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A former U.S. trade negotiator, who served with both Reagan and current Bush administrations, recommended to lawmakers that in the future any trade preference programs should help tie exporters in least developed countries into the global supply chain.
What that means in practice is that trade is increasingly dominated by competition between supply chains, said Grant D. Aldonas, principal managing director for Split Rock International and senior advisor to the Center for Strategic and International Studies, in testimony before the Senate Finance Committee on June 12.
Barriers to market access as traditionally defined (e.g., tariffs; quotas, subsidies and other non-tariff measures) no longer represent the most significant barriers to global markets, he added. Today, the principal barriers to trade are the commercial standards that exporters must satisfy in order to become a supplier integrated into a global supply chain that serves customers all over the world.
Aldonas, who served as Commerce Department undersecretary for international trade from 2001 to 2005, and director for South American and Caribbean Affairs in the Office of the U.S. Trade Representative from 1984 to 1985, said trade preferences are a good start to eliminate cumbersome tariffs on imports into the United States.
Helpful, certainly, but those preferences do not come close to helping the individual asparagus producer in Malawi find his or her way to our market, he said. To do that, our preferences would have to help the entrepreneur and exporter satisfy the product quality and safety standards demanded by U.S. grocery manufacturers.
The Senate Finance Committee sought Aldonas' testimony as it prepares to evaluate the future of trade preference programs, such as the Generalized System of Preferences and the Andean Trade Preferences and Drug Eradication Act, both of which are up for congressional renewal this year. Other important U.S. trade preference programs used by developing countries are Quality Industrial Zones, the African Growth and Opportunity Act, Haitian Hemispheric Opportunity Through Partnership, and Caribbean Basin Initiative.
Trade preference allows U.S. duty-free access for certain imports from developing countries and regions. The goal of these programs for the U.S. government is to help stimulate economic development within these impoverished countries.
GSP, initiated by Congress in 1974, is by far the largest U.S. trade preference program. In 2007, GSP covered $30.8 billion in goods. Oil, tractor and bus parts, ferroalloys, insulating material, automotive tires, felt-tip pens, musical instruments were among the beneficiary imports.
Aldonas proposed that trade preferences be tied solely to least-developed countries and committees on Capitol Hill, which are involved with economic assistance agencies such as the World Bank and Agency for International Development, work together on this effort.
The jurisdictional conflicts in Congress, moreover, often have a way of becoming disabling conflicts among separate agencies in the executive, Aldonas testified. The surest way to avoid that problem and ensure that our trade preferences and development assistance work together, rather than in potential conflict, would be to ensure that they operate under a single set of criteria for bestowing the benefits of either our trade preferences or our cash.
Aldonas urged the Senate Finance Committee to review Japan's model for facilitating trade preference and assistance programs with developing countries.
Japan, during Prime Minister Koizumi's tenure, shifted the focus of much of its development assistance filling in the institutional and educational gaps that prevent producers in developing countries from participating in Japanese companies' supply chains,
he said. Those reforms are worth looking at as the committee rethinks how our current preference programs operate and what they will need in the way of reinforcement from our development assistance programs in order to succeed.
Source:Americanshipper
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