Strategic competition calls for strengthening trade in the Americas
Given the hyper-partisan nature of today’s politics, few topics unite both parties. Yet on the prospect of China’s growing economic power and influence in the Western Hemisphere, both Republicans and Democrats agree that the strategic interests of the U.S. require prioritizing our competitive posture in the near-term, including no longer ignoring interest by Latin American nations in expanded trade.
Can we move beyond today’s protectionist mood and highly contentious debate on trade in Congress? Does our current political environment allow for bipartisan solutions to come to fruition? Competitive pressures demand that a new trade agenda in the Americas must emerge: one that combines a commitment to labor and the environment, while also highlighting the benefits of increasing trade and friend-shoring with allies and partners.
In recent years, U.S. policymakers have grown hesitant to use economic diplomacy to pursue trade agreements to offset the large-scale investments and ambitious state-run policy of Beijing. Meanwhile, Latin American nations have welcomed the non-conditionality of Chinese trade and investment, seeking to grow with speed and tackle stubborn levels of inequality and poverty.
House Leader Kevin McCarthy (R-Calif.) is moving forward a bipartisan select committee to investigate the threat posed by China to the U.S. Narrowing in to understand the trade relationships between China and strategic sectors in the Western Hemisphere should be a fundamental task for this committee and the 118th Congress to undertake. Ideally, this would lead to actionable results providing tangible economic opportunities for the U.S. and its partners in the region. Beyond using its investigatory powers, Congress should demonstrate to the American people that no matter the political party in power, good governance and bipartisan legislation will be advanced to confront challenges posed by China in the Americas. Putting trade at the center of any U.S. foreign policy agenda is an important step to get there.
One option to do so is being advanced by Sen. Bill Cassidy (R-La.) and Rep. Maria Elvira Salazar (R-Fla.). The Americas Trade and Investment Act would not only address China’s economic statecraft, but also bring the Western Hemisphere into the fold as a strategic region worthy of investing serious diplomatic and political capital. The bill seeks to “prioritize partnerships in the Western Hemisphere to improve trade, bring manufacturing back to our shores, and compete with China,” as well as “unleash the full economic potential of the United States and Latin America.”
The region is important economically. The Western Hemisphere accounted for 43 percent of overall U.S. exports and 31.5 percent of overall U.S. imports in 2019. The region is an important trading partner and strategic source of natural resources and human capital. The region’s governments — despite some serious outliers and political crises currently unfolding — primarily share strong democratic values with the U.S. and desire greater trade and collaboration within our markets.
Nations throughout the Americas have long sought to collaborate. The U.S. entered its first major hemispheric agreement with Mexico and Canada in 1994, since replaced by the United States-Mexico-Canada Agreement (USMCA). The first trade agreement with small, developing Central American economies was signed in 2004 under CAFTA-DR, including Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. Bilateral agreements followed with Chile (2004), Peru (2009), Colombia (2012) and Panama (2012).
As the U.S. has drifted from its focus on encouraging trade and greater economic integration within the Americas, entering no new agreements during the last decade, China has sought aggressively to fill the void, recently completing agreements with Ecuador and Uruguay. As the concept of “near-shoring” has grown in popularity in recent policy discussions, a free trade agenda that prioritizes the hemisphere as a strategic asset for U.S. interests is a necessary response. It should incorporate a modern approach, prioritizing environment and labor standards, the rule of law, and democratic governance as key elements in the battle between autocracy and democracy.
In the latest National Security Strategy, the Biden administration framed the role of China as “[benefiting] from the openness of the international economy while limiting access to its domestic market” whereby it seeks to “make the world more dependent on the PRC while reducing its own dependence on the world.” Furthermore, the Biden administration also recognizes the important role of global trade architecture, stating that the U.S. must chart “new economic arrangements to deepen economic engagement with our partners.”
The appointment of former Sen. Chris Dodd (D-Conn.) as Special Presidential Advisor for the Americas offers an opportunity to advance a trade agenda in the region. Beyond following through on commitments at the Ninth Summit of the Americas in Los Angeles, Dodd should engage with a group of legislators to hold a series of private consultations, garnering interest to think ambitiously and exemplify how bipartisanship can lead to important results for a modernized trade agenda that aligns with the economic integration of the Americas.
Legislators should explore in earnest the interest for greater engagement in trade by countries in the region. Several Latin American countries — Chile, Mexico and Peru — sought to join the U.S. in the Trans-Pacific Partnership and even after the U.S. pulled out, continued with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP. Colombia, Costa Rica and Uruguay have expressed interest in joining the CPTPP. Greater engagement with the Americas would be just one of the benefits from the U.S. changing course and embracing the CPTPP. Furthermore, President Lasso of Ecuador continues to push for a free trade agreement with the U.S., and Costa Rica has sought to join the USMCA.
Responding to the interest of Latin American countries in deeper trade ties, including considering expansion of the USMCA, is vital in today’s strategic competition with authoritarian rivals. The U.S. should actively pursue building a mutually beneficial Americas free trade agenda that benefits U.S. workers and our partners throughout the hemisphere. Doing so would not only strengthen important alliances, but ensure the Western Hemisphere remains a collectively more competitive force in the global economy.
Mark Kennedy is Director of the Wahba Institute for Strategic Competition at the Woodrow Wilson International Center for Scholars. He is a U.S. Air and Space Forces Civic Leader, president emeritus of the University of Colorado, and former U.S. Representative (2001-07) from Minnesota. He served as a trade advisor under both President George W. Bush and President Barack Obama.
Anders Beal is Program Associate in the Wilson Center’s Latin American Program. The views expressed are those of the authors.