The Summit of the Americas hosted by President Biden arrived to Los Angeles at a challenging moment for the region, and the world, impacting the multilateral trade and investment agenda that guided prior Summits over almost three decades.
Origins of the Summit
This gathering of Western Hemisphere leaders dates back to the year 1994, when the United States hosted the inaugural meeting in Miami, under the leadership of President Clinton. In the wake of the Cold War, it was a time of broad consensus around democracy and free markets – a new era of globalization marked by the formation of the World Trade Organization (WTO), the original North America Free Trade Agreement (NAFTA) and macroeconomic reforms that swept much of the region. The 1994 Summit centered significantly on the vision for a Free Trade Area of the Americas (FTAA) that would consolidate the "Washington Consensus."
The Summit Agenda
This time around, the first time the Summit has returned to the U.S. in almost three decades, consensus around the Summit agenda has been mixed, if not lacking. A rough symbol of this reality is the boycott of the event by Mexican President Lopez-Obrador and a small number of other leaders as a result of the exclusion from the Summit of Cuba, Nicaragua and Venezuela.
The focus of the Summit is "Building a Sustainable, Resilient, and Equitable Future" for the hemisphere. This has translated into a particular focus on migration issues, which have significant domestic political relevance in the U.S. The Summit also incorporates a focus on what might be loosely called "ESG issues" (environmental, social and governance issues). Indeed, the stated mission of the Summit is to "improve pandemic response and resilience, promote a green and equitable recovery, build strong and inclusive democracies, and address the root causes of irregular migration."
The backdrop to this agenda is complex. The 2022 Summit, the first to be held since the 2018 edition of the gathering in Lima, arises after several years of disruption across the region including, among other factors, a deterioration of the prior political consensus around globalization (including in the Pacific Alliance markets), corruption scandals, climate change, and the COVID-19 pandemic (as discussed in a prior article available here).
These factors have made consensus-building around themes that resonate across the region more challenging, for reasons that go beyond the efforts of the Biden administration – including with respect to trade and investment.
Indeed, even into the latter half of 2016, the U.S. continued to advance the Trans-Pacific Partnership (TPP), a multilateral trade and investment agreement involving 12 countries that not only focused on Asia, but also included the U.S., Canada, Mexico, Peru and Chile. It would have, as a practical matter, consolidated core components of the "Washington Consensus," modernized NAFTA and functioned in many ways as a free trade agreement of the Americas first conceptualized at the 1994 Summit. Instead, the U.S. disengaged from the TPP and ultimately renegotiated NAFTA, resulting in the United States-Mexico-Canada Agreement (USMCA). Recent efforts by the U.S. to open negotiations for a new Asia-focused agreement do not include a similar range of countries across the Americas.
The Role of Trade and Investment
The shifting sands of regional policy have impacted the historical emphasis on trade and investment that reach back to the initial 1994 Summit. In anticipation of the Summit, the Trade Advisory Group of the Council of the Americas (COA), a leading international business organization focused on Latin America, issued a Statement that serves as an important reminder of the persistent importance of trade, investment and the rule of law.
According to the COA Statement, the partnership between the public and private sectors of the Americas is the most viable way to ensure equitable, inclusive, and sustainable growth in the region, and private sector trade and investment should be priority action items for the region. According to the Statement:
- Pandemic Impact: "The twin health and economic crises created by the coronavirus pandemic will have profound long-term effects on the Western Hemisphere. Over the last two years, millions of people in the region have fallen back into poverty, erasing decades of progress. With growing debt and budgets strained by pandemic-related outlays, governments simply do not have the financial resources needed to be engines of sustainable growth."
- Public-Private Cooperation. "As the countries of the region engineer recovery," it is important "to bring interested countries together with the private sector to pursue tangible actions that will energize and facilitate private sector-led investment, improve infrastructure, expand regional trade and supply chains, and deepen public-private partnerships, with the goal of building a globally competitive Western Hemisphere economy for the twenty-first century."
- Rule of Law: "Through trade and investment agreements and engagement in multilateral economic organizations, Western Hemisphere governments have codified and expanded our shared values of transparency, high labor standards, the rule of law, good regulatory practices, and strong environmental standards. The Summit provides an opportunity for countries in our region to adapt and strengthen these practices and standards for today's rapidly changing global economy, while balancing considerations related to the environment and energy transition, social impact, and governance and compliance."
- Investment Climates and Dispute Mechanisms: "[G]overnments should use the Summit to renew their commitment to ensure stable investment climates by enforcing transparent legal frameworks for business, promoting investment through incentives such as … providing reliable dispute resolution mechanisms."
Unfolding developments, domestically and regionally, will shape how the role of trade and investment will shape the economic and policy agenda of the region in the aftermath of the Summit.
The author is a partner of White & Case based in Washington, DC, and member of the Council of the Americas Trade Advisory Group.
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