Americas Act Sponsors Say 'Hard Work of Legislating' Is Ahead
The bipartisan sponsors of The Americas Act, an ambitious bill that would invite most Central and South American countries into USMCA and offer funds to companies moving production from China to the U.S. or an Americas Act country, as well as covering diplomatic and temporary work visas, said they are working to line up support in Congress, talking to the administration, and talking to Western Hemisphere countries that could benefit from the policy, in an effort to get the bill passed.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
"The wind is at our back here," said Sen. Michael Bennet, D-Colo., the co-sponsor of the bill first introduced by Sen. Bill Cassidy, R-La. He said Americans want to address migration, and it's difficult to address without addressing Central American and South American economies as a whole. "What we have to do now is the hard work of legislating," he said.
The two spoke at an Atlantic Council event on nearshoring the evening of June 12. Atlantic Council moderators said there's been a lot of rhetoric about nearshoring since the pandemic supply chain shocks and transportation cost spikes, as well as rising tensions with China, but that going from rhetoric to reality has been harder than expected.
Cassidy told the audience his bill (see 2301110045) could create prosperity in Central and South America, which could both depress irregular migration and bolster democracies.
Bennet said, "By creating an ever-expanding and permanent trade partnership ... we can finally take a comprehensive approach to creating a long-lasting trade, climate, and immigration policy."
He added, "I think the importance of nearshoring can't be overstated. The Chinese government, Beijing, has taken full advantage of the lack of attention the U.S. is paying to the Western Hemisphere." He noted that China is the top trading partner for every country in South America, a fact that concerns Republicans and Democrats in Congress.
Cassidy also said when the U.S. imports from Mexico, there's more reciprocal trade, with Mexico importing from the U.S., compared to trade with China.
After the senators spoke, the think tank invited government officials from Guatemala, Costa Rica and Panama, as well as private sector actors in logistics, consulting and law.
Panamanian Trade Minister Federico Alfaro Boyd said his country's aim is to compete with Southeast Asian countries as a place to do semiconductor chip assembly, testing and packaging. He said Panama has already put in place the legal framework to be a good place to invest, and, with the Panama Canal, it has high quality ports and shipping available.
Patrick Van den Bossche, a partner at Kearney in global analytics, told the think tank audience that while exports from Mexico have been climbing sharply since the trade war began with China, and China's share of U.S. imports has fallen, the total dollar amount of imports from China is still climbing.
Moreover, he said, even as supply chains shift from China to Vietnam or Mexico, Chinese companies are still deeply involved -- he said that half of the foreign investment inquiries for Mexico are for Chinese companies, and 95% of new capital investments in Vietnam are tied to Chinese firms.
Van den Bossche said companies wishing to capitalize on Mexico's labor force and proximity to the U.S. market face three challenges -- getting the same quality as they got in China; finding a manufacturing partner, and whether there is a site in well-situated parts of Northern Mexico for a new factory.
"It's started to get a little crowded around the border," he said, both in terms of space and finding workers. And, he said, Mexican suppliers are so busy that they may not respond to a request for proposals, or will submit what he called "go-away prices."
Adriana Ibarra-Fernández, a partner at Baker McKenzie in Mexico City, sees different barriers to Mexico being the top choice of companies leaving China. She said there's not enough regulatory simplicity, and there is a lack of "regulatory and legal certainty."
She said if a company does find a slot in the maquiladora program in Mexico, in order to get the tax incentives associated with it, they need very strict inventory control, so that if they're audited, they can prove to the Mexican government what was made at the site. "Compliance, compliance, compliance," she said.