Contextualizing the November 2023 APEP Summit

On November 3, 2023, government representatives from across the Western Hemisphere flocked to Washington for the American Partnership for Economic Prosperity (APEP) summit. The event held economic and geopolitical importance: APEP aims to foster closer trading ties between Western Hemisphere nations and counter China’s efforts to acquire influence in Latin America though development projects. The summit marked a turning point in the partnership, with the Biden administration scaling down its trade commitments while ramping up APEP’s development aspects.

Q1: What is APEP?

A1: In June 2022, President Biden announced APEP at the Summit of the Americas in Los Angeles, California. According to the Biden administration, the partnership is meant to chart “a path forward to tackle economic inequality, foster regional economic integration and good jobs, and restore faith in democracy by delivering for working people across the region.” National representatives from the Western Hemisphere—which accounts for approximately a third of global GDP—aimed to set up such a framework in the aftermath of the economic turbulence caused by the Covid-19 pandemic. APEP aims to foster resilient supply chains, spur growth by facilitating investment, update public spending, broaden anti-corruption measures, promote decarbonization, and ensure inclusive trade. In short, APEP is meant to be a vessel for economic prosperity throughout the Americas.

Q2: What has changed since the APEP declaration in January?

A2: Observers in favor of more comprehensive trade partnerships are worried about a shift in objectives and strategy compared to the Joint Declaration on APEP signed in late January 2023, as the Biden administration is rumored to be moving away from a structure similar to the Indo-Pacific Economic Framework and toward a broader forum for addressing issues. This potential move has garnered criticism and questions from members of President Biden’s own party. In a letter addressed to White House officials, Senator Tim Kaine (D-VA) praised the initial architecture of APEP before asking pointed questions about the administration’s “pivot.” Kaine—the chair of the Senate Foreign Relations Western Hemisphere subcommittee and a continual advocate for free trade agreements (FTAs) in South America—went on to urge the Biden administration to pursue goals that fit APEP’s original proposal.

Additionally, Senator Bill Cassidy (R-LA) has spent this year advocating for the bipartisan Americas Trade and Investment Act. The draft legislation, co-led in the Senate by Senator Michael Bennet (D-CO) and spearheaded by Representative Maria Salazar (R-FL) in the House, calls on the United States to develop a coherent Latin America policy. One of the key features of the text is a “pathway” to membership in the United States-Mexico-Canada (USMCA) Agreement for countries in the region. This, along with Senator Kaine’s letter, can be viewed as evidence of a growing frustration between Capitol Hill and the White House on trade policy; some members of Congress favor text-based commitments, while the White House seeks to pursue non-binding, flexible agreements that do not require the blessing of Congress.

Country inclusion in APEP has thus been an issue for Capitol Hill. For instance, on October 31—just three days before the start of the summit—Representative Salazar wrote a letter to the Biden administration that called Paraguay’s absence from APEP a “major problem.” Salazar described the nation as “the region’s most reliably pro-American country” and wrote that Paraguay’s president personally informed her last week that they were not invited to the summit. She finished the letter by noting that Paraguay and the United States do not have an FTA and that the country has “much to offer” in terms of trade and investment.

Q3: What is the significance of the Inter-American Development Bank in APEP?

A3: On November 2, the day before the summit, the Inter-American Development Bank (IDB) hosted the invitees and regional stakeholders for the APEP IDB Responsible Investment Forum. During the forum, U.S. treasury secretary Janet Yellen gave opening remarks, revealing some of the work that the Biden administration has accomplished alongside the IDB. Yellen focused her remarks on the opportunity that APEP provides to diversify collective supply chains:

“As a result of APEP, the United States and the IDB have committed to work together to support the region’s supply chain integration through comprehensive efforts. We will help provide low-cost financing, support knowledge sharing and worker upskilling, and engage with stakeholders from across the public and private sectors, academia, and civil society to identify and tackle bottlenecks, thereby bolstering the region’s competitiveness in priority sectors.”

Secretary Yellen called for structural reforms to the IDB Group so that it can “evolve to better take on pressing regional and global challenges.” She also mentioned that the administration was working with Congress to secure an additional increase in capital for IDB Invest, the group’s private sector institution. The Biden administration and Congress had agreed on an initial capital increase in 2022.

Senator Bennet, co-sponsor of the aforementioned Americas Act, also spoke at the IBD event on November 2. He called his legislation “entirely consistent” with the Biden administration’s vision for APEP. During a panel, Bennet pushed for the Americas Act to be passed by Congress, which would open the door for creating incentives around tax and trade. This statement by the Democratic senator appears to be an attempt to reconcile the differences in philosophy between Congress and the White House on the path forward for APEP. Although APEP itself will move away from text-based agreements, legislators on the Hill are offering deals that bind the United States to supporting trade and development in the Western Hemisphere.

