During his May 23 visit to Tokyo, President Joe Biden announced the creation of a 13-country U.S.-Asian economic bloc, to be known as the Indo-Pacific Framework. So here’s an obvious question: Shouldn’t he propose creation of a similar U.S.-Latin American bloc when he hosts the Summit of the Americas in Los Angeles on June 6?
The new Indo-Pacific economic bloc, known as IPEF, is expected to replace the Trans-Pacific Partnership (TPP,) a global trade initiative that included Asian and Latin American countries on the Pacific Rim. The Obama era’s TPP was a U.S. effort to counter China’s growing economic influence in the world, but, in 2017, President Donald Trump foolishly pulled the United States out of it.
Now, Biden has recreated the TPP with less emphasis on free trade — a concession to American unions — and putting more weight on setting common standards and rules to ease trade, and to secure supply chains. The IPEF will account for about 40% of the global economy, and includes the United States, Japan, India, South Korea, Singapore, Thailand, the Philippines and Vietnam.
“We’re writing the new rules for the 21st century economy,” Biden said at the announcement. “They’re going to help all our countries’ economies grow faster and fairer.”
Granted, there are many reasons to be skeptical about the possibility of creating a similar U.S.-Latin American and Caribbean economic initiative.
The term “free trade” has become a bad word among legislators in Washington, D.C., and several other capitals. Previous U.S. efforts to create a hemisphere-wide economic area, including the Free Trade Area of the Americas in the 1990s, didn’t succeed. Negotiations failed because of Latin America’s reluctance to get too close to the United States or U.S. fears that free trade would result in U.S. job losses.
In addition, there is little time to draft an ambitious U.S.-Latin American economic initiative, since the Summit of the Americas is only two weeks away, marred by disagreements and confusion over its attendance and agenda.
Mexican President Andrés Manuel López Obrador has threatened not to attend unless Biden invites the Cuban, Venezuelan and Nicaraguan dictatorships. And Brazil’s President Jair Bolsonaro has suggested he might stay at home, although without stating his motives.
If Latin America’s two largest countries fail to attend, it would be hard to launch any big hemispheric plan.
But it could be done. After all, there was not much preparatory work for the newly created U.S.-Asian Indo-Pacific Framework. On the contrary, the group’s foundational statement is largely aspirational, and its members have only decided to start negotiating an economic integration deal.
There’s no reason why Biden could not offer a similar blueprint for Latin America. At a time when U.S. unemployment is at record lows, and the United States desperately needs alternative supply chains to depend less on imports from China, the United States could at the very least offer a plan to boost Latin American exports to the U.S. market.
“The framework that was announced in Japan could offer a path forward for the hemisphere,“ says Eric Farnsworth, head of the Washington, D.C., office of The Council of the Americas, a business-focused group. “It defines a framework of economic cooperation and trade, which is precisely what the hemisphere is requesting from Washington.”
Farnsworth added that the upcoming Summit of the Americas has been hijacked by the discussion over Cuba, Venezuela and Nicaragua’s attendance, “But that’s only because there were no meaningful U.S. economic initiatives to discuss in the first place.” As I warned in January, the Biden administration should have started working on this many months ago. Unfortunately, whether because of the Russian invasion of Ukraine or lack of interest, it didn’t.
Despite the leftward shift in Latin America, many leaders in the region would be glad to sign a special trade deal with Washington. According to an Inter-American Development Bank study, Latin America could obtain $70 billion more in annual exports if it could just produce 10% of the goods that the United States now imports from China.
So let’s be blunt: Biden’s announcement with 13 Asian leaders was mostly a statement of goodwill, which can pave the way to meaningful economic negotiations. There’s no reason why the United States should not launch a similar initiative with Latin America, and the June 6 summit would be the perfect occasion to do it.
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