Trade Liberalization Archives - WITA

Slaughter & Rees Report: The Good Jobs America Needs Are Global Jobs

Mon, 23 Jan 2023 20:26:04 +0000

Happy new year (and, for those of you in China or who are celebrating it elsewhere, happy Year of the Rabbit). Because of rampant inflation, 2022 was one of the worst years in decades for falling real incomes across the globe.

Here in America, real average weekly earnings of all U.S. workers fell 3.1 percent in 2022. A central policy challenge in the year ahead is not just creating jobs. It is creating good jobs, i.e., jobs with high and rising incomes.

How to meet this challenge? Just before the winter holidays, the U.S. Bureau of Economic Analysis released new data that show the way forward. In 2020, a certain set of U.S. companies employed 28.4 million workers in America at an average annual compensation of $84,925—about 20 percent higher than the average for the rest of the U.S. private sector.

Which companies? The U.S. parents of U.S.-headquartered multinational companies. U.S. multinationals have long been among America’s strongest firms. Although they comprise far less than 1 percent of U.S. companies, in 2020 their U.S. parents accounted for 23.1 percent of all private-sector jobs, 38.5 percent of investment in plant and equipment, 46.4 percent of exports of goods, and a remarkable 72 percent of business spending on research and development.

Despite the common allegation that multinationals simply “export jobs” out of America, research consistently shows that expansion abroad by these firms has tended to complement—not substitute for—their U.S. operations. More investment and employment abroad have tended to create more American investment and jobs as well. From 1988 to 2020, employment in foreign affiliates of U.S. multinationals rose from 4.8 million to 14 million. Over that same period, employment in U.S. parents rose from 17.7 million to 28.4 million—a slightly larger increase at home than abroad.

Thanks to all their global dynamism, for decades U.S. multinationals have driven an outsized share of U.S. productivity growth, the foundation of rising standards of living for everyone. They accounted for about 40 percent of the increase in U.S. business labor productivity since 1990. For workers, the bottom line of all this is high and rising incomes. Globally connected jobs tend to pay more because global engagement fosters—and is fostered by—innovation and growth.

There is vast potential for creating more good jobs in America that are connected to the world. From 2000 to 2020, U.S. output expanded by $10 trillion—but over that generation the rest of the world grew by over $40 trillion, such that by 2020 America’s share of global output had fallen to just 24.8 percent, down from about 30 percent in 2000. Growth in labor forces and productivity around the world has boosted the purchasing power of millions of companies and billions of consumers. U.S. multinational companies have harnessed this growth through their exports from America and, even more, through the local sales of their foreign affiliates. And in the postpandemic years ahead, forecasts of continued faster growth in the rest of the world mean even greater potential for U.S. multinationals to build more jobs and opportunity in America connected to that global growth.

But realizing this potential is not a foregone conclusion, because global growth has also spawned new competitors for U.S. multinationals. The McKinsey Global Institute recently documented and analyzed the world’s “superstar” companies that generate the largest economic profits thanks to features including high productivity. From 1995 to 2016, the U.S. share of global superstar companies fell from nearly 50 percent to 38 percent. Particularly ascendant are superstars from fast-growing Asian countries, including China, India, and South Korea. There is no guarantee that past global strength of U.S. multinationals will be prologue.

And unfortunately, the sobering reality is that the United States has become largely adrift in its policy engagement with the global economy. America’s many post–World War II decades of liberalizing trade, investment, and immigration—all to the benefit of American companies, as well as to the American economy overall—have largely stalled out.

Consider trade. America has stopped pursuing new trade agreements and instead has launched and maintained a trade war. From 2010 to 2020, the United States implemented just four new free-trade agreements—three of which (Colombia, Peru, and South Korea) had been negotiated and ratified before 2010, and the fourth of which, the USMCA, was largely refining the NAFTA that had been negotiated decades earlier. Meanwhile, so many other nations have maintained and even accelerated their efforts at trade liberalization. Free-trade agreements that exclude the United States are agreements that impede the growth of U.S. companies both abroad and at home.

To support American workers, the White House and the new Congress need to turn their attention away from pandemic ad hockery. High-productivity, high-wage jobs tend to be global jobs. We should recommit to investing in creating them.

Matthew J. Slaughter is the Paul Danos Dean of the Tuck School of Business at Dartmouth, where in addition he is the Earl C. Daum 1924 Professor of International Business.

Matthew Rees is the founder of Geonomica, an editorial consulting firm that has worked with clients across a number of industries, and a senior fellow at Tuck’s Center for Business, Government & Society.

To read the full article, please click here.

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For Inflation Relief, the United States Should Look to Trade Liberalization

sadams@wita.org — Tue, 15 Mar 2022 18:44:25 +0000

Introduction

With inflation running at 40-year high rates, President Joseph R. Biden Jr. is wringing his hands and the Federal Reserve is signaling more interest rate hikes in 2022 and 2023. But policymakers are overlooking one set of actions that could make a meaningful contribution to taming inflation: trade liberalization. The data cited in this Policy Brief indicate that a feasible package of liberalization could deliver a one-time reduction in consumer price index (CPI) inflation of around 1.3 percentage points.

That reduction would amount to $797 per US household, about half the size of pandemic relief in 2021. As a bonus, the embrace of trade liberalization would curb inflationary expectations taking hold in American firms now protected by trade barriers from foreign competition.

Goal: Liberalization Equivalent to a 2 Percentage Point Reduction in Tariffs

In a PIIE blog, Katheryn Russ explores the direct impact on US inflation of US tariffs imposed specifically on imports from China. Her research shows that these particular tariffs only marginally raised costs for US consumers and firms. But inflation can be meaningfully reduced if one looks at a broader array of tariffs.

To make a show of combating inflation, the Biden administration has rolled out an anti-monopoly strategy, arguing that lack of competition and high profits in the energy sector, among others, are contributing to high prices. But some press reports indicate that Treasury officials have argued privately that relaxing tariff duties would also ease price increases hitting American consumers.

If the White House takes these views seriously, it should set itself a liberalization target equivalent to a 2 percentage point tariff reduction. To put that goal in context, President Donald Trump inflicted Americans with $81 billion1 higher costs by imposing an additional 16 percent average tariff on $506 billion of imports from China. All told, over $610 billion of US imports in 2021 were subject to high tariffs, penalty duties, or severe quotas (table 1), and $949 billion of US imports were subject to some form of import duty. Two percentage points of tariff-equivalent relief on the $2,800 billion of US merchandise imports in 2021 would be equivalent to $56 billion2 in lower costs for Americans. If President Trump can raise costs for average households by $81 billion, President Biden can at least lower those costs by $56 billion.

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To read the full report from the Peterson Institute for International Economics, please click here.

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Key Issues for Reforming the World Trade Organization

Jude Althagafi — Mon, 27 Sep 2021 15:10:05 +0000

The members of the Global Trade & Innovation Policy Alliance (GTIPA), a network of over 40 think tanks in 26 nations, have come together to articulate a positive vision that trade, globalization, and innovation—if conducted on private enterprise-led, market-based, rules-governed terms—can maximize welfare for the world’s citizens (GTIPA, 2017). The members of the GTIPA believe the World Trade Organization (WTO) can play a critical role as a forum for the establishment of rules that enable global trade to occur in a free, fair, and market-oriented manner in accordance with the foundational principles of national treatment, nondiscrimination, transparency, and reciprocity and serves as a forum for the (ideally) impartial, rules-based, and timely adjudication of trade disputes among member nations. A well-functioning WTO is indispensable to a well-functioning international economy. Unfortunately, the WTO is an increasingly constrained organization: It has failed to deliver any new significant trade-liberalizing agreements since the original Information Technology Agreement (ITA) in 1996, progress on the Doha Round remains interminably stalled, and the Appellate Body (AB) system appears broken. Perhaps most worryingly, some nations, particularly China, have elected to embrace economic and trade strategies and policies that are fundamentally antithetical and inconsonant with their WTO commitments, with the WTO proving powerless to effectively intercede. This monograph—authored by a subset of GTIPA members—explores the leading challenges facing the WTO and offers a number of policy recommendations for how to address them.

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To read the full report from the Global Trade and Innovation Policy Alliance, please click here.

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The unappreciated trend toward unilateral trade liberalization

Sebastian Petersen-Alven — Wed, 31 Mar 2021 21:04:40 +0000

A frequently voiced complaint from the Trump administration was that US firms have faced a competitive disadvantage in exports because the US market is open and US tariffs are low but US trading partners protect their markets with high tariffs. The administration used this concern to justify raising US tariffs whenever it could. Lawrence argues that these claims should be more nuanced and account for the extensive unilateral liberalization by many countries over the past 30 years and that the grievances that motivated the Trump trade policies are increasingly misplaced. Many developing countries have reduced their tariffs unilaterally to rates that are far lower than they applied three decades ago and far less than the bound rates reflected in their World Trade Organization (WTO) obligations. Globally, on average, tariffs were not raised during the global financial crisis of 2008 and continued to decline through at least 2018. Even when shocks from imports resulted in serious injury to domestic industries, several developing countries temporarily provided safeguard protection but at levels that were lower than their WTO bound rates. This evidence of import liberalization also suggests that rising protectionism was not responsible for the slow growth in world trade that has been evident since 2011. It remains uncertain whether countries will now respond to disruptions to global supply chains since 2018 caused by Trump’s trade policies and the COVID-19 pandemic by reversing their tariff liberalization stance, but the sustained enthusiasm for new megaregional trade agreements suggests many countries will not.

