Focus on Western Hemisphere and USMCA Expansion Sought in Americas Act

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Mar. 8, 2024
By: Ashley J. Bodden

Earlier this month, U.S. Senator Bill Cassidy (R-LA) along with Senator Michael Bennet (D-CO) and U.S. Representatives Maria Elvira Salazar (R-FL) and Adriano Espaillar (D-NY) introduced their much-anticipated bill The Americas Trade and Investment Act (“Americas Act”). This bipartisan bill is aimed at expanding regional trade, investment, and people-to-people partnerships. In many ways the proposed legislation mirrors the goals of the Biden Administration’s Americas Partnership for Economic Prosperity, although it covers some additional issues.

One of the most notable sections of the Americas Act is the pathway Latin American allies would have to join the U.S.-Mexico-Canada Agreement (USMCA). Because the USMCA member countries will review the Agreement in detail in 2026, there may be an opportunity at that time to consider how expansion would work. Canada, Mexico, and the United States already have overlapping free trade agreements with a number of counties in the Western Hemisphere.

The Americas Act encourages the United States Trade Representative (USTR) to start a process that identifies other harmonization mechanisms for FTAs in the hemisphere. The bill also highlights Costa Rica and Uruguay as good potential pilot countries for USMCA expansion, while making it clear that no Americas Partner country would be required to join the USMCA as a condition of accepting the other benefits afforded to it under the Act.

In addition to the expansion of the USMCA, the bill creates grant and tax incentives for the reuse and recycling of textiles, which is aimed to reduce the demand and dependency for Chinese textiles. The Act provides $150 million per year for five years to help combat Chinese textile and apparel forced labor, bringing textile and apparel investment back to the U.S. and to Americas Partner countries, creating new jobs throughout the textile supply chain in the U.S. and in Americas Partner countries, rewarding existing textile manufacturing enterprises in the Hemisphere, and solidifying the textile and apparel supply chain in the U.S. and in Americas Partner countries.

The bill also aims to provide Customs and Border Protection (CBP) with the power to monitor and curb goods violating the Uyghur Forced Labor Prevention Act (UFLPA) and creates tax incentives to those who re-shore and near-shore textile and apparel industry from China. The Americas Act provides a change to the de minimis privileges, which would peg de minimis levels to the de minimis amount available to U.S. companies in the country of origin. There is also a provision what would blacklist some countries, including China and Russia.

Since its introduction, House Select Committee on China Chairman Representative Mike Gallagher (R-WI) has endorsed the bill, saying, "We must encourage key industries to start diversifying their supply chains." The Act substantial benefits to not just the U.S. trade industry, but also the trade industry within the Latin American region.

Should you have any questions on trade agreements or any other trade-related questions, please contact any attorney at Barnes, Richardson & Colburn LLP.