Last month, Latin American nations proposed a new regional bloc--excluding the U.S. and Canada--to serve as an alternative to the Washington-dominated Organization of American States. Predictably, the leaders of Venezuela and Bolivia praised the step as an emancipation from U.S. "imperialism." But even moderate players such as Brazil and Mexico seemed to agree that the region's interests--especially its trade interests--might benefit from fewer ties to its big, recession-plagued neighbor to the north.
Latin America is hardly alone in this epiphany. Asia has long toyed with the idea of a trade bloc, but for years the notion was hampered by Japanese and Chinese infighting, as well as Tokyo's and Seoul's eagerness to forge stronger ties to the American market. But experts say the recession has made Asia realize it can no longer rely on the U.S. to consume its exports. To counteract declining trade volume with the U.S., China and others have started engaging in a flurry of intra-Asian free-trade deals. Japan and China have both even advanced the idea of a common regional currency, leading some analysts to predict Asia will become a NAFTA- or EC-like free-trade zone within the next decade.
This opens up the prospect that U.S. trade to the east and south could eventually be eclipsed as governments prioritize regional commerce. Still, any bloc would face internal hurdles. Latin America has a poor record on integration--its Mercosur trade bloc has stagnated in recent years, and its leaders are forever quarreling. Old rivalries could also derail an Asia bloc, as Japan and smaller economies fret about Chinese hegemony. But this recession may mark the moment when the developing world decides it prefers to trade among itself.