THE AMERICAS TRADE AND INVESTMENT ACT DISCUSSION DRAFT

On January 11, 2023, United States Senator Bill Cassidy (R-LA) and Representative Maria Elvira Salazar (R-FL) released a “discussion draft” of The Americas Trade and Investment Act (“Americas Act”).^[1] The objectives reflected in the draft text are notable, because it would create the “Americas Partnership,” a dramatic expansion of eligibility for the United States-Mexico-Canada-Agreement (USMCA)^[2] to countries in Central and South America. As proposed, the United States Department of Commerce would administer the Americas Partnership program and oversee the admission application process through a new bureau in the Office of the Under Secretary for International Trade Administration.

While the bill has not yet begun the legislative process necessary for it to become law, if passed, it could significantly alter trade in the Western Hemisphere, providing opportunities for governments in the region to expand their ties with the United States and counter Chinese influence in the region and for companies in the region to rethink their supply chains in light of ongoing geopolitical shifts.^[3] The draft bill also demonstrates Congress’s interest in assigning an increased role to the United States Department of Commerce in supporting U.S. businesses at home and abroad, which would increase its relevance to Latin American governments and multinational businesses as they plan their U.S. diplomatic and government relations strategies, respectively.

This note highlights the principal features of the Americas Partnership as proposed. We expect to update this piece once the legislation is formally introduced and makes its way through the committee process.

Americas Partnership

The Americas Partnership would be “an expanding community of nations in the Western Hemisphere focused on taking steps to improve hemispheric integration with the aim of creating more prosperous societies for their people.”^[4] Countries that join the Americas Partnership would be able to seek admission to the USMCA, which supports mutually beneficial trade among its members and fosters economic growth in the region. Americas Partnership countries would also gain access to infrastructure investment, grants and loans for local companies, and people-to-people activities, such as humanitarian assistance and cultural and educational affairs programs.

The proposed creation of the Americas Partnership highlights the increased desire for the United States to lessen its dependence on foreign adversaries for necessary resources and materials, by helping finance business development, production and near-shoring opportunities throughout the region and establishing additional and more economical supply chains.

As proposed, to join the Americas Partnership, countries would have to meet certain eligibility criteria, discussed below, and satisfactorily enter into a Memorandum of Understanding (MOU) with the United States Department of Commerce.

Eligibility

Generally, to be eligible to attempt to join the Americas Partnership, a country must be located in the Western Hemisphere, designated as “free” or “partly free” by the annual Freedom in the World report of Freedom House, in compliance with the terms of the Inter-American Democratic Charter of the Organization of American States (“Inter-American Charter”) and committed to beginning the necessary negotiations and deliberations to accede to the USMCA.^[5] Additionally, the country’s government must be committed to:

• The principles of representative democracy and the rule of law;
• The fight against trafficking in persons, illegal narcotics and terrorism; and
• Respect for human rights.

Even if these eligibility requirements are met, a country may still be ineligible to join the Americas Partnership in certain specified circumstances, such as if the country is a beneficiary of the Government of Cuba’s medical professional program or a member or observer of the Bolivarian Alliance for the Peoples of Our America (“ALBA-TCP”).^[6]

The Under Secretary of Commerce for International Trade (“Under Secretary”) may also enter into a provisional MOU for up to five years with a country that does not meet these eligibility requirements, provided the country develops a plan to meet these requirements by the end of that five-year period.

Memorandum of Understanding

The Under Secretary would be responsible for leading an interagency process to develop a model MOU for countries seeking to join the Americas Partnership. The model MOU would reflect certain commitments including, among others, to (1) take actions to reduce Chinese influence in the country; (2) avoid purchasing or installing telecommunications equipment developed or produced in countries where the government is designated a foreign adversary and has a record of engaging in government surveillance; (3) avoid purchasing raw materials from countries that use forced labor; (4) develop a national infrastructure and investment plan; and (5) commit to combatting corruption.

The Under Secretary shall use the model MOU as a baseline for its negotiations with countries seeking to join the Americas Partnership and make modifications as appropriate taking into consideration the circumstances of the country, including factors such as politics, economy, culture and geography. The Under Secretary would begin consultations with interested and eligible countries as soon as practicable after the date of the enactment of the Americas Act. There is no set time limit for the duration of negotiations; however, the MOU would take effect 15 days after the Under Secretary properly submits the MOU to the United States Senate Finance Committee and the House of Representatives Ways and Means Committee.

Conclusion

The Americas Act has the potential to dramatically impact Western Hemisphere trade, business and diplomatic relations and would provide many benefits to forward-thinking companies and governments looking to bolster or expand their U.S. operations or increase U.S. sales. Since it is sufficiently early in the process, interested parties should monitor the status of the proposed legislation and, if desired, provide input to ensure it accomplishes the goals that its sponsors have articulated. If you have any questions about the Americas Act or its impact, please contact Manuel Orillac, Mike Walsh, Gabrielle Leeman or your Shearman lawyer.