Another dimension to the IDB-based work is the BID for the Americas program. Speaking on the morning of November 3 at a working breakfast, Secretary Yellen thanked the IDB for launching the new program, which aims to  increase the participation of U.S. businesses in public procurement, trade and investment, and financing in the Americas. The program will implement a slate of platforms and events dedicated to making U.S. investment into the region easier, including a “U.S. Bidder Center,” a virtual space where U.S. companies can access information about IDB-funded procurement in IDB countries.

Q4: What were the outcomes of the summit?

A4: Biden kicked off the summit by giving remarks framing APEP as a counter to Chinese economic diplomacy: “We want to make sure that our closest neighbors know they have a real choice between debt-trap diplomacy and high-quality transparent approaches to infrastructure and inter-development.” As the summit concluded, the White House released the East Room Declaration of the Leaders of the Americas Partnership for Economic Prosperity, a joint-declaration drafted by the participants. In large part, the declaration sets out to organize the future work of APEP by defining five priorities and three policy tracks.

The priorities are meant to “focus and drive” APEP’s collective work and include (1) strengthening regional competitiveness and integration, (2) fostering shared prosperity and good governance, (3) building sustainable infrastructure, (4) protecting the climate and environment, and (5) promoting health communities. The tracks were established to carry out the priorities at the ministerial level and give further instruction to ministers in their respective fields. The tracks include a foreign affairs track, a trade track, and a finance track.

The language describing the proposed work for each of the tracks is vague, but some specific asks point to the policy changes that could be coming in the near future. The foreign affairs track calls for development of a “regional accelerator for entrepreneurs” and “programs to foster development in the work force, particularly in the digital economy.”

In the trade track, the declaration calls on ministers to “immediately focus on enhancing regional integration by advancing implementation of the [World Trade Organization (WTO)] Agreement on Trade Facilitation and digitization of customs mechanisms throughout the region.” This WTO agreement, known as the TFA, entered into force in 2017 and contains binding agreements that simplify export and import procedures. A 2020 report from the U.S. International Trade Commission revealed that the implementation of the TFA was widely incomplete. The language in the Finance Track highlights the work done by the IDB and asks APEP finance ministers to continue working with multilateral investment banks to facilitate greater financing within the region.

Additionally, a fact sheet released by the White House in tandem with the APEP declaration lays out the outcomes of the summit and gives further details on the forward-looking structure of APEP. Notably, the fact sheet prescribes ministerial-level meetings for APEP countries three times a year and a leader-level summit once every two years. Costa Rica was announced as the host of the 2025 APEP Leaders’ Summit. The country announced a new semiconductor initiative in the form of a series of symposiums—the Americas Partnership Semiconductor Workforce Symposium—which will be organized by the U.S. Department of State and offer a chance for a wide range of stakeholders to discuss, in particular, workforce development. Costa Rica will hold the first symposium in February 2024. Additionally, the Costa Rican government announced a new “Center of Excellence” meant to educate individuals across Latin America and create a pipeline for talent in semiconductors, 5G technology, and artificial intelligence. Funding for the center comes from the International Technology Security and Innovation Fund, which itself is funded by the 2022 CHIPS Act. The center is the first tangible outcome of the ITSI fund, which was launched earlier this year.  

Conclusion

The primary outcome of the November APEP Leaders’ Summit was the reframing of the partnership. The White House hinted at a looser framework; for example, the declaration uses the word “flexible” to describe the new direction of APEP. The summit also worked to resolve some U.S. foreign policy tension between Congress and the White House. Senator Bennet spoke publicly the day before the summit, describing his Americas Act as fully in line with the president’s vision for the region. However, disagreements remain over the White House’s general lack of enthusiasm for binding agreements on trade.

In terms of policy outcomes, the United States revealed that the IDB will play an outsized role in U.S. regional strategy. The IDB Group launched a slate of efforts, consistent with U.S. policy aims, to scale up development financing in APEP countries. When it comes to strategic trade, the impacts of the summit are limited, but they tee up further action. Notably, a series of semiconductor workforce symposiums will bring together regional stakeholders to discuss development opportunities. The announcement of Costa Rica’s Center for Excellence—which is funded by the U.S. State Department—is a tangible improvement for workforce development in emerging technologies.

However, the lasting sentiment of the summit is to “wait and see.” Now that the framework for action has been set, analysts can look to regular APEP meetings at the ministerial and leadership levels for updates on regional economic cooperation.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Matthew Schleich is an intern with the Scholl Chair in International Business at CSIS. Thibault Denamiel is a research associate with the Scholl Chair in International Business at CSIS.