THE BLOG

Rethinking Trade

The economic recovery of the United States depends in large part on the rest of the world. Ninety-five percent of all consumers live outside America's borders, constituting huge potential markets for American goods and services. Ninety-seven percent of American exporters employ fewer than 500 employees, so the future of many small and medium-sized businesses relies on trade. One in six American manufacturing jobs is supported by trade, and agricultural exports support nearly a million more jobs. And, in a time of cutbacks and layoffs, American jobs supported by exports pay 13 to 18 percent more than the national average.

"We need trade to grow America's economy," confirms U.S. Trade Representative Ambassador Ron Kirk. "When income levels rise in other countries because of trade, American goods find new markets," he summarizes. One way to foster productive international trade is through effective U.S. foreign assistance that works to create stronger trade partners throughout the developing world. Such partners, in turn, are better equipped to attract the investments that can connect them to markets, lift them out of poverty, and place them on a path to sustainable economic growth.

While many think of American aid as short-term responses for humanitarian concerns, it is much more than that; U.S. development assistance funds are also invested to bolster the trade capacity of developing countries to better integrate them with the global economy, benefitting them and us. That is why the United States is meeting with sub-Saharan African countries this week in Kenya at the 8th AGOA (African Growth and Opportunity Act) Forum to discuss ways to facilitate greater trade and investment. U.S. assistance supports technical training to help the poor develop trade strategies to access American markets, streamline their customs and national standards, and boost trade-related skills. American aid builds roads, ports, and bridges to literally connect the poor to global markets so they can compete and trade. U.S. assistance can also create a powerful incentive for reform that fosters a pro-business and a pro-trade policy environment. American businesses want to trade with economies around the world that respect the rule of law, fight corruption, and operate with transparency and predictability. When assistance is awarded to countries already undertaking economic reforms in these areas, it goes a long way in creating reliable trading partners and in forging a natural fit between U.S. trade and development strategies.

The work of the U.S. Government's Millennium Challenge Corporation (MCC), one of the most innovative approaches to assistance, provides some telling examples of the link between development assistance and trade. In Ghana, for instance, part of MCC's $547 million grant is boosting agricultural productivity with investments in post-harvest infrastructure, feeder roads, and credit services that are opening new opportunities for Ghanaian pineapple farmers. Major American agribusinesses are increasingly viewing the country as a reliable supplier of globally-certified fruits and investigating possible investments. This has the very real potential of expanding the benefits of trade and raising the incomes of Ghanaian farmers. The interplay between development assistance and trade is also unfolding a continent away in El Salvador. There, a $461 million MCC grant is making the construction of the country's Northern Transnational Highway, a modern road system, possible. By promising to slash travel time across El Salvador from four hours to 45 minutes and to spur regional trade, the highway is a generational dream come true for the country's poor, stimulating economic growth that will benefit them with new jobs and commercial opportunities. To build this highway, Caterpillar tractors and backhoes are already on site, creating another market for this leading U.S. company, helping it retain jobs and expand profits. Breaking ground in El Salvador through U.S. development assistance clearly means as much to Salvadorans as it does to Americans in Peoria.

While the world looks for innovative solutions to global poverty, it is clear that trade must be part of the answer. Development assistance, done right, can help poor countries succeed at international trade and at growing their own markets. Let's tap into such assistance wisely for the benefit of the global bottom line.