Ideas to Action:

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Integration in the Americas: One Idea for Plan B (Essay)

June 16, 2008
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In this CGD Essay, visiting fellow Nancy Lee provides the full details and policy recommendations for a strategy of regional investment integration in the Americas. The essay, excerpted from her chapter in the forthcoming White House and the World: A Global Development Agenda for the Next U.S. President, builds on a previously published CGD Note by specifying the scope of the proposed agreement, outlining its expected gains, and identifying the initial steps the United States could take to encourage a fresh agreement to be reached.

The idea is to set common standards, based on international norms and newly available data, for reducing regulatory, tax, and legal barriers to domestic and foreign investment. Standards could also be set in other pressing areas, such as strengthening protection of the environment and labor.

Beyond its benefits for growth, a regional investment agreement would likely boost the incomes of the poor by helping small businesses trapped in the informal sector move into the more productive formal sector. Compliance with agreement standards could be promoted through regular country report cards, or a peer review process, or dispute settlement options for investors and states. Generous transition periods and technical assistance could be offered to help countries build capacity to meet standards. Countries like Colombia, Guatemala, Mexico, and Peru that have been named top ten global business climate reformers by the World Bank could take the lead in launching exploratory discussions, with strong support from the United States and regional institutions.

Leaders at the next Summit of the Americas in early 2009 might support pursuit by interested countries of such a regional investment agreement as one possible new way forward toward integration and income convergence in the hemisphere.

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