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White House to lure US firms to Latam from Asia in nearshoring drive

US President Donald Trump made "Buy America" policies a centerpiece of his administration since taking office in 2017

President Donald Trump

President Donald Trump

By Andrea Shalal and Cassandra Garrison
WASHINGTON/BUENOS AIRES (Reuters) - The Trump administration is readying a new initiative that would use financial incentives to encourage U.S. firms to move production facilities out of Asia and into the United States, Latin America and the Caribbean, a senior White House adviser said on Wednesday.
The project could bring $30 billion to $50 billion in U.S. investment back to the Americas, Mauricio Claver-Carone told Reuters in an interview, adding that infrastructure, energy and transportation could be the first potential areas of focus.
"We're essentially creating a 'Back to the Americas' initiative," he said. That would include both returning some facilities outsourced to China back to the United States and basing others in Latin America and the Caribbean in a drive for more so-called nearshoring, Claver-Carone said.
He gave no details about the scope of possible incentives, but pointed to the administration's use of a $765 million loan to encourage Eastman Kodak Co to produce pharmaceutical ingredients in the United States to help fight the coronavirus pandemic.
U.S. President Donald Trump has made "Buy America" policies a centerpiece of his administration since taking office in 2017, with those efforts accelerating sharply since the turmoil created by the pandemic.
The United States and China signed a trade deal in January, but tensions have mounted in recent months over Beijing's handling of the outbreak, a national security law limiting the autonomy of Hong Kong, and other issues.
Claver-Carone said the administration had already been working with countries in Latin America and the Caribbean to help them attract U.S. investors, but the pandemic helped convince U.S. companies it was time to get on board. He did not name any companies.
He said the outbreak had clearly demonstrated the advantages of having suppliers based closer to the United States than in Asia.
The initiative would not focus on cheap labor costs, but would build on provisions aimed at protecting workers that were included in the U.S.-Mexico-Canada trade agreement that entered into force in July, he added.
Claver-Carone also said there needed to be an improvement in transparency over Chinese lending in Latin America.
He said Ecuador in particular was "not being able to advance and move forward and kind of unshackle itself from that unfair, over-collateralized debt to China."
Ecuador's President Lenin Moreno has sought to renegotiate the terms of its debt to China, which totaled $6.5 billion in 2018.
China invests heavily in Latin America and has been responsible for more than $40 billion in lending to the region since 2015, according to Inter-American Dialogue data.
The United States wants to "collaborate" with China to ensure its lending practices in the region are more transparent, said Claver-Carone, echoing a push by the World Bank.
The Chinese embassy in Washington did not immediately reply to a request for comment.
If he wins a September election, Claver-Carone would be the first U.S. candidate to head the Washington-based Inter-American Development Bank (IDB), Latin America's principal development finance institution.
His candidacy has prompted push-back from some Latin American countries and former leaders, including publicly-shared letters signed by former presidents and ministers stating their opposition.
Claver-Carone, who as a top Latin American adviser for Trump has played a key role pushing for punitive measures against socialist-run Venezuela and Cuba, said he had "overwhelming support" from countries in Latin America and the Caribbean, including Brazil, Colombia and Ecuador.
He said 15 countries in the region had publicly supported him for the IDB job and six others, which he declined to name, had privately expressed their backing.
(Reporting by Andrea Shalal in Washington and Cassandra Garrison in Buenos Aires, Editing by Rosalba O'Brien)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Jul 30 2020 | 9:42 AM IST

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