New economic alliance is open to CARICOM and Brazil, U.S. official says

The Biden administration announced Friday the initial members of an economic partnership with Latin America and Caribbean countries called Americas Partnership for Economic Prosperity.

The framework, aimed at driving economic growth and cooperation in the region, was initially joined by 11 countries: Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Panama, Peru and Uruguay. Ministers from the participant countries, including the United States, officially launched the partnership during a meeting Friday.

In an exclusive interview, Jose W. Fernandez, the Under Secretary of State for Economic Growth, Energy and the Environment, explained the key goals of the initiative, answered questions about the trade component, and why other countries are expected to join.

The interview has been edited for clarity and space.

Q. As I listened to the ministers today, I didn’t hear talk of creating new trade agreements with countries that do not have one yet. Why not if trade is at the center of this initiative?

A. We have 11 partners in this in this effort. With eight of those partners, we already have trade agreements.

The Americans Partnership, which was announced by President Biden last year in Los Angeles, is made up of four basic themes. And what we’re trying to do goes beyond the traditional trade agreements.

It has four pillars. The first one is how do we as a region become more competitive? We’ve seen the rise of other parts of the world that have become major competitors to the Western Hemisphere. And we’re trying to address it by looking at the first pillar, which is regional competitiveness. We’ll look at custom trade facilitation, capacity building, things of that nature.

The second is how do we become more resilient? How do we take advantage of our geography, history or the fact that, you know, we have 50 million Latinos in this country? How do we integrate the region into supply chains? And then how do we improve labor rights so that the middle class and workers benefit?

The third is how do we create a prosperity that is lasting, inclusive and fair. How do countries fund their own development and what we mean by that is improve the rule of law, improve human rights, reduce corruption, improve the tax systems, and the public health systems.

And lastly, investment.

Your question is frankly something I get all the time. Too often we frame agreements through the lens of tariffs reduction. There is this belief that unless a trade agreement includes broad market access it’s not attractive. But the argument that I make, and I think I have the data to prove it, is that that argument is misplaced. Right now, market access into the U.S. is quite open. The average applied tariff in the U.S. is roughly three to four percent. And if you look at information and communications and technology goods, they have been zero. The reason that companies hesitate to trade or invest in Latin America is not market access. It’s an unattractive business climate, unstable business climate, corruption, violence.

What you’re seeing with the Americas Partnership are agreements meant to design a new global code of conduct, to basically tackle economic inequality, counter corruption, break down barriers to supply chains, create jobs, and have democracy deliver for people so that the countries become more attractive places to trade with and to invest.

Q. Can you give concrete examples of the deliverables, for example on supply chains integration, that we could expect in the coming two years from this initiative?

Latin America suffered the most of any region of the world from COVID. We saw that there was a difficulty in supply chains. Countries could not get in many cases medical equipment, the ingredients that they needed to manufacture vaccines. Things were stuck at the border. You had many ministries of health in the region, about a third of them, being accused of corruption in procurement of medicines. That’s a concrete example. So we’re going to find ways to encourage countries that can do so to manufacture vaccines so that we’re ready for the next pandemic. And how are we going to do that? Well, things like regulatory alignment, more seamless customs processing, electronic filings, workforce development. Every week, I get a country that tells me that they can be the answer to our supply chain problem. And then I talk to companies and they say, yeah, they might, but they just don’t have the workers. So workforce development, all of those are items that the Americas Partnership intends to work and it goes beyond trade.

Q. Barbados’ foreign affairs minister today urged the United States to include CARICOM in this initiative. Why wasn’t that considered from the beginning and is this something that could still happen soon?

A. Absolutely. Look, these are just the 12 initial partners. This is intended to be an open framework. It is our hope that other countries will engage with the partners, and want to be part of the Americas Partnership. So the answer is, we’ve started with 12 but we do not intend to end with 12.

Q. There are other notable absences in the list of countries announced today, including Brazil. Is there an expectation that Brazil or Argentina will join soon, or have these countries not signaled interest?

A. Not at all. Brazil was in the middle of an election while we were in discussions with initial partners in this region, and we thought it would be best for the partnership not to become an issue or subject of discussion during the campaign. But by all means, we look forward to engaging with the new government of Brazil about this initiative, and we hope that they will be interested. So, it should not be interpreted as anything other than we had to start with the initial partners, and once we have a strong framework in place, the 12 founding partners will agree on a process to welcome additional countries into the partnership.

A. How do you expect to deliver on such an ambitious agenda in the two years remaining before the presidential elections?

There’s a lot of details that we’ve already discussed. But we are pushing an open door. There is great appetite for U.S. involvement in the region, not only investment but if you look at what the USMCA (the U.S., Mexico and Canada Agreement) have done on labor rights in Mexico it’s been very welcomed by the Mexican government and by the labor unions. So there’s a great desire to do this. This is something that region has been asking us to do for a while. We have to flip the needle between ambition and realism and that’s part of the challenge. But in terms of an appetite for this involvement, this is not a situation where we need to convince anyone.