Photo: U.S. Secretary of State Antony Blinken meets with his counterparts: Erika Mouynes of Panama, Rodolfo Solano of Costa Rica, and Roberto Álvarez of the Dominican Republic / Ministry of Foreign Relations, Dominican Republic.
At the Summit of the Americas last week, Ecuadorean President Guillermo Lasso announced that his country would join the Alliance for Development in Democracy (ADD). The alliance, launched in 2021 by the governments of Costa Rica, the Dominican Republic, and Panama, contains no great powers and has a combined population of fewer than 40 million people. But it may be the best ally yet for the United States in an era of regional fragmentation.
In the weeks leading up to last week’s summit, discussions over who would be invited overshadowed substantive issues. When U.S. officials, in their role hosting the regional conference, floated their plans to exclude Cuba, Nicaragua, and Venezuela from the guest list, leaders from across the hemisphere voiced their displeasure. Many threatened to boycott the event. In the end, Mexican President Andrés Manuel López Obrador, representing the largest U.S. trade partner in the region, failed to attend. The leaders of El Salvador, Guatemala, and Honduras—three major countries of origin for immigrants to the United States—were also absent. Presidents Jair Bolsonaro of Brazil and Alberto Fernández of Argentina attended only reluctantly. Bolsonaro reportedly used the occasion to ask Biden to interfere on his behalf in his country’s elections. Fernández lambasted his hosts for denying authoritarian countries a seat at the table.
The recent behavior of countries like Argentina, Brazil, El Salvador, Guatemala, Honduras, and Mexico has highlighted a difficult truth of Latin American politics: Many of the region’s leaders hold only a tenuous commitment to the rule of law and democracy, whether in their own country or elsewhere.
Despite these disagreements, the U.S. government has rightly sought out areas of cooperation with each of these countries. In Mexico and the Northern Triangle, the United States has pursued assistance on migration. In the region’s largest countries, U.S. officials have sought cooperation on climate change, trade, and investment.
But in their effort to assuage reluctant partners in the region, U.S. officials risk ignoring Latin American and Caribbean governments that have consistently supported U.S. interests and values. The Alliance for Development in Democracy, with its commitments to sustainable growth, shared prosperity, democracy, and the rule of law, unites four of these governments in one regional bloc.
Opportunities for Collaboration
At first glance, Costa Rica, the Dominican Republic, Ecuador, and Panama are not as central to U.S. interests as other countries in the region. But as Dominican Foreign Minister Roberto Álvarez noted in February, the combined economies of the Alliance for Development in Democracy comprised the third largest U.S. trading partner in the region, even before Ecuador’s adhesion. The three founding members are members of the Central America Free Trade Agreement, and as research by the Global Americans High-Level Working Group on U.S.-Ecuador Relations demonstrates, there are ample opportunities for trade integration between the U.S. and Ecuador as well. The Americas Partnership for Economic Prosperity, launched by President Biden in Los Angeles, should give ADD members a central role.
On migration, the Alliance for Development in Democracy is similarly critical to U.S. interests. In 2021, Ecuador rose to the fourth largest country of origin for undocumented immigrants crossing the U.S.-Mexico border. A rising number of Venezuelan refugees and immigrants have crossed Panama’s Darien Gap, an insecure, sparsely populated region along the country’s border with Colombia. And less than a year after the assassination of President Jovenel Moïse, Haitians continue to flee their country, often passing through the Dominican Republic, Panama, or Costa Rica. As the U.S. and the region seek to implement the Declaration on Migration and Protection, signed in Los Angeles last week, the ADD countries will be both key players and willing partners.
Finally, members of the ADD are important interlocutors for the United States to achieve its climate and sustainability goals. At the Summit of the Americas, Vice President Kamala Harris announced the U.S.-Caribbean Partnership to Address the Climate Crisis 2030, recognizing the Caribbean’s unique vulnerability to rising sea levels, extreme weather events, and rising temperatures. As the Global Americans High-Level Working Group on Climate Change in the Caribbean has written, the Dominican Republic should be a major partner in this partnership, straddling both the Caribbean islands and the Spanish-speaking states of Latin America.
Nearshoring and Friendshoring
In exchange for the alliance’s cooperation on trade, investment, migration, and climate, the United States must go beyond supportive rhetoric and deliver concrete benefits to member countries. Support for nearshoring/friendshoring is the most tangible way for the U.S. to stimulate growth in the Alliance for Development in Democracy while also promoting U.S. interests.
