Americas Act could open doors for job creation
New data from the U.S. Census Bureau revealed recently that Mexico overtook China for the first time in 20 years to become America's top source for imports. This historic shift highlights the successful role the U.S.-Mexico-Canada Agreement (USMCA) plays in trade relations with our democratic partners.
The USMCA has been an economic boon for North America with the countries accounting for almost a third of global GDP. It has provided rock solid stability through the COVIDcrisis and Russia's invasion of Ukraine. An estimated two million U.S. manufacturing jobs depend on the exports our industries send to Mexico and Canada. Our business partners in these countries also purchase one-fifth of the value of U.S. manufacturing output.
Of course, another factor contributing to this greater trade reliance on Mexico and Canada has been the deteriorating relationship between the United States and Beijing which some have described as “a new Cold War.”
U.S. Intelligence officials have warned American businesses for years about the threat the Chinese government poses through efforts to steal sensitive technology and corporate information. When asked in a CNBC interview about whether the Chinese government wants to compete with or eliminate American companies, FBI Director Christopher Wray replied: “Well, their definition of competing, I think, involves embracing the idea of eliminating.” This would give any U.S. business pause.
Meanwhile, China's relationship with our adversaries like Russia grows stronger. At the UN, China continues to side with Russia in its war with Ukraine. China recently joined Russia in criticizing the U.S. military response defending commercial shipping in the Red Sea from Houthi rebel attacks. And as the rest of the western world condemned Vladimir Putin for the death of opposition leader Alexey Navalny, China's foreign ministry declined comment calling it “Russia's internal affair.”
Some members of Congress have seen enough and want to encourage even more reshoring from China by expanding the USMCA into democracies like Latin America who are not looking to steal our technology or support our adversaries.
Anew bill introduced in Congress this week called the Americas Act, would extend the economic and security benefits the USMCA currently offers to the U.S., Canada and Mexico to more democratic allies in the Western Hemisphere. The bill offered by Sens. Bill Cassidy, M.D. (R-LA), Michael Bennet (D-CO), and U.S. Reps. Maria Salazar (R-FL-27) and Adriano Espaillat (D-NY-13) would also counter China's control over global manufacturing by incentivizing more U.S. businesses in China to return home.
The Americas Act proposes to create an “Americas Partnership” in the Western Hemisphere with a goal of producing more prosperous societies. It would establish an e-governance system to administer public and private interactions within the Americas Partnership to combat “gray economies” and prevent corruption.
The Americas Act would commit partners to join the USMCA common trade zone and include commitments to reduce Chinese influence in the hemisphere. It creates areshoring account within the U.S. Treasury and offer $5 billion in tax incentives for qualified expenses for U.S. companies from China to bring businesses back to U.S. shores. It creates a “Build Americas Unit” (BAU) within the Development Finance Corporation, giving the BAU special authorities on equity and country selection to be responsive to investment needs in the hemisphere like infrastructure and economic development.
Lastly, it instructs the U.S. Trade Representative to begin negotiations with USMCA partners to allow Partnership countries to join the USMCA.
The bill sponsors note over 60 million Americans are of Hispanic descent, making the U.S. the fourth-largest Spanish-speaking country globally. The Western Hemisphere grows enough food and produces enough critical minerals to sustain every country in the Americas. It only makes sense to explore an Americas Partnership. And Latin American nations are ready.
In December 2022, Costa Rican President Rodrigo Chaves informed the United States of its desires to join the USMCA. “If you want to stay close to the country and share values, we need to strengthen relations and improve business opportunities and growth in the United States,” Chaves said. Unfortunately, no pathway currently exists for countries such as Costa Rica to enter the USMCA. The Americas Act would fix this.
With the USCMA as its compass, the Americas Act could open doors for job creation, infrastructure development, and technology partnerships that will uplift economies of the Western Hemisphere while strengthening our national security. If the U.S. fails to embrace free and fair trade in the Americas, rest assured that China will take advantage of the leadership vacuum our country leaves behind.
Jon Barela is CEO of The Borderplex Alliance.