United States Should Boost Trade with Poorest Countries

May 11, 2011
The United States could help developing countries by opening its trade with poorest countries. WASHINGTON — With a complex and difficult situation grinding on in Libya, the uprising in Syria, war in Afghanistan and fresh uncertainty about U.S. assistance to Pakistan, many Americans feel beleaguered about international involvement. At the same time, they recognize that the U.S. cannot disengage from a globalized world. If only there were a simple, low-cost way for the United States to intervene for good in the world. The United States has one such opportunity. A United Nations conference in Istanbul this week focuses on 48 of the world’s poorest and most economically vulnerable countries: the so called “least developed countries” — 33 in Africa, 14 in Asia and Oceania, and one, Haiti, in the Western Hemisphere. Half the almost 900 million people living in these countries subsist on less than $1.25 a day. Some of the countries — the Democratic Republic of the Congo, Sudan, Somalia, Yemen and Afghanistan — make headlines as security problems. Many of the others — Bangladesh, Nepal, Senegal and Tanzania — against all odds have started haltingly down the road of economic and political reform and are making good progress on growth and better government. Almost all would benefit from greater engagement in the world economy. From medieval Europe to early independent America to contemporary East Asia, trade has been the route that countries have most often taken to gain a foothold in prosperity and modernity. Trade preference programs are an important, though underused, tool for stimulating exports, creating jobs and reducing poverty. Access to the markets of richer countries can be a means to extend the hard-fought gains in economic and political stability that many poor countries have made in recent years, as well as to show those in crisis a sustainable path toward stability. In 2005 the member nations of the World Trade Organization (WTO) endorsed the principle that 97 percent of products from least developed countries should be allowed duty-free and quota-free entry to the markets of the prosperous developed countries, and of emerging markets that felt able to do so. But progress since then has been limited. In Europe “Duty-free, Quota-free” access was already in place but with convoluted and overly stringent rules of origin blocking entry of most exports from least developed countries. In the United States, the African Growth and Opportunity Act provides such access for least developed countries in Africa, but “sensitive” sectors that are key exports for these countries, such as  sugar, peanuts, tobacco, and dairy products, are excluded. The United States has done well for African and Haitian exports, but for other least developed countries we grant “Duty-free, Quota-free” access on just 80 percent of products — typically excluding the 20 percent of products that poor countries could produce competitively. As my colleague, CGD senior fellow Kim Elliott, argues in a recent report on global trade preference reform, improving these programs could make a major difference in the lives of the poor, while having minimal effects on production or exports in preference-giving countries. That’s because the affected trade is so small: less than 1 percent of global exports are from least developed countries. Yet for these poor countries it could make a world of difference. The United States has an opportunity to lead the rest of the world in Istanbul. Opening the U.S. market to the world’s least-developed countries would promote those interests at little or no cost and help to restore American leadership on trade. The White House should signal in Istanbul that it will work with Congress to take this modest step — a costless one for America that would expand economic opportunity to the world’s poorest people — thereby ensuring a more prosperous and safer world for us all. This blog was originally written for You can also read the article on their website.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.