Since 2020, the COVID-19 pandemic, the Russian invasion of Ukraine, and the resulting economic crises have laid bare the risks of far-flung supply chains, particularly in authoritarian countries like China and Russia that share neither U.S. values nor U.S. interests. Today’s high inflation rates are largely a consequence of these unforeseen disruptions. The Trump and Biden administrations have responded to supply chain risks by variously advocating for reshoring (relocating supply chains within the United States), nearshoring (relocating supply chains closer to the U.S.), and friendshoring (relocating supply chains in friendly countries).
ADD members are close to the United States, both in their location and their attitude toward markets and rule of law. They are ideal candidates for nearshoring and friendshoring, as U.S. officials have recognized in their decision to form a strategic alliance with the ADD. And locating supply chains in these countries, rather than within the United States, offers firms an opportunity to limit risk while still benefiting from lower costs. Yet there has been little movement toward nearshoring/friendshoring, either in U.S. policy or in businesses relocating.
From Rhetoric to Results
To bridge the gap between supportive rhetoric and concrete results in nearshoring, U.S. policymakers have several policy options at their disposal.
First, the United States should build on its phase-one trade accord with Ecuador, signed in 2020, with further trade and investment liberalization between the two countries. Ecuador has already taken unilateral steps to attract investment; the U.S. can encourage further progress. In the short term, Congress should renew the Generalized System of Preferences, which grants tariff-free access to imports from Ecuador and other developing countries. The Senate has passed the America COMPETES Act and the House has approved the U.S. Innovation and Competition Act to do exactly this, but the bills have since languished in conference committee. House and Senate leaders must speed up the process. In the medium and long term, the U.S. Trade Representative should deepen trade negotiations with Ecuador to achieve lasting, bilateral reforms.
Second, U.S. officials should provide greater regulatory clarity for companies that wish to relocate their supply chains to friendly countries around the Caribbean Basin, including the ADD member countries. When operating abroad, U.S. firms must comply with certain U.S. government regulations, certain foreign government regulations, and their own corporate governance obligations on issues from labor and the environment to anti-corruption and social responsibility. The U.S. government can help corporations comply with these rules in two ways. First, officials can offer information about existing regulations and compliance mechanisms. Second, the United States can use its convening power to help countries in the ADD streamline their regulations to attract greater investment.
Finally, to the extent that U.S. policymakers are engaged in industrial policy, they should not discriminate between the United States and friendly countries around the Caribbean Basin. Over the last several years, U.S. policymakers have proposed a series of incentives for companies to reshore their production in the United States. Some of these measures, such as infrastructure and education spending, would make the U.S. economy more competitive and naturally attract companies looking for a productive workforce and high-quality investment climate. Others, such as the Trump administration’s tariffs against China and the Biden administration’s “Buy American” requirement for government procurement, distort the economy, raising prices at a time when inflation is already the primary issue facing most Americans.
To avoid becoming a form of “backdoor protectionism,” writes Global Americans Advisory Council member Richard Feinberg, Biden’s industrial policies should offer the same benefits to firms investing in the Caribbean Basin that they offer to firms investing in the United States. Funds designated for U.S. technological hubs could just as easily incentivize high-tech hubs around the Caribbean, building on existing free trade zones. Just as businesses can receive low-cost loans to move their supply chains to the United States, they should be able to access the same loans through the Import-Export Bank and the Development Finance Corporation. Like the Made in America industrial policy, a potential Made in the Americas policy would encourage companies to relocate their supply chains toward safer shores. But the Made in the Americas policy has an added advantage: that of lower labor costs, and in turn, lower prices for U.S. consumers.
To tackle the issues of trade, investment, migration, and climate, the United States must cooperate with its neighbors in Latin America. At a time when so many of these neighbors are either ambivalent or outright hostile to U.S. interests and values, initiatives like the Alliance for Development in Democracy are more important than ever. Costa Rica, the Dominican Republic, Ecuador, and Panama have taken the initiative. It’s time for the U.S. to respond.
Robert (Bo) Carlson is the Editor of Global Americans. He previously held roles at the OAS and the Center for Strategic and International Studies (CSIS) and has written for The National Interest and The Diplomat. You can find him on Twitter: @bocarlson1.