Americas Act Discussion Draft Released by Cassidy, Salazar

Sen. Bill Cassidy, R-La., joined by Rep. Maria Elvira Salazar, R-Fla., has proposed that most countries in Central and South America should be invited to join USMCA, and that before that can be negotiated, the countries should be added to the Caribbean Basin Trade Preference Area.

The Americas Act discussion draft, released Jan. 11, would not allow some countries to benefit from the Caribbean Basin trade preferences, including Nicaragua, Venezuela, Cuba, Bolivia and six other Caribbean island nations; however, the six island nations are already in the Caribbean Basin Initiative, and Nicaragua already has duty-free benefits through the Central America Free Trade Agreement.

Cassidy said, in a summary of the 200-page draft, "It is high time that we place hemispheric integration at the center of our foreign policy. Our new ‘Cold War’ with China has highlighted the problem, as demonstrated by the COVID-19 supply chain disasters. Our ‘divorce’ from China, more than a decade in the making, is now a reality. We now know we cannot productively work with China.

"There is no progressively growing trade body that links the US with our hemispheric allies and them with each other in a common community of trade."

Salazar said in the press release announcing the draft: "It’s time we unleash the full economic potential of the United States and Latin America. The Americas Act is THE solution to grow our economy and bring stability to the hemisphere. This bill will create new business opportunities at home and abroad, help our allies in the region, build resiliency for American supply chains, and reduce incentives to migrate.”

The Americas Act goes beyond trade to include tax incentives and grants and loans for moving production from China to an Americas Act country, as well as diplomatic initiatives and even an immigration provision, a temporary work visa for those engaged in elder care in the U.S.

The bill's authors propose that it be managed by the International Trade Administration, and that Commerce would manage loans, grants, lines of credit, insurance or equity arrangements to help firms move manufacturing from China to the Western Hemisphere. It proposes up to $40 billion in funding for these programs.

The summary says, "This program is fully paid for and self-contained. It will only cost as much money as it brings in," because it foresees much of the funding offered to companies as loans or insurance.

The seed funding would be found by negotiating with other countries to increase their de minimis levels, and if they do not, by lowering U.S. de minimis levels to match those countries'.

Specifically, the bill's text says that packages from China currently entering under de minimis provisions should face U.S. duties and a duty equal to what China charges on U.S. exports in that category, "taking into account purchasing power parity as determined by the World Bank."

In addition to tax benefits and loans to help re-shore, the draft says that any goods exported from a newly nearshored factory will not face any duties.

The draft sets out a number of eligibility requirements for countries that wish to be part of the Americas Act, but gives them five years to come into compliance, while still benefiting from the duty reductions. One of the requirements is that the countries agree not to purchase raw materials "from countries that use forced labor."

The countries should also be working toward regulatory alignment with the U.S. on pharmaceuticals, food safety, medical standards, labor standards, environmental standards, clean energy requirements, banking transparency and privacy standards.

The proposal also would create new positions in the State Department and USAID, and create an assistant U.S. trade representative for Americas Partnership. It would deploy permanent textile production verification teams from CBP to partnership countries "to ensure the integrity of the textile supply chains of those countries."