A Guest Post by Bama Athreya: Trade, Aid and Security Coalition
Congress allowed a longstanding trade access program to lapse in December, 2010. That program, the Generalized System of Preferences (GSP), allowed over 100 poor developing countries around the world to export their goods to the United States. The program has been in place since 1974, and has succeeded in enabling low-income countries to expand their economies and create jobs for their citizens, thereby becoming less aid-dependent. The program is consistent with a long-term vision of sustainable economic development.
Congress knew what it was doing, when it first passed this legislation in 1974. The GSP program was premised on the concept that ‘trade, not aid,’ would ensure that the billions of dollars spent by the U.S. on direct foreign assistance would be complemented by benefits that helped economies to grow. Thus countries could become self-sustaining and direct foreign aid could be phased out. Should this not be exactly the approach that the US would want to foster in this time of constrained resources?
The expiration of the program could not have come at a worse time for the world’s working poor. The global economic crisis is estimated to have cost poor countries hundreds of billions of dollars in lost exports and remittances. The ILO has estimated that tens of millions of jobs have been lost in the developing world as a result of the crisis. Now, new tariff barriers that will be imposed on imports from these countries may result in further shrinkage of these economies, and further job loss, pushing many more into poverty and dependency on humanitarian assistance for survival.
While the market access provided by GSP is far from comprehensive, and the rules governing the program have long needed reform, nevertheless the right approach, particularly from those in Congress who purport to be pro-trade, is to expand and reform the program, not to kill it.