One year later, root causes of migration still need to be addressed

A year ago, as part of her role addressing the root causes of migration from Central America, Vice President Kamala Harris announced a Call to Action for businesses and social enterprises to “make new, significant commitments to sustainably address the root causes of migration by promoting economic opportunity.” As focus shifts to the midterm elections, delivering on this promise will become even more critical if Democrats hope to maintain control in Washington.  

The first pillar of the Root Cause Strategy initiated by the Biden administration is to address economic insecurity and inequality in the region. To that end, Vice President Harris has primarily focused on promoting private sector investment in the region, recently touting several major U.S. companies’ promised investments.  

Despite these actions, illegal immigration at the southern border has increased rapidly since President Biden was sworn in, rising at a faster rate in his first six months than any other period since the Border Patrol’s founding nearly a century ago. Over two million migrants were stopped while attempting to enter the United States from Mexico illegally in 2021. Compared to the average 500,000 people stopped per year in previous administrations, it is clear that the U.S. needs to take a different approach.  

Yet without significant changes, this trend will continue, with the U.S. Customs and Border Protection reporting that there were 153,941 encounters along the southwest land border in January alone.  

It is abundantly clear that more work needs to be done to sustain the long-term economic growth that is needed to address the root causes of migration, in large part fueled by a lack of job opportunities. Given that many countries in Central America, particularly the Northern Triangle (made up of Honduras, Guatemala and El Salvador) borrowed heavily to supply their citizens with support packages during the pandemic, it will likely take these countries many years to recover economically, making timely action even more critical.  

Instead of focusing on a scattershot of private sector investments, the Biden administration should look at structural changes that would promote growth long-term, particularly changing policies that can be found within the Central American Free Trade Agreement (CAFTA-DR).  

CAFTA-DR was originally established to promote “stronger trade and investment ties, prosperity, and stability throughout the region and along our Southern border.” While this agreement has had some success at boosting trade amongst member countries, there is more that could be done to strengthen the agreement to boost economic development in the region.  

A recent report published by the Mosbacher Institute at Texas A&M University pointed out that apparel production in Central America is stifled by a provision in CAFTA-DR that limits the yarns and fabrics that can be used in clothing to qualify for duty-free trade. This report highlights how “in developing countries, exporting apparel creates jobs, reduces poverty, and contributes to economic growth.” 

While China and Vietnam’s share of U.S. apparel imports expanded, Central America’s share has remained constant or fallen. But not only is the quantity of apparel products being produced and exported in the region not increasing, Central America exports a narrow variety of apparel products, particularly when compared to China and Vietnam.  

This lack of growth and diversity in apparel is largely due to the yarn-forward rule of origin requirement that mandates that apparel products, unlike other products covered by CAFTA-DR, be wholly sourced from member countries. This rule is maintained at the insistence of a handful of monopolistic yarn producers and allows them to earn record profits and charge a premium while suppressing apparel job creation in the Northern Triangle. This anti-competitive rule must be addressed if the administration truly wants to create apparel jobs in this hemisphere. 

Additionally, this rule and the exceptions to it are less understood by small and medium producers, and presents an administrative burden that is too costly for these businesses and, as such, limits the ability of the agreement to promote job growth in the apparel sector. 

Allowing exceptions to the yarn-forward rule for items not produced here in sufficient quantities would allow Central America to upgrade and diversify. And boosting the Central American apparel industry would also go a long way towards promoting economic equality, given the sector is a key driver for jobs for women in the region. Additionally, it would help draw migrants out of seasonal agricultural work into more steady employment.  

Updating the rule of origin requirement to allow for more diverse inputs would also have the added benefit of helping secure supply chains by moving apparel production to Central America and away from Asian countries.  

Without structural changes to the restrictive rules that govern trade between the U.S. and Central America, we can expect economic growth to continue to be stifled in the region, and therefore migration to the states to only accelerate. If Democrats hope to stymie the predicted loss of congressional seats in the midterms, they should work to deliver on their promises like addressing the root causes of migration by updating the rule of origin requirements in CAFTA-DR.  

Carlos Solorzano is the CEO of the Hispanic Chambers of Commerce of San Francisco.