Putting the Pep in U.S.-Hemispheric Relations

Putting the Pep in U.S.-Hemispheric Relations

The Americas Act signals a critical bipartisan step toward improving hemispheric affairs and reinvigorating the Americas' importance within U.S. foreign policy.

On March 6, 2024, U.S. Senators Bill Cassidy (R-LA) and Michael Bennet (D-CO) and U.S. Representatives Maria Elvira Salazar (R-FL) and Adriano Espalillat (D-NY) introduced the “Americas Trade and Investment Act” (Americas Act). Aiming to counter Chinese influence in the region, this marks a significant shift that strengthens U.S. foreign policy within the region and institutionalizes the Americas Partnership for Economic Prosperity (APEP). While the Act was heralded as an essential step forward in parts of the region, some components must be handled carefully if it is to usher in a new era of hemispheric affairs.

The 217-page Americas Act would create new institutions, harmonize rules, and establish novel frameworks to stimulate regional integration while curbing China’s economic influence. Initially intended for current APEP members—Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Panama, Peru, and Uruguay—the partnership will be an alliance of democracies that benefit from U.S. incentives for economic development, preferential market access, and people-to-people programs.

Benefits include access to up to $70 billion in re-shoring and near-shoring loans, grants, and tax incentives for U.S. businesses and American partner nation entities and governments to move strategic supply chains from China. The Act also would provide the Department of Commerce with additional funding to invest—half within the United States and half within American partnership nations—in the textile and apparel industry. There are additional incentives to advance regional energy independence and reduce energy costs. It also allows the Development Finance Corporation to provide additional financial assistance to partners, including high-income countries. By closing lucrative de minimis trade loopholes worth $15 billion annually, the programs in the bill are expected to be fully paid.

The bill also provides options to harmonize regional trade agreements and reduce investment and manufacturing costs, including the novel docking mechanism for Americas Partnership members to join the United States-Mexico-Canada Agreement (USMCA)—considered the “Golden Standard” of trade agreements. In addition to highlighting Costa Rica and Uruguay as possible pilot countries for USMCA expansion, the bill also incorporates elements of the proposed Innovation and Development in Ecuador Act and the United States Uruguay Economic Partnership Act to provide Ecuador and Uruguay market access for certain goods.

In addition to its investment and trade elements, the bill puts forward essential resources to improve U.S.-Latin American relations through people-to-people programming. This includes emphasizing existing efforts within the Americas, such as USAID projects, Peace Corps volunteers, and English language and leadership programs. It also seeks to increase educational opportunities and exchanges through additional grants and scholarships for Latin American and Caribbean students to attend U.S. universities and the establishment of an American University of the Americas. It also increases visa opportunities to come to the United States and creates a Radio Free Americas to counter disinformation campaigns in the region.

Over the past decade, U.S. policy has turned against free trade, creating challenges for the passage of trade-related measures. Political polarization in an election year may present challenges for the Act’s passage. However, there remain reasons to be optimistic. In addition to being proposed by a bipartisan coalition, the Americas Act builds upon and incorporates elements from past and existing U.S. foreign policy initiatives from both Republican and Democratic administrations—including efforts from both Bush and Clinton to foster regional free trade agreements, Obama’s efforts to promote educational exchanges, the Trump administration’s targeted investment programs, and the Biden administration’s APEP program.

Furthermore, while there has been pushback to free trade, the Act seeks to strengthen the existing trade agreements with allied countries through near-shoring. This reframing of the trade agenda, as noted by protectionist Donald Trump in renegotiating the North American Free Trade Agreement (NAFTA), paired with funding gained from closing loopholes, may make the bill more palatable domestically. Framing the issue around countering China may also build support within Congress. Indeed, one of the initial co-sponsors is the chairman of the House Select Committee on the Chinese Communist Party. While the Act may face an uphill battle, proponents have elements to build support for the Act’s passage.

