Global Trade & Investment

The Summit of the Americas concluded last week in Los Angeles with two announcements to promote hemispheric trade: the Americas Partnership for Economic Prosperity and a Declaration on Good Regulatory Practices.  Similar to the approach taken by the Indo-Pacific Economic Cooperation Framework for Prosperity (known colloquially as IPEF), both provide a platform for positive economic engagement in the Americas and the potential to strengthen growth opportunities for businesses. They are not expected to focus on market access and do not require congressional approval.

Americas Partnership for Economic Prosperity

At the opening ceremony of the Summit of the Americas, President Biden announced the Americas Partnership for Economic Prosperity which aims to build on the foundation established by existing free trade agreements (FTAs) in the region.  Twelve of the twenty countries with which the United States has an FTA are in the Western Hemisphere.[1]

U.S. officials shared that this initiative plans to identify a core set of countries that will set a very high ambition followed by an open architecture where countries self-select which “pillars” on which to negotiate and join. The next two to three months will be spent talking to like-minded economies about the scope of the deal and encouraging them to join in the hopes of a ministerial meeting in the early fall.

Areas of focus that also appear in IPEF include: trade (good regulatory practices, digital, labor and environment standards, customs facilitation, incentivizing corporate accountability); supply chains, infrastructure, decarbonization, and energy.  Areas unique to the Americas effort include: broadening participation in the formal economy and biodiversity.

Declaration on Good Regulatory Practices

The Office of the U.S. Trade Representative (USTR) also announced last week a Declaration on Good Regulatory Practices (GRP) among 14 countries: Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Haiti, Panama, Paraguay, the United States and Uruguay. 

GRP instill confidence, accountability, and predictability in regulatory processes and include measures such as: providing easy access to regulatory information; conducting public consultations in an open and inclusive manner; engaging all interested persons in the regulatory process; conducting reviews of regulations in effect; and using relevant international standards, guides and recommendations to avoid unnecessary obstacles to trade.

GRP are growing in prominence in U.S. trade policy.  This latest GRP Declaration both expands the number of countries with which the United States is engaging on GRP and the number of GRP elements covered. The first U.S. FTAs in the region to feature GRP were those with Chile, the five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) and the Dominican Republic, Panama, and Colombia.  The transparency chapters of these FTAs featured certain GRP, such as publishing in advance proposed measures and providing comment opportunities.  The North American Free Trade Agreement (NAFTA) also included such provisions, which expanded into a new chapter wholly dedicated to GRP when NAFTA was substituted with the United States-Mexico-Canada Agreement (USMCA) in 2020.  This new chapter added concepts also in the GRP Declaration, such as: considering use of international standards; publishing an explanation of the data and evidence the regulatory authority relied upon to support a regulation; and encouraging regulatory impact assessments, including risk analyses.  That same year, the United States and Brazil signed a Protocol relating to Trade Rules and Transparency, updating a 2011 Agreement on Trade and Economic Cooperation (ATEC) with three new annexes – one of which was on GRP.  In 2021, the United States and Ecuador marked the entry into force of a Protocol that also included a GRP Annex. 

Looking Ahead

The private sector may be pleased to see that signatories to the new GRP Declaration plan to promote awareness of GRP with regulatory authorities and assess implementation progress by the end of 2023.  These components are critical as GRP are implemented not only “horizontally” across the whole of government but also “vertically” at the sector-specific level, within regulatory agencies responsible for health, digital, among other areas. 

As for the Americas Partnership for Economic Prosperity, the table below may be instructive as to which countries choose to join at the outset, showing seven Western Hemisphere countries (in bold) with which the United States has an FTA and have signed the Declaration on GRP. 

Chile, however, may elect to sit on the sidelines.  While incoming leftist President Boric conveyed to the private sector assembled at the CEO Summit of the Americas his administration’s commitment to rule of law and adhering to Chile’s WTO and FTA commitments, joining a new trade initiative may be a bridge too far as the country focuses on passing a new constitution.  Colombia’s runoff election on June 19 for the presidency may also result in a new government wary of advances in trade.  Independent candidate Rodolfo Hernandez and leftist Gustavo Petro are currently locked in a tight virtual tie.  The Biden Administration’s frosty relationship with El Salvador’s President Bukele over allegations of human-rights abuses suggests that the list may be even smaller.

The remaining countries are Canada, Costa Rica, Dominican Republic, and Panama.  These may be joined by countries which signed the Declaration on GRP and are capable of meeting high standards but do not have an FTA with the United States. These countries include Argentina, Brazil, Ecuador, and Uruguay.

An important indicator for the regional success of the Americas Partnership for Economic Prosperity is whether Brazil will join the new framework. On 8 June, Brazil President Jair Bolsonaro signed into law the U.S.-Brazil 2020 Protocol on Transparency and Trade Rules by Presidential Decree. The timing of President Bolsonaro’s Decree is a positive sign for the country’s prospects of joining the new framework. However, Brazil’s upcoming October general elections may derail potential progress. The increasingly tight race between President Bolsonaro and former President Luiz Inácio “Lula” da Silva has extremely strong potential impacts on the country’s political and economic trajectory.

As countries across the Americas intently watch Brazil’s next moves, by Q4 2022 we should see just how many countries sign up to the latest iteration for Western Hemisphere integration and economic prosperity. 

Country	FTA with the United States	Declaration on GRP
Argentina		X
Brazil		X
Canada	X	X
Chile	X	X
Colombia	X	X
Costa Rica	X	X
Dominican Republic	X	X
Ecuador		X
El Salvador	X	X
Guatemala	X
Haiti		X
Honduras	X
Mexico	X
Nicaragua	X
Panama	X	X
Paraguay		X
Peru	X
Uruguay		X

[1] Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru.