US Treasury Secretary Janet Yellen called this Thursday to strengthen US supply chains from Latin America, which would reduce dependence on China and counter the growing influence of the Asian superpower in the region. This happened during an event at the headquarters of the Inter-American Development Bank (IDB), which was attended by several heads of state and government of Latin American countries at the invitation of the organization’s president.
“Let me address an area where we have a unique opportunity to work much more closely together: supply chain diversification efforts. The United States is working with its partners on what I call “friendshoring,” that is, diversifying our supply chains with a range of trusted partners and allies. This has huge potential benefits for boosting growth in Latin America and the Caribbean,” the Finance Minister said.
According to Yellen, diversification offers the opportunity not only to significantly increase trade but also innovation, in sectors from renewable energy to semiconductors to medical supplies. “Latin American and Caribbean companies – already key partners of the United States in producing solar and wind technologies – will increasingly have the opportunity to lead new areas of clean energy. “For example, helping to establish vertical supply chains through the use of locally obtained lithium in the local production of batteries,” he cites as an example.
In the healthcare sector, medical device and pharmaceutical companies could grow and introduce innovations to meet increased demand, the finance minister added. “And in the semiconductor sector, the region’s skilled workers can expand production of advanced materials, including the automotive chips needed for current and next generations of electric vehicles,” he quoted third.
Yellen also reiterated her commitment to supporting a capital increase at IDB Invest to better mobilize private capital for the region. The capital increase proposal presented by the IDB for its cooperation arm with private sector companies and investors aims to implement a new business model that will significantly expand its impact in Latin America and the Caribbean. The idea is to mobilize more private resources to respond to the region’s development needs in key areas such as social issues, gender equality and inclusion, and climate change.
“I am proud to reaffirm the Biden-Harris Administration’s strong commitment to working with the IDB Group under the excellent leadership of Ilan Goldfajn to support strong, sustainable and inclusive economic growth, supported by commitments to democracy, “Equality, transparency and the fight against corruption and the rule of law,” said Yellen. The United States is the largest shareholder in the IDB, Latin America’s development bank. The organization recently partnered with the World Bank to coordinate work in the region.
The Finance Minister, together with Goldfajn, opened an event that was also attended by Gabriel Boric, President of Chile; Rodrigo Chaves Robles, President of Costa Rica; Luis Abinader, President of the Dominican Republic; Guillermo Lasso, President of Ecuador; Dina Boluarte, President of Peru, and Luis Lacalle Pou, President of Uruguay. They are all in Washington this Friday to take part in a meeting with the President of the United States, Joe Biden, and to promote the so-called Alliance of the Americas for Economic Prosperity, launched at the Summit of the Americas in June 2022 became. A total of 12 countries in the hemisphere are members of the alliance, an initiative that aims to combat economic inequality and promote regional economic integration.
The IDB is taking a leading role in promoting these policies. Ilan Goldfajn stated in his speech: “The IDB’s mission is to promote regional integration. It is our comparative advantage and is in our DNA. “We are pleased to be the chosen channel to mobilize more responsible investments for the region.”
Bilateral trade in goods and services between the United States and Latin America and the Caribbean was nearly $1.5 trillion in 2022. Over the past three years, the United States has been the region’s largest source of foreign direct investment, accounting for nearly 40% of total investment flows, according to the IDB. At the same time, however, Latin America and the Caribbean’s trade with China reached unprecedented levels in 2022, exporting about $184 billion worth of goods to China and importing about $265 billion, according to an analysis by the Center for Development Policy Global Boston University quoted by AP.
During the event, Goldfajn announced new tools for IDB for the Americas, a program launched in September to promote business opportunities and strengthen economic ties between the United States and countries in the region.
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