While some recent U.S. trade legislation has impacted partnerships in Europe and Asia, some of the latest efforts out of Washington, D.C. are focused specifically on textile and apparel partnerships in Central and South America.
The four initiatives aim to bolster relationships with U.S. allies in the southern hemisphere by reexamining supply chains and trade agreements to increase security measures and stem migration.
“We’re in a period where we’re recasting our relationships in the region to focus on critical supply chains, and to address the other challenges the U.S. and the region face in terms of economic investments and growth in regional economies, the migration of peoples, and the related humanitarian issues,” David Skillman, managing partner at international law firm Arnold & Porter, said in an interview.
Skillman, whose practice focuses on federal law and legislation related to tax and trade, said that most policy makers are thinking about the relationship between Central and South America and China, especially as it pertains to the Belt and Road Initiative, China’s plan to expand infrastructure, trade and transportation between China and the West.
“That has changed the dynamic as to how we proceed with trading relationships,” Skillman said.
Here’s a look at the four initiatives and what their impact might be.
The Americas Act
In March, a bipartisan group of Congress members proposed the Americas Trade and Investment Act, otherwise known as the Americas Act.
The Americas Act includes more than $45 billion in incentives for circularity across apparel, footwear and accessories, and is aimed at creating a partnership among Western Hemisphere countries to bolster trade, create jobs and improve regional stability.
“With the Americas Act, we can win the power competition against communist China….by selling our two best products: democracy and capitalism,” Rep. María Elvira Salazar, who introduced the act, said in a press conference.
A portion of the bill focuses on the textile and apparel industry and is designed to invest in the Western Hemisphere through grant and recycling programs. This includes a $105 million investment each year for five years and tax incentive programs to establish a circular textile industry in the U.S. and to re-shore and near-shore the textile and apparel industry from China.
The bill additionally calls for the deployment of the U.S. Custom and Border Protection’s Textile Production and Verification Teams to partner countries to enforce legal requirements of the trade agreement and makes clear the cases in which fibers, fabrics and yarns may be imported from Western Hemisphere countries with free trade agreements.
Before the Americas Act was officially introduced, a draft of the bill was reviewed by the Subcommittee on International Trade, Customs, and Global Competitiveness in May 2023, and ambassadors from Latin American and Caribbean nations were in attendance to show their support. Since its formal introduction, the bill has been through multiple subcommittees, and is currently awaiting a review by the Subcommittee on Border Security and Enforcement. No formal date has been set for next steps.
Department of Homeland Security Enforcement Actions
The Department of Homeland Security and two agencies under its control, Customs and Border Protection and Homeland Security Investigation, announced a collaborative plan to protect the American textile industry. The goal of the joint effort between these U.S. agencies is to bolster the American textile industry by finding bad actors who are using forced labor and violating customs laws to drive prices so low that they undercut American businesses, creating a barrier for American textile workers to stable and gainful employment. The agency has already begun implementation, according to an April DHS press release.
“The textile industry, like other industries, suffers when competitors use forced labor, violate customs laws, and engage in other illegal practices to undercut U.S. businesses and drive prices unfairly low,” DHS Secretary Alejandro Mayorkas said in a press release announcing the plan.
The proposal seeks to improve small package screenings, expand the Uyghur Forced Labor Prevention Act Entity list, and expand customs audits to ensure textiles qualify under the U.S.-Mexico-Canada Agreement and the Central America-Dominican Republic Free Trade Agreement.
Initiatives to strengthen the U.S.-Guatemala relationship
The new DHS enforcement actions followed Guatemalan President Bernardo Arévalo’s visit with U.S. Vice President Kamala Harris in March.
“The Office of the United States Trade Representative and U.S. Customs and Border Protection will launch a Trade Capacity Building program to advance secure trade in textiles and apparel between the United States and Guatemala by encouraging engagement,” according to a White House fact sheet.
As part of the Biden-Harris Administration’s Root Causes Strategy, Harris pledged $170 million to transform Guatemala’s economic, health and security development in order to prevent migration to the U.S. The Office of the U.S. Trade Representative will partner with CBP to launch a Trade Capacity Building program to encourage collaboration between the CBP’s Customs Trade Partnership Against Terrorisn Program and the Superintendent of Tax Administration of Guatemala’s Authorized Economic Operator Program.
“Harris’ efforts with Guatemala, with respect to the relationships between producers of U.S. textiles and Latin American textiles, is harmonizing standards and values through the region,” Skillman, the international trade and legislative attorney, said.
America’s Partnership for Economic Prosperity
The Americas Act, DHS’ enforcement actions, and the strengthened U.S.-Guatemala relationship all build upon the Biden Administration’s America’s Partnership for Economic Prosperity, frequently abbreviated to APEP or the Americas Partnership.
“We have a hodgepodge of existing trading relationships from different areas and different requirements and it's kind of a jumble,” Skillman said. “The Americas Act provides a framework to organize and relate all of these efforts to one another.
While originally launched in June 2022, APEP has continued to drive legislation, particularly bills regarding trade, economic development and combating the climate crisis, to counteract China’s growing influence in the region and help address the economic causes of migration, according to a White House fact sheet.
Congress members are interested in the possibility of modifying the Central America-Dominican Republic Free Trade Agreement rules of origin in the textiles and apparel industries in order to promote investment and job growth in the region, according to a Congressional Research Service report.
“Other Members have called for updating CAFTA-DR by incorporating similar provisions as those in USMCA, particularly on labor,” the report stated.
If passed, the Americas Act may offer a way to solidify Washington’s efforts to strengthen trade relationships with Central and South America, according to Skillman.
“By pointing towards an expansion of USMCA, this legislation would harmonize all of the rules in a coherent way,” Skillman said.
