The Rising Importance of South-South Cooperation in Asia-LAC Economic Relations

It is often argued that the current pattern of ‘complementary’ Trans-Pacific economic cooperation between East Asia and Latin America and the Caribbean (LAC) is not sustainable in terms of trade and investment. Typically LAC economies export low value-added commodities to Asia-Pacific in exchange for high profile manufactures. Although this pattern has pros and cons for both regions, it is being operated in unbalanced fashion. Trans-Pacific investment shows also a unidirectional pattern. From 2003 to 2011, investments from Asia to LAC rose from US$13 to 17 billion, but most of these are Asian investments to a few large economies like Brazil and Mexico. Development cooperation between economies in Asia and LAC is an increasingly important pillar of bilateral economic relationships. It is also the area that offers measurable evidence of interregional cooperation. Nevertheless, the trend here is also the typical unidirectional pattern of cooperation with Asian resources mobilized towards LAC. Therefore, this paper will suggest South-South Cooperation (SSC) including Triangular Development Cooperation (TDC) as a newly rising mechanism for sustainable Trans-Pacific relations after assessing existing practices between three Asian countries: China, Japan and Korea, and LAC. In conclusion, the paper emphasizes two directions for future cooperation: first, the strengthened role of multilateral framework for active interactions among non-traditional partners; second, the contribution of SSC towards more balanced relations between Asia and LAC. Unlike typical Asia-LAC development cooperation of channeling Asian resources and experiences to LAC, equally rich experience and development practices of the latter must be viewed as critical resources for Asian developing countries.