Chapter III.
Regional Developments

C. Latin America and the Caribbean

As a result of market opening and liberalization in the 1990s, Latin America has grown into a world hub for multinational companies. Corresponding to activities in the private sector, ties with Latin America have been strengthened at the governmental level as progress has been made in creating inter-regional frameworks of Latin America with Europe and with Asia. At the same time, as the principles of competition prevail, social problems such as the growing disparity between the rich and the poor and the deterioration of civil order, have been highlighted, and those factors are destabilizing societies.

a) Latin America as a strategic hub in the world economy

The Latin American market is enormous, as borne out by the fact that Brazil alone has a GDP equivalent to that of the ASEAN10 combined, and the region is moving in the direction of stable growth. In January 1999, Brazil adopted a floating rate system, and there were temporary fears that the economic crisis could ripple out to other Latin American countries. However, backed by on-going support from the International Monetary Fund (IMF) to Brazil, the Brazilian economy effected a swift recovery. Direct investment inflows also expanded, lifting foreign investment to the same level as enjoyed by China. Adding in Mexico, which has been incorporated into the North American economic area, and Chile and Argentina, both of which have already succeeded in privatization, Latin America has continued to grow as an arena for competition among the world's multinational corporations.

In 1999, while Congress denied the U.S. Government fast-track authority, work toward the creation of the Free Trade Area of the Americas (FTAA) stagnated. However, it is noteworthy that Latin America heightened its interest in strengthening its ties with Europe, and then with Asia.

In June, Latin American and European Union leaders gathered for the first time in Rio de Janeiro to hold a meeting of Heads of Government and State among Latin America, the Caribbean and the EU. The meeting adopted "The Rio de Janeiro Declaration: Priorities for Action" aiming at further strengthening ties between these regions. A Summit Meeting was also held among the Southern Common Market (MERCOSUR), Chile and the EU, at which the leaders of those countries announced the initiation of the comprehensive negotiation toward effective trade liberalization, including agriculture. These Summit Meetings revealed a common interest between the EU desiring to boost its presence in Latin America, and Latin America hoping to strengthen ties with the EU as a counterbalance to the United States.

Turning to relations with Asia, the first East Asia-Latin America Forum was held in Singapore in September. Attended by countries from both regions, the forum aimed to improve mutual understanding between East Asian and Latin American nations and to strengthen cooperative ties.

b) Political developments

Paraguay experienced an unexpected disturbance in March, with President Raúl Cubas resigning and, in accordance with the Constitution, Senate Leader Luis González Macchi taking over the reins of power. However, the changes in leadership which took place in many other Latin American countries in 1999 were all in line with the democratic process, indicative of the increasing permeation of democracy in the region. In January, President Fernando Henrique Cardoso of Brazil and Prime Minister Owen Seymour Arthur of Barbados were re-elected. In February, President Hugo Chávez took office in Venezuela, in June, President Francisco Flores in El Salvador, and in September, President Mireya Moscoso in Panama. In December, the opposition party won the presidential election in Argentina, and President Fernando de la Rua was inaugurated into office. In accordance with the Panama Canal Treaty, the United States returned the Panama Canal to Panama at the end of December, and withdrew U.S. forces stationed in the country.

Although globalization brought about strong economic growth for Latin America in the 1990s, it also created problems such as poverty, increasing unemployment and worsening civil order. As a result, center-left candidates amassed public support in elections in Argentina and other countries. In Venezuela, with strong public support, the Government criticized the old order, and announced drastic political reforms including the revision of the Constitution. In all of these reforms, policy management will be closely watched by the international community.

In the case of Chile, former Chilean President Augusto Pinochet was arrested in October 1998 during his stay in the United Kingdom in response to Spanish accusations of torture and other crimes committed under the military administration of the 1970s and '80s. This case brought to the fore the issue of appropriate handling of the past in terms of military administration crimes and actions, and similar questions have also arisen in Argentina and other Latin American countries. Chile's leader was absent from both the Latin American and Caribbean-EU Summit in June and the Ibero-America Summit (Meeting of the Heads of Government and of State of Latin America, Spain and Portugal) in November, and the Argentinian President also begged off, with the issue also impacting to some extent on diplomatic relations. Efforts to resolve such problems have become something of a touchstone in terms of whether democracy has taken root in Latin America in substance as well as in the transfer to a civil administration.

