Trump administration policies that place a higher priority on national security and economic growth also could have an impact on growing energy investment opportunities for US companies in Latin America, an Inter-American Dialogue energy working paper suggested.
“Now is, in many ways, an opportune moment for US investment in Latin America’s energy sectors,” authors Lisa Vicidi and Rebecca O’Connor said. “Natural resources investment in the region has decreased in recent years, largely as a result of the decline in commodity prices. However, many countries have recently become more open to energy investments, enacting market-friendly policies and regulatory reforms to attract private capital and international expertise.”
They warned that changing trade accords, particularly the North America Free Trade Agreement, could increase costs for foreign energy companies to invest in Latin America. China and other countries could fill the vacuum if US policy changes discouraged companies in this country from investing there, they added.
“US investment in energy brings multiple benefits to both the US and Latin America,” the report said. “For Latin American governments, oil exports to the US market provide a critical source of revenue and the development of energy resources is an economic driver for prosperity in the region. For the US, energy investment in Latin America also has the potential to generate investment revenue and employment within the country.”
It said that while most US investments in Latin American energy have been driven by markets, policies also have played a part in promoting energy integration and cross-border investment.
“Various administrations have developed initiatives to promote US-Latin America energy cooperation. Collaboration on energy issues in turn helps bolster broader economic, political and security relations with Latin American countries, many of which serve as key US allies, and cooperate on a range of issues from immigration to counter-narcotics,” the report said.
It recommended that the US:
• Maintain a fluid exports system that allows Latin American and Caribbean market access. “This entails both helping US energy exporters reach Latin American markets and ensuring that Latin American markets are open to US investment,” the report said. “Open energy trade policies and free-trade agreements have provided the foundation for investment and access to markets in the region.”
• Support regulatory cooperation and reforms in Latin American and Caribbean countries that enable private investment. “Energy should be included as an agenda item for broader high-level policy discussions with many countries in the Western Hemisphere, particularly with Mexico as it continues to implement its energy reforms,” the report said.
• Support commercial opportunities for renewable energy development in the region. “Facilitating access to finance is one of the key policies that can further private sector investment in clean energy solutions,” the report said.
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