Obama looks to Asia as trade markets beckon south

President Obama’s postelection trip to Southeast Asia presages a greater second-term focus on that region, but some foreign-policy analysts say that shouldn’t distract from the need to build better alliances with U.S. neighbors, which could be key to restoring the nation’s sluggish economy.

Nowhere is that more apparent than Mexico, whose president-elect, Enrique Pena Nieto, is scheduled to visit Washington this month and has signaled an openness to deeper cooperation, including in the energy sector.

“I think the Obama administration is focused on the Asia pivot,” said Andrew Selee, who heads the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington. “But if things in Mexico get exciting, we may see a pivot toward the Western Hemisphere, which has much more tangible consequences.

“One of our greatest paths to making the U.S. economy more dynamic is to tie it much more closely to the Mexican and Canadian economies in terms of innovation and manufacturing,” Mr. Selee said. “This will make the U.S. much more competitive globally.”

Mr. Obama’s trip to Asia, which will include stops in Thailand, Myanmar and Cambodia, underscores the administration’s self-described “pivot” toward that region as the U.S. grapples with the rise of China. There is speculation that the trip might include a surprise meeting between Mr. Obama and China’s incoming president, Xi Jinping.

Indeed, the White House appears to have broad support for putting China — a rising superpower that holds an estimated $1.5 trillion of U.S. debt — above such other foreign-policy priorities as Syria’s civil war, Iran’s nuclear ambitions and the more than decade-old war in Afghanistan.

Beyond the security implications of the Far East, analysts said, there are immediate reasons to be focusing closer to home, where long-standing trade partnerships need attention and new links could be formed.

“I think the top foreign-policy and national security priority is the restoration of the American economy,” said Leslie H. Gelb, president emeritus and board senior fellow at the Council on Foreign Relations, who added that “a key part of restoring our own economy is our economic relationship with Canada, Mexico and Latin America.”

Economic growth at home will help lawmakers tackle America’s spiraling deficit, a serious reduction of which, Mr. Gelb said, would give the U.S. “more oomph in dealing with China.”

“We’ve got to restore our economy. That’s how you get most countries to pay attention to us,” he said. “If your focus is on restoring our own economy, you’re going to pay attention to Mexico and Brazil.”

A bloody war on drugs and organized crime has defined the U.S.-Mexico relationship throughout Mr. Obama’s first term. But away from the headlines, recent years also have brought impressive economic growth in Mexico facilitated by the North American Free Trade Agreement (NAFTA), which will mark its 20th anniversary during Mr. Obama’s second term.

A 40 percent jump in Mexico’s per capita gross domestic product since NAFTA’s inception has resulted in an increasingly robust middle class, eager to buy automobiles and other expensive consumer goods for which their country historically has not been a major market.

More important, some analysts say, is the potential for serious and long-term energy-sector growth between the two nations. Mr. Pena Nieto, whose inauguration is next month, appears as eager as any Mexican president of recent memory to open his nation’s state-controlled oil and gas sector to co-investment from private companies from the U.S. and other countries.

Mexico has long limited foreign investment in its energy sector, partly to protect its state-owned monopoly and partly from historic opposition to such holdings in general as potentially giving other countries, especially the U.S., pretexts to invade, colonize or interfere in Mexico’s affairs.

The Obama administration has shown little awareness of or interest in such an opening, which would require a series of politically delicate reforms to Mexican law. It remains to be seen whether the administration is capable of playing the kind of versatile diplomatic hand that could help Mr. Pena Nieto achieve such reforms.

Mr. Selee said the incoming Mexican president is poised to “allow for private investment in deep-water oil exploration and shale gas exploration and in secondary petrochemicals and refining.”

Long-term investment in such U.S. companies — coupled with an expanded focus on the vibrant U.S.-Canadian energy relationship — has the potential to open an unprecedented era of North American energy security, Mr. Selee said.

Such security could lay a bedrock for the kind of regional economic stability and growth likely to be required if the United States truly seeks to counter China’s rise in the global economy for decades to come.

“We think about China as being the 100-pound gorilla in the room, but the truth is, we have a 100-pound gorilla in the room to our south,” said Christopher Sabatini, who directs policy at the Americas Society and Council of the Americas in New York. “Latin America’s middle class is the fastest-growing middle class in the world, and that means markets for the U.S., it means disposable income.”

Nor is Mexico alone in Latin America; farther to the south is a rapidly growing behemoth of almost 200 million people.

“In Brazil, they’ve added 40 million people to the ranks of the middle class,” Mr. Sabatini said. “They’ll want washing machines and dryers and cars and all the accouterments of the middle classness. We should be finding ways to lower tariff barriers for that because the truth of the matter is that China is going to sell them the lower-quality version of all that stuff.”

The time is ripe, he said, for “tightening our alliance with some of the more serious countries — Peru, Chile, Colombia, Mexico and Canada — in the hemisphere as a way not just to create a positive diplomatic and economic pole in the region, but as a larger, broader geostrategic plan.”

Such logic, however, essentially was absent from the U.S. presidential campaign this year.

The words “Latin America” were barely uttered in the foreign-policy debate between Mr. Obama and Republican nominee Mitt Romney. When they were, it was from Mr. Romney, who observed that while “we’re all focused on China, Latin America is a huge opportunity for us.”

“As a matter of fact, Latin America’s economy is almost as big as the economy of China,” Mr. Romney said.

Mr. Obama has overseen the passage of free-trade agreements with Colombia and Panama, though those deals were negotiated by President George W. Bush and Mr. Obama was widely seen as delaying ratification.

He also backed the ascension of Canada and Mexico to the Trans-Pacific Partnership, an 11-nation free-trade pact aimed at countering China’s dominance toward its neighbors.

But his White House has shown less interest in the Western Hemisphere, particularly how the U.S. economy might benefit in immediate, long-term and geostrategic ways by working more fluently with the likes of Brazil or Mexico.

“Will the administration do that? I have no idea,” Mr. Gelb said. “They haven’t to date, because I don’t think, at this point, that they share my sense of economics being the top priority, and I’m not sure they would define that priority the way I define it.”