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To read the full policy brief by the Peterson Institute for International Economics, please click here.

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Self-Harming Trade Policy? Protectionism and Production Networks

Jude Althagafi — Fri, 19 Mar 2021 14:10:17 +0000

Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting procedural details of TTBs and high-frequency data, we identify movements in protectionism exogenous to economic fundamentals. We then use input-output tables to construct measures of protectionism affecting downstream producers. Finally, we estimate panel local projections using the identified trade-policy shocks. Protectionism has small and insignificant beneficial effects in protected industries. In contrast, the effects in downstream industries are negative, sizable, and significant. The employment decline follows an increase in intermediate-inputs and final goods prices.

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To read the full report from the National Bureau of Economic Research, please click here.

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2021 Index of Economic Freedom: After Three Years of Worsening Trade Freedom, Countries Should Recommit to Lowering Barriers

Rachel Accorsi — Thu, 12 Nov 2020 14:53:47 +0000

Global trade freedom has fallen for the third straight year and is at its lowest level since 2006. For countries around the world, that means higher tariffs and nontariff barriers than in the past. For families and businesses, it means that trading is more difficult and costly. The downward trend in trade freedom started well before the coronavirus pandemic, but a worldwide combination of pandemic-related business shutdowns and economic struggles has caused global goods trade to contract.

Initially, many countries responded to the pandemic and increased demand for medical goods—such as face masks and ventilators—with trade measures that restricted the free movement of those products. While many of those measures were eventually removed, they undoubtedly made it more difficult for products to go where they were most needed. Economic recovery discussions in the U.S. and around the world are now focusing on how to prevent such a recession in the future.

While countries may be tempted to close themselves off to the world and international supply chains, doing so will make it more difficult and more costly for their citizens to get what they need. The Heritage Foundation’s Index of Economic Freedom has demonstrated for more than 25 years that economic openness yields better results for individuals around the world. The same is true for countries that reduce barriers to trade and allow individuals to exchange freely with the world. Policymakers around the world should work to eliminate barriers to trade as economies recover from the pandemic.

To read the full issue brief, click here.

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Tori K. Smith is a Jay Van Andel Trade Economist for The Heritage Foundation.

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Revitalizing the World Trade Organization

Griffin Ursin — Mon, 09 Nov 2020 14:51:16 +0000

All three pillars of the World Trade Organization (WTO) have played a key role in promoting “rules-based” international trade for the past twenty-five years.

Negotiations: The negotiations creating the WTO were a major success, leading to a broad range of new rules that prohibit members from raising tariffs beyond agreed-upon levels, restrict non-tariff barriers, and ban discriminatory trade measures. Since then, a few negotiations have helped further lower barriers, including the Trade Facilitation Agreement (TFA) and Information Technology Agreement (ITA). Today, average applied tariffs are approximately half of what they were when the WTO was created, and numerous unfair trade practices have been discontinued.2
Implementation and Monitoring: The WTO recognizes that the implementation and monitoring of commitments are essential to maintaining the integrity of an effective rules-based system. Accordingly, the WTO includes mechanisms to track implementation and rules that require members to notify it of changes in trade policies and share information on trade-distorting practices (e.g., subsidies). Transparency and information sharing promote business predictability, while the discussion of trade-distorting policies often leads to their modification or abandonment before adoption.
Dispute Settlement: The WTO dispute-settlement system helps resolve trade disputes to minimize unilateral action and cycles of retaliation. Many countries use the dispute-settlement system to challenge adverse measures. In most cases, the member losing the dispute changes the offending measure. In other cases, that member exercises its sovereignty and chooses not to change the policy, freely accepting the consequences (retaliatory tariffs). Additionally, many disputes are settled before litigation commences.

The world has changed considerably since the WTO’s creation. It has experienced the rise of the Internet and other advanced technologies, China’s economic expansion, greater skepticism about the benefits of trade, and greater concern about income inequality. The world has changed, and so must the WTO. At the same time, the WTO itself has not met expectations. WTO negotiations have not readily facilitated new rules or additional market-access openings, the implementation and monitoring pillar has not held countries accountable for ignoring its requirements, and the dispute-settlement system has not strictly applied the rules as negotiated. As a result, the WTO is falling far short of its promise and mandate in different ways.

WTO negotiations have failed to update international trade rules to: account for non-market economies and deal with related unfair trade practices, such as forced technology transfer and massive industrial subsidies; account for new technologies, such as the Internet; improve commitments in key areas covered in detail by free-trade agreements (FTAs), such as intellectual property and services; and fully address politically important policy issues, such as labor and the environment. WTO negotiations have also failed to substantially lower or equalize tariff treatment among major economies.

