Returning to Obama-era Foreign Policy
Madrid –Joe Biden’s victory in 2020 signals a change in the United States’ foreign policy priorities, especially towards Latin America. It also represents the return of Former US President Barack Obama’s foreign policy priorities as well as many staffers, including President-Elect Biden’s nominee to head the State Department, Anthony Blinken. With a renewed focus on multilateralism, the United States’ foreign policy initiatives may more closely represent traditional US foreign policy with acute changes carried over from the current administration. This is especially relevant in Latin America, where the United States has seen an erosion of commercial and diplomatic market share with the growth of Chinese investment initiatives. Unlike the current administration’s attitude towards Latin America, President-Elect Biden’s foreign policy in the region will likely focus on strengthening economic relationships, reinforcing a commitment to human rights and democratic reform, and US-based aid to stem the flow of asylums in Central America.
Change to Trade Policy
While Vice President and Chair of the Senate Foreign Relations Committee, President-Elect Biden supported trade integration initiatives, specifically on issues like the US-Colombia Trade Promotion Agreement and the Trans-Pacific Partnership (TPP). This was especially true in light of China’s growing regional partnerships and investments in Asia and around the world. Under pressure from the Democratic Party, however, it is unlikely that the President-Elect could feasibly push additional free trade agreements or other multiparty trade partnerships during his first term. The Democratic Party’s winning coalition, made up of progressive liberals and working class voters, campaigned on concerns around the impact of globalization on American workers. Across the political spectrum, views on trade liberalization have soured and so any attempt to rejoin the TPP, for instance, would surely fail in Congress. It is more likely that there will be a rolling back of existing tariffs in the region and a return to regulatory certainty to incentivize American investment and facilitate the restructuring of supply chains in the hemisphere.
China in Latin America
Over the last decade, US investment in Latin America has shrunk given the growth of Chinese initiatives. Amid these realities, it’s likely that the incoming administration will attempt to continue the Obama-era push to encourage alternatives to Chinese supply chains; a call that has been made more vociferously during the Trump years. This could also include continuing current US President Donald Trump administration’s strategy of pushing allies to ban or limit the influence of Chinese companies in strategic industries such as telecommunications. The political implications of Chinese investment in Latin America is also likely to inform the President-Elect Biden’s policy in the region. For instance, it is likely that the United States would look to strengthen multilateral organizations like the Organization of American States (OAS) and reaffirm the region’s commitment to human rights and democratic governance. In an op-ed penned in Foreign Affairs this year, President-Elect Biden said of the United States’ role in the region, “…we need to do more to integrate our friends in Latin America and Africa into the broader network of democracies and to seize opportunities for cooperation in those regions.” This would indicate further US assistance and investment tied to human rights, environmental protections, and democratization initiatives. The focus on strengthening and increasing US investment in Latin America would ostensibly lead to a more favorable environment for US businesses.
Creating Relationships
President Trump’s administration has developed relationships with populist movements in the region, independently of political persuasion. This was highlighted with President Trump’s relationship with Brazilian President Jair Bolsonaro and even the Mexican head of state, President Andres Manuel Lopez Obrador. The incoming administration is likely to realign US relationships in Latin America to project a commitment to liberalization and hemispheric integration. During the Obama administration, the President-Elect played a large role in expanding aid to Central America in an attempt to stem the flow of refugees and migrants. It is very likely that these same aims of reducing violence and expanding aid in Central America will drive the political initiatives of President-Elect Biden’s administration. This is especially salient given the “Remain in Mexico” policy devised by the current administration. President-Elect Biden will need to reinforce his relationship with President Obrador and find common ground to alleviate the migratory situation on the US-Mexico border. Lastly, and depending on the administration’s congressional support, President-Elect Biden may look to normalize investment relationships with Cuba. This would signal a renewed opportunity for American companies, primarily in the in the travel and hospitality sector, that had already seen some rapprochement in Cuba during the Obama presidency.
CONCLUSION
US businesses can expect to find more opportunities in Latin America given the incoming administration’s foreign policy priorities. Domestic policies aside, US engagement in the region will create more regulatory certainty and incentives for American investment. This is especially true for manufacturers, commodities, and value-added goods which will see lower operating costs with rolled back tariffs. In recovering from the COVID-19 pandemic and amid changing political realities, businesses must understand the unique dynamics at play in every market.
Author Bio– Miguel Tavera
Miguel Tavera is an international consultant with experience living in over five countries and speaks three languages. He has worked with a number of industries including technology, cybersecurity, healthcare, and banking.
Miguel’s expertise is in global strategy as well as macroeconomic and political risk analysis. He is currently pursuing his MBA and LLM in International Business Law at IE Business School in Madrid, Spain.
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