The initiative aims to promote broader prosperity and address some of the Western Hemisphere’s most challenging problems, including mass migration to the United States.
But the American Partnership for Economic Prosperity (APEP), which President Biden launched at a summit with regional leaders in June, falls short of the traditional trade deals the United States has negotiated in the past.
“It makes sense that people are skeptical about how much impact this will actually have,” said Matthew Goodman, a former White House official in the Obama administration and now at the Center for Strategic and International Studies. said.
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APEP reflects the administration’s efforts to reconcile its desire to strengthen regional ties with Congress’ opposition to further trade liberalization. Many lawmakers (and the president’s trade union allies) have blamed the loss of millions of American manufacturing jobs. Biden aides are pursuing a similar agreement, the Indo-Pacific Economic Framework for Prosperity, in talks with 12 countries in Asia.
The administration’s push to Latin America is taking place as China significantly expands its influence in the region. According to the International Monetary Fund, Chinese customers now buy nearly 15% of the region’s exports, up from just 1% in 2000. A total of 21 Latin countries, including eight APEP member states, are participating in Beijing’s global infrastructure investment program known as the Belt and Road Initiative.
The United States already has trade deals with nine countries that have agreed to participate in the initial APEP negotiations. The APEP Group includes Barbados, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Mexico, Panama, Peru and Uruguay.
Notable absences from the first round of negotiations include Brazil and Argentina, two of the region’s largest economies.
A formal start date for talks has not been set, but U.S. officials said they will begin soon.
“We are going to move very quickly,” said an administration official who spoke to reporters on condition of anonymity before the official announcement.
Officials say the partnership is aimed at promoting labor standards, supply chain resilience, decarbonization and pandemic recovery rather than expanding access to the U.S. market.
The administration also wants to breathe new life into the Inter-American Development Bank, a multilateral financial institution that has been criticized for ineffective lending.
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A source briefing reporters described the partnership as a “flexible framework” containing “high-level agreements”.
Regional officials and analysts said they were baffled by the lack of concrete results following Mr. Biden’s remarks last summer.
“Of course, I would be happy to participate,” said a senior official from the participating countries. “But it’s an invitation to talk. Compared to when trade deals were negotiated, for example, there are no proposals. This is much more modest and limited.”
Many countries want more investment, said the official, who requested anonymity to speak candidly.
“However, in this highly competitive world, it is not clear how the United States will push for this to happen. The Chinese are everywhere and the Europeans are very active in Latin America today.” said an official who questioned whether the partnership would meet the region’s investment needs.
The Biden administration’s proposal stands in contrast to previous efforts to boost US trade with its southern neighbors. In 1994, 34 countries agreed to begin negotiations towards a Free Trade Area of the United States (FTAA). The agreement would have gradually lowered tariffs and other trade restrictions across a vast territory stretching from northern Canada to the southern tip of Argentina.
After negotiations failed, the United States turned to negotiating smaller agreements with countries such as Colombia.
Under Secretary of State for Economic Growth, Energy and the Environment, Jose Fernandez, recently attended CSIS and defended the Biden administration’s approach to trade deals.
“What we are trying to do is create new road rules. Create road rules where workers can compete, not race to the bottom,” he said. “Our agreement seeks to establish a new global code of conduct.”
According to Lori Wallach, a trade expert at the American Economic Liberties Project, a nonprofit that opposes the concentration of economic power, Mr. Biden’s new approach to trade will ultimately help companies If it works in their favor, voters will hold the administration accountable, he said.
“Millions of Americans accused of corporate-rigged trade deals in the past have high hopes that this administration will create new trade policies to help them, which could turn into outrage. It has the potential to have significant policy and political impact because we hear it is producing,” she said.
Unlike traditional trade agreements, any gains from negotiations with regional countries do not require congressional approval. According to Goodman, such an administrative agreement would not be legally binding and would lack the reciprocal benefits of a full trade agreement.
“This kind of deal is not as credible and durable as a trade deal,” he said.