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Reengaging with Latin American Partners

Updated: Apr 6

Big Picture:

The world is undergoing a period of instability brought about initially by the pandemic’s effects on supply chains and exacerbated by the Russian invasion of Ukraine. This has negatively affected supply chains across the globe, contributed to price inflation for critical inputs, and accelerated a “reshoring” phenomenon with business entities seeking safety by relocating their supply chains closer to home. Many have suggested a U.S. pivot to Latin America for supply lines, but this is impossible unless the U.S. government takes a different approach to increase trade and economic development with Latin American partners. The U.S. must acknowledge past mistakes that have often been characterized as imperialistic. Only then can the U.S. renew policy initiatives to increase trade ties with Latin American partners which would increase economic opportunity for all and tackle pressing issues of migration, drug trafficking and low economic development.


Operative Definitions:

  1. United States-Mexico-Canada Agreement (USMCA): The primary trade agreement involving Mexico, Canada and the U.S. Enacted July 1, 2020, and implemented to replace NAFTA. It sought to create a “more balanced and reciprocal” trade agreement between the North American economies.

  2. The North American Free Trade Agreement (NAFTA): Enacted in 1994, it sought to integrate the Mexican, Canadian and U.S. economies by reducing tariffs and trade barriers between nations involved.

  3. Free Trade Area of the Americas (FTAA): Proposed in 2005. A trade agreement resembling NAFTA (USMCA) that would include partnering nations within the western hemisphere. It fell apart due to inconsistencies and perpetuation of problems with NAFTA, primarily U.S. subsidies to domestic agricultural firms.


Five-Point Plan:

(1) Acknowledge U.S. history within the region. It is an unfortunate fact that the U.S. has, in the past, perpetuated harms that are still felt by many Latin Americans today. Examples of this are the support for abusive Latin American dictators and subsequent U.S. invasions, the destabilization of trade agreements and recurring debt crises from domestic U.S. financial instability. To rebuild meaningful and productive relationships, the U.S. must acknowledge this history, at the very least through meaningful dialogue, possibly through regional leadership summit meetings.

(2) Resume diplomatic talks with Latin American nations. Latin American nations, while their interests may be different, share the view that the U.S. policy towards their region is one of unearned leadership, according to the Pew Research Center. In other words, they share an overall negative view of America. This must be rectified by a genuine attempt to resume talks between the U.S. and estranged Latin American nations such as Cuba, Venezuela and El Salvador.

(3) Review current trade agreements. Some aspects of current trade agreements, such as USMCA, contain provisions that contribute to crises. For example, the reduction of agricultural trade barriers within the bloc has devastated Mexican rural agricultural production and contributed to the large influx of immigrants seeking work. Without a comprehensive adjustment to U.S. agricultural subsidies in ways that will reduce their detrimental effect on partnering nations, they serve to quickly outcompete Mexican businesses that are then forced to shutter.

(4) Address the root causes of migrations. Resolving the complex issue of migration, among others, cannot be done without sustained and dedicated foreign direct investment opportunities facilitated by the U.S. government. By incentivizing enhanced business relations between U.S. sectors and Latin America, particularly infrastructure and individual entrepreneurial development, the U.S. may contribute towards a policy that benefits international partners and Latin American people directly. While this policy may run into corruption or state-owned enterprises, negotiation must be sought if progress is to be made in economic development. Strong entrepreneurial policies would incentivize efficiency and opportunity for individuals to develop companies that would contribute towards the economic growth of the region.

(5) Inform domestic debates on why the policy is important. The domestic dialogue surrounding immigration and U.S.-Latin American relations is often a negative one and is used by politicians as an easy rallying cry to influence voters. These claims are often exaggerated or outright false. There must be a sustained bipartisan approach towards changing the dialogue to one that is more cooperative, friendly and humble if any meaningful progress is to be made.


Why This Initiative Is Important:

This initiative is important for three primary reasons. The first is to address the inequities perpetuated by past U.S. administrations towards the region, which have in large part decimated opportunity for certain individuals while encouraging oppressive regimes. The second is to provide economic opportunity to a region that desperately needs it and to address heavy immigration outflows toward North America which increases divisive domestic attitudes and policies. The third is to bring about a new era of relations between the U.S. and Latin America, in ways that will benefit U.S. national security through increased economic and cultural ties within the hemisphere.


Acknowledgements:

The following student(s) worked on this nonpartisan proposal: Matthew A. Reyna, University of California, Irvine.

The opinions expressed in this article are those of the individual author.


Sources:

Johnson, Courtney. “Fewer People in Latin America See the U.S. Favorably Under Trump”. Pew Research Center. April 12, 2022. https://www.pewresearch.org/global/2018/04/12/fewer-people-in-latin-america-see-the-u-s-favorably-under-trump/.

Kose, Ayhan M. et al. “How Has NAFTA Affected the Mexican Economy? Review and Evidence”. International Monetary Fund. April, 2004. https://www.imf.org/external/pubs/ft/wp/2004/wp0459.pdf.

“North American Free Trade Agreement”. International Trade Administration. 1994. https://www.trade.gov/north-american-free-trade-agreement-nafta.

“United States-Mexico-Canada Trade Agreement”. Office of the United States Trade Representative.July 1, 2020. https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement.

 

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