The Free Trade Area of the Americas has spent years on the back burner, but Biden could revive it when he takes office.
In the Western Hemisphere, 1994 was the year of trade. The United States, Mexico, and Canada integrated their economies by inking the North American Free Trade Agreement (NAFTA), and the United States held the first Summit of the Americas with the objective of striking a hemisphere-spanning trade deal (the so-called Free Trade Area of the Americas). Over a quarter century later, the recent U.S.-Mexico-Canada Agreement (USMCA) has modernized and replaced NAFTA, but the broader free trade agenda in the Western Hemisphere has stalled. In 2021, the United States will once again host the triennial Summit of the Americas—and it must put free trade squarely back on the agenda.
For Washington, it is not always obvious why the Americas (aside from neighboring Canada and Mexico) deserve its focus in matters of trade. The region has struggled to grow at the rapid pace seen in other developing regions. The GDPs of the other countries of the hemisphere, including Canada and Mexico, barely add up to one-third of the United States’. The grand prize for U.S. trade negotiators has always been a large multilateral trade deal with Asia and, to a lesser extent, with Europe.
Yet those targets seem further and further off. Even beyond the limitations of the Trump administration, a possible European trade deal will remain entangled in disagreements over defense spending and Europe’s recent propensity to aggressively regulate U.S. technology firms. And in Asia, the United States forwent the opportunity for a grand bargain when the Trump administration scrapped the Trans-Pacific Partnership (TPP) in just its first weeks in power.