Made in Latin America

From 2012 to 2014, while living in Peru, I witnessed the government's negotiations with China for a Free Trade Agreement (FTA). Concerned about the influx of cheap Chinese imports, I cautioned factory owners about the possible harmful effects. Unfortunately, my fears were realized. When I met factory owners at a trade show in 2019, they shared that their businesses had been hit hard in the six years following the FTA. Many factories had shut down, leaving workers unemployed. The question remains: what happened to those workers? Were they left to rely on tourism or the export of resources like copper, iron ore, gold, or agricultural products? The real data—worker incomes and the social impacts of factory closures—made it clear that the economic growth promised by the FTA had failed to materialize.

This scenario reminded me of the devastation caused by the British spinning industry during the first industrial revolution when British imports obliterated India’s local cotton spinning sector. Back then, military force was needed; today, a propaganda campaign can achieve the same destructive results.

In 2019, I had the chance to visit Uruguay. As a wool specialist, I had traded wool from Australia and New Zealand for years but had never been to Uruguay. My goal had always been to connect farmers directly to the market and empower them by creating an open, farmer-led industry. By giving farmers financial tools to hold onto their wool and avoid premature sales, we can stabilize the market and ensure they are compensated fairly. This model shifts power away from middlemen, turning them into service providers for testing, packing, and logistics. Uruguay’s small size and lack of an auction system made it the ideal location to test this approach.

To support this initiative, I began developing platforms like CraftofUruguay.com, which allows small and medium-sized businesses to present their products to a global market through digital tools. I also provide affordable ERP software to help them manage daily operations more efficiently, digitizing processes to reduce costs. Despite these efforts, my short visits have shown me that much more is needed to make a substantial impact.

The Importance of "Made in Latin America"

Latin America is rich in cultural heritage, shaped by ancient civilizations like the Maya and Inca, along with Spanish and Portuguese influences. The region’s diverse climate produces goods found nowhere else. Yet, despite its potential, economic growth has stagnated in recent decades. Globalization has changed the appearance of cities and introduced international influences, but it has not brought prosperity. Instead, it has limited opportunities for local businesses and young people, with China emerging as the clear winner.

During my travels, I noticed how Chinese-made products dominate Latin American markets. In Peru, for example, nearly half of all cars and SUVs are from China, while in Uruguay and Colombia, the numbers are lower. But the real question is, do Peruvians benefit from paying less for these Chinese cars under the FTA? The answer is clear: far fewer people benefit than those who suffer. Peru's manufacturing sector has been decimated by the FTA, leaving only niche industries like alpaca and Peruvian cotton competitive.

Uruguay is facing similar challenges. During my visit, I saw just a handful of remaining spinners and sweater factories. Wool production has dropped to only 20% of what it was 30 years ago. At a craft market, only five out of 40 booths featured hand-knitted wool products. The wool industry is in rapid decline, and many people I spoke with were pessimistic about its future.

However, there is still hope. I visited a leading Uruguayan brand called Manos, which produces most of its products locally. Despite growing demand, they struggle to find skilled knitters. Every year, they sell out their products, but they can't meet demand due to a lack of skilled labor. This reaffirmed my belief that creating a knitting town in Uruguay and supporting local artisans could help revive the industry, attract younger generations, and create thousands of jobs. By collaborating with brands like Manos, we can inspire a new generation of knitters and help rejuvenate the wool sector.

Promoting Manufacturing in Latin America for Economic Growth

In Colombia, I toured two leading fabric mills, several sewing factories, and prominent shopping malls like Adina in Bogotá. I was impressed by the number of brands committed to producing "Made in Colombia" products. Although their prices are 30-50% higher than Chinese imports, they maintain competitiveness by offering high-quality craftsmanship, fast delivery, and small minimum order requirements—especially in sectors like activewear, swimwear, and shape wear. This has enabled Colombian factories to build an ecosystem that supports local production, helping to preserve the manufacturing industry.

While in Colombia, I tried to promote a similar idea with CraftofColombia.com, aimed at boosting exports of "Made in Colombia" products. I firmly believe that providing flexible financing to small and medium-sized factories is crucial for their success. These funds would allow them to accept international orders, cover operational costs, and focus on production. A platform like Craft of Colombia could play a critical role in raising funds and supporting exporters, ultimately enhancing Colombia’s reputation for craftsmanship.

Building a Future for "Made in Latin America"

The truth is simple: by keeping manufacturing jobs local, workers' incomes circulate within the consumer market, driving sustainable economic growth. This creates a positive cycle that strengthens the local economy.

Latin America has a vast labor force, and by building a regional supply chain, the region can achieve stability and prosperity. If every Latin American brand committed to sourcing 50% of their goods from within Latin America over the next decade or face special tax on their imports, we could reduce immigration-related tragedies and transform the region. This commitment would benefit both Latin America and the United States.

However, for this plan to work, governments must move away from the short-sighted approach of lowering duties on Chinese imports. Brazil offers a great example, imposing duties of 60-100% on Chinese and Asian goods. This policy has preserved Brazil’s manufacturing sector, while other Latin American countries have suffered. Brazil continues to export to China without restrictions, proving that high import duties do not hinder trade relationships.

It is time to reject biased trade agreements and adopt policies that promote balanced economic development. Without manufacturing, countries will remain impoverished. Additionally, governments should levy special taxes on resource exports, like minerals, to ensure profits benefit their citizens. Botswana’s diamond industry is an excellent model, where the government shares in company profits. Similarly, Norway and the UK have used oil revenues to fund social welfare and development programs.

The path to progress is clear: prioritize local manufacturing, set high import duties, and reinvest profits into the economy. If Latin American countries unite and implement these strategies, they can create a future where “Made in Latin America” becomes a source of pride and prosperity.

It all begins with taking that first step—let’s move forward together.