The initiative aims to spur broad prosperity and tackle some of the most difficult issues in the Western Hemisphere, including mass migration to the United States.
But the Partnership of the Americas for Economic Prosperity (APEP), which President Biden launched in June at a summit with regional leaders, falls short of traditional trade agreements the United States has negotiated in the past.
«It’s reasonable that people are skeptical about the real impact this will have,» said Matthew Goodman, a former White House official in the Obama administration who is now at the Center for Strategic and International Studies.
The APEP reflects the administration’s efforts to reconcile its desire for stronger regional ties with congressional opposition to greater trade liberalization, which many lawmakers – and the president’s labor allies – blame for the loss of million US manufacturing jobs. Biden aides are pursuing a similar deal, the Indo-Pacific Economic Framework for Prosperity, in talks with 12 countries in Asia.
The administration’s Latin American push comes as China has significantly expanded its influence in the region. Chinese customers now buy almost 15% of the region’s exports, up from just 1% in 2000, according to the International Monetary Fund. A total of 21 Latin countries – including eight APEP members – are participating in Beijing’s global infrastructure investment program known as the Belt and Road Initiative.
The United States already has trade agreements with nine of the countries that agreed to participate in the original APEC negotiations. The APEP group includes Barbados, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Mexico, Panama, Peru and Uruguay.
Notable absentees from the first round of talks include Brazil and Argentina, two of the region’s largest economies.
No date has been set for the start of formal talks, although US officials have said they will begin soon.
“We will act very quickly,” said an administration official who insisted on anonymity to brief reporters ahead of the official announcement.
Rather than offering greater access to the U.S. market, the partnership is designed to promote labor standards, supply chain resilience, decarbonization and pandemic recovery, officials said.
The administration also hopes to breathe new life into the Inter-American Development Bank, a multilateral financial institution that has been criticized for its ineffective lending.
Officials who briefed reporters gave few details about the partnership, which they described as a «flexible framework» that will include «high-level agreements».
Regional officials and analysts said they were intrigued by the lack of concrete results following Biden’s remarks last summer.
“Of course we are happy to participate,” said a senior official from a participating country. “But it is an invitation to speak. There is no proposal, for example if you compare it to…when the trade treaties were negotiated. It is much more modest and limited.
Many countries want more investment, said the official, who asked not to be quoted to be frank.
«But it’s unclear how the United States, in this very competitive world, will push for that to happen. The Chinese are everywhere and the Europeans are very active in Latin America today,» said the official, who wondered if the partnership would meet the investment needs of the region.
The Biden administration’s proposal represents a stark contrast to previous efforts to boost U.S. trade with its southern neighbors. In 1994, 34 nations agreed to launch negotiations for a Free Trade Area of the Americas (FTAA). The deal would have gradually lowered tariffs and other trade restrictions across a huge territory stretching from northern Canada to the southern tip of Argentina.
After the talks broke down, the United States turned to negotiating small deals with countries like Colombia.
During a recent appearance at CSIS, Jose Fernandez, Under Secretary of State for Economic Growth, Energy, and the Environment, defended the Biden administration’s approach to trade deals.
«What we’re trying to do is make new rules of the road, create rules of the road where our workers can compete – not a race to the bottom,» he said. «Our agreements attempt to establish a new global code of conduct.»
Voters will hold the administration accountable if Biden’s new trade approach ultimately favors corporate interests, according to Lori Wallach, trade expert with the American Economic Liberties Project, a nonprofit organization that opposes the concentration of economic power.
«This could have a major political and political impact because millions of Americans who have been criticized by past corporate-rigged trade deals hear that this administration is creating new trade policy to help them and that is creating expectations that can be turn into anger,» she said.
Unlike a traditional trade agreement, anything that emerges from negotiations with countries in the region will not require congressional approval. Such an executive agreement would not be legally binding and would not have the reciprocal benefits of a full trade pact, according to Goodman.
«This type of deal doesn’t have the same kind of credibility and durability that a trade deal does,» he said.