segments, an endless appetite for natural resources and more-than-sufficient wealth to pay for whatever they need!

Is the U.S. Missing Out?

The U.S. won’t be entirely out of the game, but you can see the trend.

  • The Pacific Alliance will open up new international profit opportunities, but
  • There will be fewer chances to profit in the U.S., and
  • More profit opportunities are developing outside the U.S.!

This is why I spend so much time investigating the fine points of international free trade. I want to find potential profits, wherever they may be, so I can tell my readers about them.

Right now my Global Trend Trader model portfolio includes:

  • A Latin American building materials giant that already dominates its segment in the Western Hemisphere — and is growing fast in parts of Europe and Asia;
  • A world-class, rapidly expanding energy giant; and
  • An Exchange-Traded Fund from a nation far ahead of the U.S. in wealth-enhancing international trade hookups.

Latin America is turning into an enormous, friction-free international trade machine. With China in the equation, the potential is simply unbelievable!

In decades as an investment analyst, I’ve never seen entire nations blossom like this. I’m adding new candidates to my list almost as fast as I can analyze them, and if you’re a subscriber to my service, watch your e-mail for developing opportunities!

Happy Trading!

Rudy

P.S. Latin America’s trade-driven profit growth is so exciting, I asked our editorial team to let me finish this story later this week. The answer was an enthusiastic “Yes!”

One ETF is in perfect position to take advantage of the new Pacific Alliance. I’ll tell you all about it this Friday, July 26 — just two days from now. So watch your inbox … You won’t want to miss this special edition of Uncommon Wisdom Daily !