US President Joe Biden has convened a two-day summit in the United States capital.
This inaugural gathering, known as the Americas Partnership for Economic Prosperity Leaders' Summit, aims to create a unique opportunity to shift global supply chains toward the Western Hemisphere, according to White House National Security Council spokesman John Kirby,
Biden to Host Summit Tackling Migration, Investment
This summit, set in motion following last year's Summit of the Americas in Los Angeles, highlights the intensifying competition between the United States and China, the world's two largest economies, as per Business Standard. The disruption caused by the pandemic has underscored the importance of diversifying trade and reducing dependence on Chinese manufacturing.
In 2022, the United States traded $1.2 trillion worth of goods and services with countries in the Western Hemisphere, a significant portion of which involved Canada and Mexico.
In contrast, the United States imported $562.9 billion from China. To reduce this trade imbalance and enhance supply chain resilience, Treasury Secretary Janet Yellen has articulated the administration's goal to work with "trusted partners and allies."
Yellen advocates a strategy called "friend-shoring" - focusing on collaboration with friendly nations rather than geopolitical rivals like China. She envisions increased US investment in South America, with support from the Inter-American Development Bank, the largest multilateral lender in Latin America.
The United States holds a 30% stake in the bank and seeks to support new projects through grants, lending, and new programs. Concerns have arisen about China's influence within the Inter-American Development Bank despite its limited voting rights.
While this initiative may not directly challenge China's economic dominance, it could address issues like irregular regional migration, according to ABC News.
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Mutual Benefit in America's Prosperity Partnership
President Biden underscores the idea of mutual benefit in this diplomatic approach, emphasizing that the Americas Partnership for Economic Prosperity is about expanding opportunities for working people in both the United States and its partner countries.
Janet Yellen points out that this economic partnership can positively impact critical sectors such as renewables, medical supplies, and semiconductors. The United States faces tough competition from China, increasing its investments and economic relations in South America, becoming the continent's largest trading partner.
However, the US-led initiative relies on private-sector investment and a more market-driven approach than China's state-driven investments. The goal is to choose projects and investments wisely to ensure that the actual people of the Americas ultimately benefit.
Although the Americas Partnership for Economic Prosperity does not involve new market access commitments, it may address other regional challenges, particularly migration-related ones.
By investing in the participating countries and providing sustainable financing, the initiative aims to strengthen the economies of these nations, ultimately reducing the impetus for people to leave their home countries.
While negotiations for the Americas Partnership for Economic Prosperity may need to catch up to those of the Indo-Pacific Economic Framework, the United States maintains an advantage in the Western Hemisphere due to its comprehensive ground rules, historical investment ties, and higher-value trade.
However, the success of this initiative will depend on strategic investment choices and fostering proper economic growth and prosperity for the people of the Americas, Voice of America reported.
