The US can solve the border crisis by decoupling from China
Vice President Kamala Harris says she is determined to get at the “root causes” of the migration crisis at America’s southern border. There is one way to do that and at the same time stabilize Central America, attract factories from China, reduce America’s strategic vulnerabilities and cut global carbon emissions.
Harris has just wrapped up her first foreign trip as vice president — she visited Guatemala and Mexico — but she barely touched upon the primary cause of the relentless northward movement of people. There are many reasons for the devastation of the Northern Triangle countries of Guatemala, Honduras, and El Salvador, but loss of manufacturing from the region to China in the first decade of this century is a crucial one. Therefore, giving manufacturers larger preferences to the U.S. market promises both long-term prosperity for this now-troubled area and a more stable southern border for Americans.
The Biden administration’s primary means of addressing core problems in the Northern Triangle, the source of about 40 percent of the undocumented migrants crossing into the U.S., is American aid.
The administration provided $310 million in additional assistance for Guatemala in April. This week, Harris promised 500,000 doses of COVID-19 vaccines and more funding on top of $26 million in coronavirus aid.
America’s assistance programs have inconsistent track records, especially in this hemisphere where money somehow manages to end up in the bank accounts of local elites. Northern Triangle countries do not need extraordinarily wealthy leaders.
Harris has been encouraging American investment in the region and late last month lined up about a dozen companies, including giants Microsoft and Mastercard, for this purpose. That’s an important start, but a more enduring solution is for manufacturers to locate in the Northern Triangle.
With manufacturing comes trade. Last year, thanks to the USMCA agreement, two-way merchandise trade between Mexico and the U.S. amounted to $536.7 billion. There are fewer undocumented migrants entering the U.S. from that relatively prosperous neighbor. In contrast, America’s two-way trade with the three Northern Triangle countries totaled a paltry $22.3 billion.
The trade solution has been tried before. The Dominican Republic-Central America-United States Free Trade Agreement came into force in 2006 and included all three Northern Triangle countries. CAFTA-DR FTA, as the pact is known, has not been a success in the Northern Triangle.
“The refusal to prioritize the region in the mid-2000s is the main reason that the Central America free trade agreement failed,” Washington, D.C.-based trade expert Alan Tonelson told me. “We paid no attention to the goal of making sure that the benefits were channeled to Central America.”
Benefits would flow to the region if the U.S. focused on goods made in the three Northern Triangle countries. Manufacturers of low-cost items would move there from China, especially if Washington’s three-year-old “trade war” with China continues, as it undoubtedly will.
“Near-shoring” is happening already, but at a pace slower than it should. According to the Inter-American Development Bank, Latin American producers each year could replace up to $80 billion of America’s imports from China. Many countries in the region, however, are missing the opportunity to woo factories from the other side of the Pacific.
Buying from factories in Central America would improve U.S. security. China continually threatens to use its position in supply chains to achieve geopolitical goals. For instance, in the early days of the COVID-19 pandemic, Beijing threatened to throw America into a “mighty sea of coronavirus” by cutting off the supply of personal protective equipment.
And that was not a theoretical threat. Last year, according to Maria Bartiromo of the Fox Business Network, Beijing had turned around at least one ship carrying protective gear for New York hospitals and, according to former Trump trade official Peter Navarro, “effectively” nationalized a 3M factory making N95 masks. Beijing periodically talks about halting the supply of rare earths, including last year when it launched a “verbal rocket” at American defense contractor Lockheed Martin for upgrading Taiwan’s Patriot air defense batteries.
Beijing continually maintains that U.S.-China “decoupling” is not possible. With a vibrant manufacturing sector in the Northern Triangle, decoupling would become inevitable, especially as companies seek to locate factories closer to consumers.
There’s one more benefit to buying goods from Central America. President Biden places great emphasis on slowing climate change. Manufacturing in the Northern Triangle would certainly cut down on carbon from transportation. Container ships plying the Pacific are one of the biggest sources of greenhouse gases. It is said that the 15 largest container vessels account for more carbon than all the world’s cars.
Prosperity generally follows trade. So why should Americans enrich a hostile Chinese state with everyday purchasing decisions when they can stabilize the Northern Triangle societies instead?
“If we are going to control immigration, then we have to take a more strategic view of global trade flows,” said Tonelson.
Gordon G. Chang is the author of The Coming Collapse of China. Follow him on Twitter @GordonGChang.