For the first time since China launched its economic outreach in the Americas 20 years ago, the COVID-19 pandemic has compelled the United States to work with hemispheric neighbors to reduce their dependence on Beijing. Bolstering investment in pharmaceutical research and production in the U.S. and in nearby countries will cultivate more secure sources for vaccines, therapeutics, and other critical goods. Regional manufacturers of all kinds can reduce costs and optimize their supply chains by sourcing production and assembly closer to home, generating jobs and economic stability as the region looks to rebound.
Even before the dispute with China over the lack of transparency regarding the COVID-19 virus, that country’s exploitative mercantile model was a source of unease in the Americas. Brazilians learned the costs of overdependence on Chinese demand when their economy was sent into recession 10 years ago when exports plummeted. Ecuador, which became indebted to China, has been struggling to restore fiscal order and service its debt. China has devoured Venezuelan assets after bankrolling a dictatorship that has wrecked the country.
Although President Trump has confronted China’s predatory economic practices like none of his predecessors, doubts are growing that his stiff tariffs and hard-nosed negotiations will produce tangible change in Beijing’s behavior. Even regional leaders who still see China as a vital trade partner will recognize the benefits of strengthening partnerships closer to home. This calculation is less about countries following Washington’s lead than it is about doing what they need to recover and sustain prosperity.
By the time the coronavirus lockdowns are relaxed in the U.S., the country will be in the throes of a national election and dealing with the economic fallout of the pandemic. So, the private sector in the U.S. and neighboring countries should forge ahead to develop a plan that can be taken up by Washington and regional leaders.
The Inter-American Development Bank should convene a virtual summit to challenge private sector leaders and policymakers to bolster supply chains and economic ties in the Americas. Starting now, working across sectors and borders, entrepreneurs, manufacturers, engineers, investors, bankers, etc., must team up to envision an economic recovery built on optimized supply chains and trading relationships in the Western Hemisphere.
For example, practitioners from the private sector can recommend how to maximize the mutual benefits of the Central American Free Trade Agreement, which has done little to break the fall of that troubled subregion. If MERCOSUR is not the future in the southern cone, perhaps it is time to reconsider a bilateral trade agreement between the two continental giants.
Urgent steps must be taken to reverse Mexico’s impending slide into recession, and companies in Canada, Central America, or the Caribbean should shore up the North American supply chain. The private sector should recommend measures to reduce bottlenecks and lower the costs of transporting and processing cargo among regional ports. The banking community should recommend the creation of a sovereign-backed fund to push capital to jump-start productive and labor-intensive enterprises. U.S., Brazilian, Canadian, and other development banks should prioritize investments among their neighbors. The Inter-American Development Bank and the World Bank should invest in innovation, entrepreneurship, and critical infrastructure to facilitate new growth, creating the next “Silicon Valley” in Latin America. The recent $1.2 billion U.S. investment in the “blue economy” can help propel Caribbean and Central American states to sustainable prosperity, integrated like never before with continental enterprises.
Pondering these issues will help shape a vision for a stronger, more secure hemispheric economy. No less important is private sector leaders identifying dozens of practical domestic economic reforms for jump-starting growth.
Some questions require the involvement of governments. With oil prices at rock bottom, what projects will maximize the value of vast natural resources in this hemisphere? What regional security mechanisms will meet organized crime threats head-on? What benefits can be derived by moving decisively to liberate and rebuild resource-rich Venezuela at the heart of the hemispheric economy? What can governments do together to seize billions lost to corruption and steer them toward honest enterprise?
One thing that governments should do without delay is strengthen the ability of the Inter-American Development Bank and the Organization of American States to confront threats to the rule of law and security, which are the building blocks of democratic capitalism.
Stated plainly, the market economies and democracies of the Western Hemisphere would be better off depending more on one another and less on China. Such a realignment is urgent for the Americas, as like-minded neighbors cooperate to restore their prosperity and secure their destiny.
Roger F. Noriega was U.S. ambassador to the Organization of American States and assistant secretary of state for Western Hemisphere affairs from 2001-05. He is a visiting fellow at the American Enterprise Institute, and his firm Visión Américas LLC represents U.S. and foreign clients.
