International Trade Voices Say FTAs in Western Hemisphere Need to Be Enhanced, Expanded

Although the U.S. has the most trade agreements with Western Hemisphere countries, many of those trading partners haven't developed as strongly as trading partners in Asia, said a panel of former ambassadors and a Brazilian consultant to businesses that operate in Latin America during a Center for Strategic and International Studies online panel Jan. 10.

Martha Barcena, a former ambassador from Mexico, now retired from that country's foreign service, said that at the Summit of the Americas, trade and investment are issues that all attendees can reach consensus on, but the U.S. must be careful not to tell countries that they have to choose between the U.S. and China. While Colombia, Mexico and most of Central America have their strongest trade and investment relationships with the U.S., Brazil, Peru, Chile and Argentina have China as their No. 1 trading partner.

Todd Chapman, a former U.S. ambassador to Brazil, said the U.S. should focus on a number of priorities as it prepares for the Summit of the Americas later this year. First, accelerate a plan for nearshoring, for supply chain security. He thinks that loan guarantees would help companies make the decision to transfer production from Asia to Mexico, Central America or other Western Hemisphere countries. He said that U.S. venture capital and private equity funds would be more willing to invest in places like Brazil or Mexico if the U.S. government offered first-loss guarantees or securities to hedge exchange rate risk.

"Just to Brazil, in the last four years, venture capital has doubled in value each year," said Chapman, who retired from the foreign service and now is a CSIS adviser.

Thiago de Aragao, a Brazilian consultant and a CSIS associate, said during the webinar that that Bolivia is often forgotten as the U.S. considers trade opportunities in its hemisphere, but that Bolivia has the largest reserves of lithium. Because of its lagging infrastructure, companies have not found a way to mine Bolivia's lithium profitably, but de Aragao said that the U.S. has an opportunity to develop a supply there, after China has already invested heavily in Chile and Peru's lithium mining sectors.

He said that if the U.S. could get involved in investing in Bolivia's lithium production, it would offer other countries an example of how the U.S. can be pragmatic, even if the State Department is not sure about the overall ideological direction of the country's leadership.

Chapman, who also served as an ambassador to Ecuador, said that country would love a free trade agreement, but the Office of the U.S. Trade Representative did not have the capacity to negotiate one while working on the NAFTA rewrite. "Let’s triple the size of USTR," he said. "How can we be the largest economy in the world, and we can’t do more than one free trade agreement in a region at a time?"

Barcena said that although she thinks focusing on trade in the Americas would be a productive agenda at the upcoming summit, she doesn't see the political will in Congress for either new free trade agreements or expanding existing trade agreements. If U.S. politicians were open to it, however, she said, Mexico's president Andres Manuel Lopez Obrador "thinks the model of USMCA could be extended or applicable to the whole region." She said the only real option is to make CAFTA, the Dominican Republic-Central America Free Trade Agreement, more practical.

De Aragao agreed, saying that trade agreements should not sit on the shelf once they are signed. "The dialogues … must be continuous and those agreements must be enhanced as time goes by," he said.