By MATTHEW ROONEY
Part of an ongoing series from the Wilson Center*
America’s engagement in international trade and global manufacturing supply chains is the cornerstone of the power and prosperity of the United States.
The rising chorus of voices arguing that a “go-it-alone” industrial policy will make the United States more secure and more prosperous have misunderstood this simple fact. On the contrary, attempting to decouple from international markets would make U.S. products less competitive, causing the United States to lose market share around the world, which would in turn shrink America’s economy and make Americans less wealthy.
Moreover, if the United States were to bring the entire supply chain to the United States, we would be taking jobs away from workers in Mexico, Central America and the Caribbean, not just China. Chinese workers may not be able to come to the United States in search of opportunity, but we have seen how quickly Central Americans, Mexicans and Caribbeans can make the journey when they are desperate to feed and protect their families.
A policy to strengthen the prosperity of the American people and secure U.S. borders acknowledges that North America is the cornerstone of our own industrial competitiveness. That is why we should double down on cooperation across North America. But beyond that, linking the United States-Mexico-Canada Agreement (USMCA) with the Central America-Dominican Republic Free Trade Agreement (CAFTA) will contribute greatly to breaking the vicious cycle of poverty, rampant crime and institutional weakness in the Central American region that is driving much of the recent irregular immigration to the United States.
In this context, we must not forget that China has become a disruptive player in global markets and a revisionist geopolitical force. That country is seeking to exploit Central America’s weakness to challenge U.S. predominance in its immediate region. These two core interests of immigration and the China threat, each central to U.S. national security and its future prosperity, intersect in Central America.
Building a strong link between the USMCA and CAFTA presents an opportunity to strengthen U.S. interests on both dimensions. Linking those trade agreements would ensure that intermediate goods manufactured in Central America can be used in products made in Mexico, Canada or the United States for duty-free sale in the United States. This would have the effect of making U.S. products more price competitive, while at the same time fostering economic development in Central America.
Additionally, a trade policy strategy built on a more closely integrating CAFTA and USMCA would lend powerful coherence to the U.S. effort to address the root causes of migration. Done well, it would fully engage the private sector in the region and encourage some of the investment currently feeding U.S. supply chains from China to move to Central America — benefitting U.S. manufacturers and consumers. And it would do much to put the United States back in its traditional position as Central America’s principal economic, security and political partner, blocking China’s efforts to ingratiate itself with our nearby neighbors.
Not incidentally, such an approach implemented well would create hundreds of thousands of jobs in Central America, which would encourage Central Americans to seek their futures at home instead of in the United States. It would also drain personnel and power away from the gangs and drug cartels, now plundering the region.
Most investors leaving China are in search of a more welcoming environment, and they are finding it in other Asian countries. An initiative like the one proposed here would divert some of that investment to Central America, which in turn would strengthen the prosperity and security of the region.
By implementing well the USMCA and then linking it with CAFTA, the United States has an opportunity to boost its own prosperity, as well as that of its neighbors, while at the same time blunting China’s efforts to undermine U.S. prosperity and drive wedges between Washington and its regional allies. The stakes are high. The United States should seize the opportunity at hand to deepen cooperation across the continent.
MATTHEW ROONEY is the director of Outreach and Strategic Partnerships at the George W. Bush Institute in Dallas, Texas. He was formerly deputy assistant secretary of state for Canada and Mexico.
* The Wilson Center is offering a series of articles to take a deeper look at the potential gains of more effective collaboration across North America. Drafted and coordinated by former U.S. Ambassador to Mexico Earl Anthony Wayne, the series includes articles by experts from the three countries making the case for why such cooperation across the continent is worthwhile, despite its complexity and difficulties. This is part of that series, which is being published in Pulse News Mexico with express prior permission from the Wilson Center.