President Biden’s Summit of the Americas arrived in Los Angeles at a difficult time for the region and the world, impacting the multilateral trade and investment agenda that has guided previous summits for nearly three decades.
Origins of the Summit
This gathering of Western Hemisphere leaders dates back to 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 an era of broad consensus around democracy and free markets – a new era of globalization marked by the formation of the World Trade Organization (WTO), the Free Trade Agreement – North American exchange (NAFTA) and macroeconomic reforms that have swept much of the region. The 1994 Summit focused primarily on the vision of 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 United States in nearly three decades, consensus around the Summit’s agenda has been mixed to non-existent. A rough symbol of this reality is the boycott of the event by Mexican President Lopez-Obrador and a small number of other leaders following the exclusion of Cuba, Nicaragua and Venezuela from the summit.
The goal of the Summit is “Building a Sustainable, Resilient and Equitable Future” for the hemisphere. This has resulted in a particular focus on migration issues, which have significant domestic political significance in the United States. The Summit also incorporates a focus on what might loosely be termed “ESG matters” (environmental, social and governance issues). Indeed, the declared mission of the Summit is “to improve the response and resilience to the pandemic, to promote a green and equitable recovery, to build strong and inclusive democracies and to address the root causes of irregular migration”. .
The background of this program is complex. The 2022 Summit, the first to be held since the 2018 edition of the Lima Gathering, comes after several years of disruption across the region, including, among other factors, a deterioration of the previous political consensus around globalization (including in Pacific Alliance markets), corruption scandals, climate change and the COVID-19 pandemic (as discussed in a previous article available here).
These factors have made it more difficult to build consensus around themes that resonate across the region, for reasons that go beyond the efforts of the Biden administration — especially with respect to trade and investment.
Indeed, even in the second half of 2016, the United States continued to advance the Trans-Pacific Partnership (TPP), a multilateral trade and investment agreement involving 12 countries that focused not just on Asia, but also included the United States, Canada, Mexico, Peru and Chile. It would have, in practice, consolidated the essential components of the “Washington Consensus”, modernized NAFTA and functioned in many ways as a free trade agreement of the Americas first conceived at the 1994 Summit. , the United States withdrew from the TPP and eventually renegotiated NAFTA, resulting in the United States-Mexico-Canada Agreement (USMCA). Recent US efforts to open negotiations for a new Asia-focused deal do not include a similar array of countries across the Americas.
The role of trade and investment
The shifting sands of regional politics have impacted the historic focus on trade and investment dating back to the initial summit in 1994. In anticipation of the Summit, the Trade Advisory Group of the Council of the Americas (COA) , a leading international trade organization focused on Latin America, released a statement that serves as an important reminder of the continuing importance of trade, investment and the rule of law.
According to the ACO statement, 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 actions for the region. According to the Declaration:
- Impact of the pandemic: “The dual health and economic crises created by the coronavirus pandemic will have profound long-term effects on the Western Hemisphere. Over the past two years, millions of people in the region have fallen back into poverty, erasing decades of “With mounting debt and budgets strained by pandemic-related spending, governments simply don’t have the financial resources to drive sustainable growth.”
- Public-private cooperation. “As the countries of the region organize the recovery”, it is important “to bring together interested countries with the private sector to pursue concrete actions that will energize and facilitate private sector investment, improve infrastructure, develop regional trade and supply chains, and deepen public-private partnerships, with the goal of building a globally competitive Western Hemisphere economy for the 21st century.”
- Rule of law: “Through trade and investment agreements and engagement in multilateral economic organizations, governments in the Western Hemisphere have codified and expanded our shared values of transparency, high labor standards, rule of law, good regulatory practices and stringent 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 environmental considerations. environment and energy transition, social impact, governance and compliance.
- Investment climate and dispute resolution mechanisms: “[G]Governments should use the Summit to renew their commitment to ensuring stable investment climates by enforcing transparent legal frameworks for business, promoting investment through incentives such as… providing reliable dispute resolution mechanisms.
Ongoing developments, at the national and regional levels, will shape how the role of trade and investment will shape the economic and political agenda of the region following the Summit.