Although the Americas Act includes many vital elements that would improve U.S. foreign policy toward the region, some elements of the bill need to be handled delicately in the region. U.S. policymakers must consider how the Act and its actions will be perceived in the region and recognize potential barriers for partners in joining this initiative.

While past large-scale efforts to promote U.S. regional policy also sought to limit extra-hemispheric influence—particularly the Good Neighbor Policy—the efforts were framed around improving perceptions of the United States rather than just countering enemies. Although leaning into countering China may help gain support for the Act within Congress, it may undermine its impact in the region. Many countries do not view China as a threat but as an opportunity. Latin American and Caribbean countries remain reluctant to undermine commercial relations with Beijing. Furthermore, providing specific grants and loans to finance near-shoring operations away from China could create diplomatic disputes between Beijing and recipient countries. The United States must not force regional leaders to be pawns in its geopolitical chess match but serve as a better partner and provide more opportunities than  China. 

The Americas Act explicitly notes that members of the Bolivarian Alliance for the Peoples of Our America (ALBA) and countries violating the Inter-American Democratic Charter may not be members. While there are essential reasons to leverage the Americas Act to promote democracy in the Americas—an area that every country in the region except Cuba has committed to defend—U.S. policymakers must be careful not to equate democracy with ideology. By explicitly banning ALBA members, the United States excludes the possibility of several democratic Caribbean nations from joining the partnership. Rather than targeting one group of undemocratic countries, the United States should showcase its commitment to democracy rather than ideology.

Expanding free trade, including harmonizing trade relations and negotiating and implementing the proposed docking mechanism to the USMCA, may also pose challenges. Latin American and Caribbean countries have a complex web of regional and bilateral trade agreements whose unraveling could create disputes due to often overlapping and conflicting rules and technical standards. For instance, under Mercosur—one of the region’s most protectionist blocks—member states cannot, in principle, unilaterally negotiate Free Trade Agreements (FTA). Although Mercosur remains a weak regional integration mechanism, the signing of an FTA with Uruguay or its invitation to the USMCA, as proposed in the Americas Act, could create political tensions among Mercusor members and have spillover effects on the United States. Navigating the complex network of regional trade agreements will require understanding the “spaghetti bowl” of regional trade agreements and developing mechanisms to link existing trade frameworks into the Americas Partnership. 

For the Americas Act to be successful, it must rely on improved perceptions of the United States in the region and vice versa. Building U.S. popular interest in the Americas can include encouraging U.S. students to attend school in the region and leveraging pop culture to deepen interest. While domestic support for the region is critical for shifting regional policy, popular support will be necessary to ensure the long-term success of these initiatives. The legislation would fund the project by collecting new tariffs—specifically those from China and Russia. However, as free trade with the region increases and the U.S. economy becomes less reliant on Chinese imports, tariff revenue will decrease, necessitating additional funding—which will require public support. While near-shoring objectives may have been achieved, improving relations with the region is a long-term task beyond just trade relations.

The Americas Act signals a critical bipartisan step toward improving hemispheric affairs and reinvigorating the Americas’ importance within U.S. foreign policy. Its incorporation of a wide array of issues, clear focus on mutual benefits, and bipartisan support could help usher in a new golden age of regional affairs. However, there are areas where U.S. policymakers must exercise caution and implement measures to maximize its success. Emphasizing cooperation and Pan-American ideals can increase effectiveness, including countering China and supporting development and democracy.

Adam Ratzlaff is a Diplomatic Courier correspondent and a specialist in Inter-American Affairs. With over a decade of experience analyzing regional affairs, Ratzlaff has previously consulted for the World Bank, the Inter-American Development Bank, and the U.S. Department of State.

Alejandro Trenchi is the Research and Programs Director at Global Americans. Alejandro holds an M.Sc. in Political Science from Leiden University and a B.A. in International Studies from Universidad ORT Uruguay.

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