Building the Hemispheric Growth Agenda: A New Framework for Policy, Report of the Trade Advisory Group, Council of the Americas (Jonathan C. Hamilton, Member, Trade Advisory Group) (2009) (excerpt)

 The Council of the Americas assembled its Trade Advisory Group to develop over a period of months a policy report on the Western Hemisphere in connection with the political transition for President Bush to President Obama at the beginning of 2009. The report is a telling indicator of the political and economic posture of the region following more than a decade of the “Washington Consensus” in the midst of the global economic downturn. The recognition of the inward turn of U.S. politics foreshadowed further changes that would arrive in the U.S. less than a decade later. This is the executive summary of the report.

The global economic downturn, the pending Fifth Summit of the Americas in April, and the US presidential transition and new Congress all suggest that now is a propitious time for a re-evaluation of hemispheric trade policy and broader US relations in the Americas.

Circumstances have changed dramatically since the last US presidential transition in 2000.  Economically, much of the hemisphere is better prepared to weather the severe financial crisis as reforms have taken hold and commodities exports, at least until recently, supercharged growth.  The rise of China, India, and other emerging markets has forged a secular change in regional trade and investment dynamics.  Democracy remains the accepted organizing framework for hemispheric governance, even as anti-democratic steps in some countries argue against complacency.

Unfortunately, the comprehensive, consensus-based Summit of the Americas agenda has long since broken down, a reality ratified in 2005 at the last Summit in Mar del Plata.  Much of Latin America is now attempting to forge its own path in the global economy.  At the same time, the United States’ ability to drive hemispheric trade expansion has become more difficult as the US electorate turns increasingly inward.  More broadly, the United States, preoccupied with a post-9/11 security agenda, has seen much hemispheric goodwill dissipate, though countries remain hungry for access to the US market and flows of foreign direct investment (FDI).

With roughly 33 percent of the regional population continuing to live in poverty, the need for a broad hemispheric growth agenda is critical, even more so during a time of economic uncertainty and stress.  Trade expansion remains a critical tool to promote growth.  While other nations have stepped in to fill the void on certain issues, nuanced US leadership remains essential.

Trade expansion does not occur in a vacuum, nor is it sufficient in and of itself.  A spirit of goodwill and mutual interest must first exist, and the new administration should consider several steps early on that will build a positive atmosphere prior to the Summit.  Among them: the naming of a Special Envoy for the Americas, support for Brazil and Mexico (and Spain) to join the G8, passage of pending trade agreements with Colombia and Panama, support for additional recommendations to reduce the effects of financial shock across the region, and a softening of the most punitive measures targeting Cuba, including visits, exchanges, and remittances.

The Summit agenda should focus on specific priorities, including energy security and climate change, financial well-being, microeconomic reforms, and capacity building and workforce development.  All of these must go hand-in-hand with trade expansion as part of a longer term growth agenda, as must an effort to engage more actively with Brazil.  Efforts on climate change and energy security, a game changer in the context of hemispheric relations, should be led initially by a subgroup of willing nations.

The trade agenda itself must also be reconsidered.  As a practical matter, competitive liberalization has reached a point of diminishing returns.  Nonetheless, given the importance of trade expansion to a successful growth agenda, momentum must be restored.  Other nations are moving forward aggressively, expanding market opportunities for Asia, Canada, and Europe often at the expense of the United States.

Although the Free Trade Area of the Americas (FTAA) proved too ambitious for its time, it should remain a longer-term goal of the United States.  In the meantime, the harmonization of the rules of origin within existing US trade agreements would be a useful place to concentrate trade expansion energies, and existing efforts to increase global competitiveness such as the Pathways to Prosperity in the Americas and the North American Security and Prosperity Partnership should be broadly continued.  As well, given the growing promise of Asian trade with the Americas, the Trans-Pacific Strategic Economic Partnership is an exciting initiative that the Council has strongly advocated.  It is perhaps the most promising recent initiative to kick start hemispheric trade expansion and should be prioritized by policy makers.

Additional comprehensive bilateral trade negotiations are unlikely to prove successful in the near term given prevailing political and economic conditions. A new path forward must be found. Nonetheless, trade remains a critical tool to promote a regional growth agenda, and numerous alternative areas of promise can be pursued. With a new US administration and Congress and the Fifth Summit of the Americas in April, now is the best time to begin.

The comprehensive, consensus-based agenda has long since broken down.  Much of Latin America is now attempting to forge its own path in the global economy.  At the same time, the United States’ ability to drive hemispheric trade expansion has become more difficult as the US electorate turns increasingly inward.