A Congressional initiative aimed at strengthening trade ties between North and South America could affect the promo supply chain.
The Americas Trade and Investment Act, known as the Americas Act, would establish a trade platform connecting Western Hemisphere countries, creating jobs and promoting commerce by investing billions of dollars in infrastructure and incentives to textile and apparel companies. A bipartisan group introduced the bill in March 2024.
The main goals of the initiative are to bring domestic companies’ production back from China and to create a community of countries with mutually beneficial, free-trade relationships called the “Americas Partnership.”
The bill introduces an e-governance system that would administer interactions between partnering countries, including currency exchange and regulation harmonization; incentives for American companies to reshore or nearshore production from China; avenues for investment; and humanitarian, education and immigration assistance.
“Simply put, this bill will bring manufacturing jobs back to the United States, expand our partnership with Latin America and counter the threat of China,” Rep. María Elvira Salazar said in a press conference. Rep. Adriano Espaillat, Sen. Bill Cassidy and Sen. Michael Bennet are the other members of the group who introduced the Americas Act.
China is integral to the promo industry, supplying approximately 90% of all imported promotional products. There have been efforts to draw production from the country due to geopolitical, ethical and supply chain concerns, but they are ultimately not widespread due to cheap prices and its manufacturing power. The Americas Act offers a comprehensive plan to pry factories back to the West, the members of Congress wrote.
The bill would create a U.S. Department of Treasury account worth $70 billion in loans and grants to finance costs of reshoring or nearshoring textile and apparel companies from China. Reshoring is when a domestic company brings its production from a foreign country back to its home nation. Nearshoring is the same concept but refers to bringing manufacturing back to the region of its home country.
It would invest in building convenient, efficient supply chains connecting Americas Partnership countries by creating a “Build Americas Unit” within the U.S. International Development Finance Corporation (DFC), providing the unit access to the DFC’s borrowing authority and increasing the DFC’s borrowing budget from $60 billion to $90 billion.
Using government resources to back nearshoring investments is unprecedented, as efforts are usually rooted in the private sector. Senior Vice Presidents of the U.S. Chamber of Commerce John G. Murphy and Neil Herrington wrote that implementing these industries in South American countries takes more than just building factories – and the proposal’s focus on digitalizing and implementing e-governance is essential.
Addressing issues like adequate transportation provisions, upskilling the workforce and shoring local governments, enforcing rule of law and combatting criminal groups would take tailored approaches for each country and are imperative in its lofty goals of nearshoring companies, they wrote.
The Americas Act’s e-governance system would be the mechanism to address those concerns. Countries would have to adhere to environmental and workplace regulations transparently to get access to tools for economic and government formalization provided by the online system, obligating partner governments to follow the rules and address their issues under the eye of the U.S. – another incentive for companies to nearshore.
The system would grant access to the United Nations digital governance platform, which provides a portal for businesses to pay taxes, obtain import and export licenses and process permits, and the U.S. Customs and Border Patrol Authorized Economic Operator program, which registers importers as low-risk and streamlines trade facilitation, with other benefits and capabilities designed by the U.S. Department of Commerce.
In addition, the network would provide humanitarian services like developmental assistance for the countries’ economies and governments, an American University of the Americas with multiple campuses, the creation of a new CARE Visa in the U.S. for elderly care, centers for anti-corruption and Peace Corps volunteers.
The proposal described a “Memorandum of Understanding” within the Americas Partnership that commits partners to combatting corruption and Chinese influence in the region, reenforces democracy and rule of law, and creates a working group to implement uniform regulations across the countries of the partnership.
Under the plan, the United States-Mexico-Canada Agreement (USMCA) that establishes free trade within North America would expand to members of the Americas Partnership.
The USMCA is the updated version of the North American Free Trade Agreement and went into effect in July 2020. It reduces costs, makes cross-border transactions easier and encourages regulatory cooperation for manufacturers in Mexico, Canada and the U.S.
Murphy and Herrington wrote that this expansion is one of the pitfalls of the Americas Act proposal. They wrote that the strict De Minimis Rules of Origin under USMCA – only 10% of the products’ ingredients can be sourced from outside North America to qualify for free trade – would restrict meaningful transactions for countries like Ecuador or Uruguay that cannot adhere to them.
They also wrote that it would undermine existing free trade agreements between the U.S., Canada, Mexico and South American countries, which have different rules regarding intellectual property and investment protections than USMCA.
The most problematic aspect of the Americas Act, according to the Chamber of Commerce representatives, is its proposal to overturn the World Trade Organization’s foundational agreement, which regulates tariffs and lowers barriers for trade between the U.S. and its European, African, Asian and other allies. They argue that overturning the agreement would invite tariff wars, and though it may generate tariff revenue as the proposal suggests, it would ultimately be a disservice to the U.S. economy.
The plan states that the project would be self-funded and at no cost to taxpayers, using tariff money generated and funds produced by trade.
Though the bill is not perfect, Murphy and Herrington believe in its potential to revolutionize trade in the Western Hemisphere and benefit all Americans, North and South.
“On one point, we are all agreed: When it comes to nearshoring, trade-led economic growth and inclusive economic development in Latin America and the Caribbean, strengthening U.S. trade and investment ties represents a real opportunity,” they wrote.
“On the Americas Act, legislators should refine their work, keep its good ideas and reject elements that would put our prosperity and global trade relationships at risk.”
