With eyes on China, US unveils new Latin America economic plan at summit

The Biden administration has unveiled a new proposed US economic partnership with Latin America as regional leaders gathered for a summit in Los Angeles which has been undermined by discord over the guest list.

Seeking to counter China's growing clout in the region, a senior administration official said on Wednesday that President Joe Biden is offering neighbours to the south an alternative that calls for increased US engagement, including more investment, strengthening supply lines and building on existing trade deals.

However, Biden's "Americas Partnership for Economic Prosperity," which still appears to be a work in progress, stops short of offering tariff relief and, according to the US official, will initially focus on "like-minded partners" that already have US trade accords. 

Negotiations are expected to begin in early fall, the official added.

Biden's agenda has been marred by a partial boycott by leaders upset at Washington's decision to exclude Communist-run Cuba and the leftist governments of Venezuela and Nicaragua from the Summit of the Americas.

Washington, which already has a combined trade pact with Canada and Mexico, a collective one with Central America and a series of other agreements, will attempt to develop new customs, digital trade, labour, environmental and corporate accountability standards, according to the official.

Still, the administration appeared to be moving cautiously, mindful an initiative that promotes jobs abroad could face US protectionist pushback.

All eyes on China

Even as Biden deals with major priorities such as mass shootings, high inflation and the Ukraine conflict, the US official said the president is seeking to press the administration's competitive goals against China with the launch of the new partnership for the region.

The challenge from China is clearly a major consideration.

China has widened the gap with the United States in trade terms in large parts of Latin America since Biden came into office in January 2021, data show, underscoring how Washington is being pushed onto the back foot in the region.

An exclusive Reuters analysis of UN trade data from 2015 to 2021 shows that outside of Mexico, the top US trade partner, China has overtaken the United States in Latin America and widened its advantage last year.

"The best antidote to China's inroads in the region is to ensure that we are forwarding our own affirmative vision for the region economically," the administration official said.

Biden’s aides have framed the summit as an opportunity for the United States to reaffirm its commitment to Latin America after years of comparative neglect under Biden's predecessor Donald Trump.

But diplomatic tensions broke into the open this week when Washington opted not to invite the three countries it says violate human rights and democratic values.