In November, Cuba hosted for the first time the 9th Ibero-America Summit, which some regarded as Cuba communicating a message against the U.S. policy of Cuban isolation. On the other hand, the exchanges of views conducted by leaders of participating countries with Cuban anti-government activists also attracted international attention.

c) Relations with Japan

  • Support for medium- to long-term Latin American stability

    Japan is Latin America's second largest donor following the United States. More specifically, in addition to government loans and grant cooperation, Japan also provides funds to the Organization of American States for drug eradication and de-mining in Latin America, as well as cooperating in the resolution of the various social problems which the region faces. One concrete example of the latter was the dispatch of election monitoring teams to the Guatemala presidential elections in November and December. In December, when Venezuela experienced its heaviest ever torrential rain, Japan also provided 50 tents, 2,700 blankets and other emergency aid supplies worth around 15 million yen, as well as contributing approximately 60 million yen in the form of emergency grant cooperation.

  • Latin America as a resource supplier: Private-sector-led trade and investment expansion

    Latin America has enormous potential as a supplier of food, minerals and energy, and has opened these resources to foreign investment, providing an excellent opportunity for Japan to develop cooperative relations with the politically stable Latin American countries in terms of resources in particular. Moves to expand trade and investment between Japan and the Latin American countries have therefore begun to emerge, spearheaded by the private sector.

    As to relations with Brazil, the 8th Japan-Brazil Economic Cooperation Committee was hosted in September by the Japan Federation of Economic Organizations (Keidanren) and the Brazilian National Federation of Industry, with Foreign Minister Masahiko Koumura also attending. The meeting issued a Joint Communique with the stated objective of building cooperative relations toward the 21st century, and a concrete action plan was subsequently examined at the private-sector level.

    In terms of relations with Mexico, the Japan-Mexico High-Level Economic Consultation held in July resulted in a preliminary negotiation in October toward the conclusion of a bilateral investment agreement between the two countries. The New Japan-Mexico Commission for the 21st Century, comprising representatives from industry, academia and the mass media of both countries, also met in July and October in Tokyo and Mexico, respectively, to work on recommendations for Japan-Mexico relations in the 21st century.

    While Japan has not yet concluded a free trade agreement with any other country, the private sector has recently been calling for agreements with Mexico, Chile and others.

  • Stronger Japan-Latin America ties through immigration anniversaries

    The year 1999 marked the centennial of Japanese immigration to Peru and Bolivia and the 70th anniversary of immigration to Colombia and to the Amazon region in Brazil. Japanese migrants and persons of Japanese descent play a valuable role as a bridge between Japan and Latin America, and are also important members of the local community, which they support through activities in a variety of fields. A ceremony commemorating the centennial of Japanese migration to Peru was held in Lima in May. Her Imperial Highness Princess Sayako attended the event together with Chairman of the Japan-Peru Parliamentary Friendship League Toshiki Kaifu, receiving a heartfelt welcome from President Alberto Fujimori, more than 10,000 Japanese-Peruvians and other Peruvian citizens. Her Imperial Highness went on to participate in official events such as a courtesy visit to President Hugo Banzer Suarez in La Paz, Bolivia, before moving on to Santa Cruz to participate together with Chair of the Japan-Bolivia Parliamentary Friendship League Tokuo Yamashita in a ceremony commemorating the centenary of Japanese migration to Bolivia, also taking the opportunity to visit San Juan and the Colonia de Okinawa. The commemorative ceremony in Colombia was attended by President of the Japan-Colombia Parliamentary Friendship League Kabun Muto, while the ceremony in the Amazonian region of Brazil was attended by House of Representatives member Osamu Fujimura on behalf of the Japan-Brazil Parliamentary Friendship League.

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