Japan’s relations with Latin America are marked by significant economic ties. Japan’s role is based on imports of commodities from the region, and investment in Latin American industries. Infrastructure development projects, financed and supported by Japan, have also played an important role. However, Japan’s role in Latin America and the Caribbean (LAC) has remained limited. Nevertheless, China’s growing influence, and the importance of the region’s natural resources, have led Japan to recognise the need to revisit its foreign policies.
Key judgement 1. Over the next 12 months, Japan is likely to continue to invest economically and in infrastructure in LAC, seeking to increase its role in the region.
Key judgement 2. Over the next 12 months, the Japan International Cooperation Agency (JICA) and the Japan Association of Latin America and the Caribbean (JALAC) are likely to play increasingly vital roles between the two blocs.
Key judgement 3. It is likely that in the next 12 months, Japan will recognise the importance of the LAC region, and the need to compete against China, especially in the natural resources sector.
KJ-1. Over the next 12 months, Japan is likely to continue to invest economically and in infrastructure in LAC, seeking to increase its role in the region.
a. Over the last few decades, Japan has emerged as an important Asian partner for LAC. Japan accounts for 3% of LAC trade and LAC accounts for 5% of Japanese trade (source).
b. In the last decade, Japanese Foreign Direct Investment (FDI) in the region averaged $6.9 billion per year. During this period, Japan has also committed more than $100 billion in financing to LAC (source).
c. In 2021, Japan’s Foreign Minister Motegi Toshimitsu made his first trip of the year to Mexico, Uruguay, Argentina, Paraguay, and Brazil (source). This was part of the country’s aim for stronger engagement in Latin America (source).
d. Motegi’s visit was one of the longest in recent times and exemplified Japan’s commitment to maintaining bilateral ties in the region (source) (source).
KJ-2. Over the next 12 months, the Japan International Cooperation Agency (JICA) and the Japan Association of Latin America and the Caribbean (JALAC) are likely to play increasingly vital roles between the two blocs.
a. JICA has successfully assisted its LAC counterparts in different areas. For instance, with salmon farms in Chile and soybean production in Brazil. This was achieved through technical advances to increase productivity and add value to the natural resource sectors (source).
b. The JALAC has also proven to be an important centre for gathering and sharing knowledge. It serves as a connection between Japan-Latin America organisations of binational and subregional nature, as well as chambers of business (source).
c. Furthermore, JALAC keeps its members informed on LAC developments and facilitates communication among them (source).
KJ-3. It is likely that in the next 12 months, Japan will recognise the importance of the LAC region, and the need to compete against China, especially in the natural resources sector.
a. Latin America possesses an extensive array of natural resources. These resources are especially necessary for Asian economies given the growing demand for commodities and services (source).
b. China has established itself as an alternative source of financial and infrastructure help in the region. In the last 15 years, Beijing lent over $140 billion (source). In 2022, China’s total trade value with Latin America was $450 billion (source).
c. In addition, China’s Belt and Road Initiative (BRI) enjoys strong support in the region. Nineteen countries have already signed up (source).
d. Because of this, Tokyo has initiated an expansion of the Free and Open Indo-Pacific policy. It is also giving a boost to its 2014 ‘Juntos’ (Together) policy (source).
Analytical Summary
We have high confidence in our assessment that Japan will continue to invest in Latin America. We believe that the JICA will promote investment, while JALAC promotes cultural and inter-bloc ties. Furthermore, China’s growing investment in the region and LAC´s natural resources will make Japan seek to increase its role. Our analysis is primarily based on Spanish and English-language press. We assume that Japan will implement its policies of increasing investment while trying to compete with China. Should this assumption prove incorrect, we will continue to see a limited Japanese presence in the region. Further insight into Japan´s plans, LAC interests, and the Chinese activity in the region, would reduce uncertainty.
Intelligence Cut-Off Date:Â 19 September 2023