The ability of large emerging economies to self-declare “developing-country” status and avoid taking on the same commitments as competitors has compounded the challenge. Worse yet, many countries claim that trade liberalization and the WTO rules that promote it are anti-development, undermining the WTO’s core mission.

Compliance with the WTO’s implementation and monitoring function has not been widespread, with many members failing to follow the basic notification requirements necessary to ensure the transparency and predictability of trade.

WTO dispute settlement has drifted from its original design. It has failed to properly adjudicate certain disputes, including by inventing new rules without consensus and improperly applying the rules to non-market economies; allowed the WTO Secretariat to wield too much power in decision-making; and taken too long, depriving workers and businesses of real-time solutions.

Accordingly, all three pillars require reform to ensure the WTO retains a constructive and central role in resolving disputes before they spiral out of control, and in shaping international trade rules and behavior. When the WTO is functioning properly, it provides a mechanism to enforce agreed-upon rules in a predictable manner and create new rules to protect workers and businesses. When the rules are inadequate and disputes take too long, countries are more inclined to adopt unfair practices, and may be forced to respond unilaterally to protect their interests.

WTO reform provides the quickest and most constructive path to adequately address China’s unfair trade practices. The US-China Phase One trade deal made important progress on certain structural issues, but did not meaningfully address industrial subsidies or state-owned enterprises (SOEs), and it is unlikely that China will ever address these matters bilaterally given the government’s central role in its economy. Therefore, concerted multilateral pressure that paints these policies as a threat to the global trading system as a whole is necessary to effectuate change. In many respects, the WTO provides the ideal forum for countries to work together to persuade China to change its most problematic behavior. The WTO already has a core set of principles, such as non-discrimination, that are critical to countering such practices, and an existing infrastructure for negotiating, monitoring, and enforcing those rules. The WTO’s membership is also critical—it includes many countries impacted by these issues, as well as China itself. The broad reach of the WTO will also help ensure other countries do not adopt similar non-policies.

The United States has been calling for significant WTO reform for years, and many countries have recently joined the chorus. For example, in December 2018, all Group of Twenty (G20) members endorsed the following language in the leaders’ statement: International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning.

Despite these high-level statements, WTO members have struggled to gain momentum toward tangible reform. Some blame the United States for refusing to offer specific proposals on dispute settlement, the European Union (EU) for an unwillingness to meaningfully address US concerns on this issue, China for refusing to engage on proposals related to its practices, and India for leading the fight to preserve preferential developing country status for large, emerging economies.

Regardless of who is to blame, the WTO is in crisis, and momentum for ambitious reform must be generated before the system loses its relevance. To catalyze momentum, members should quickly resolve ongoing negotiations while “thinking big” about the future and significantly raising their levels of ambition. The successful conclusion of ongoing negotiations, such as those on fisheries subsidies, will create new confidence in the WTO by demonstrating that the system is still capable of solving problems. But, negotiations will not solve the biggest problems facing the system. Therefore, even as members seek to make incremental progress, they increase their ambition with respect to the overall scope of reform needed to create a system fit for purpose in the twenty-first century and on “outside-the-box” ideas to solve some of the more intractable problems before it is too late.

Any successful WTO reform effort requires the United States and the European Union to better cooperate and coordinate. The United States and EU share common values, jointly spearheaded the creation of the original international trading system, and have both used it to promote trade-liberalizing, market-oriented policies around the globe. The economies of the United States and the EU are also equally challenged by China’s policies. If they cannot reach consensus on how to fix the WTO, it is inconceivable that the rest of the world could do so.

To this end, this paper proposes an ambitious WTO reform proposal that both the United States and the European Union should be able to endorse, and ultimately work together to promote. In particular, a joint US-EU WTO reform proposal should

address problems with all three pillars—negotiations, implementation and monitoring, and dispute settlement; these functions complement each other and reform is needed in all three to make the system work as a whole;
address the most difficult issues, including China’s unfair trade policies and how to fit a non-market economy into a system built by market economies;
- create new rules to address issues that have emerged since the WTO was created, such as digital trade, and upgrade existing agreements, such as the intellectual property and services agreements, to the higher standards included in many FTAs;
include more robust commitments on politically important issues, such as labor and the environment, which are critical to regaining domestic support for trade;
eliminate the unfairly high tariff rates imposed by certain countries, and bring greater parity in tariff levels among major economic powers;
promote liberalization by all members, not just “developed” economies, while recognizing the unique challenges faced by least-developed countries (LDCs) and allowing for differential treatment predicated on fact-based need;
consider novel approaches to rescue the negotiating function, such as the use of plurilateral agreements that only benefit participants (non-most favored nation), or non-binding commitments for LDCs as an initial approach in certain areas;
increase high-level political engagement from capitals to promote greater ambition in Geneva;
hold countries accountable for failing to follow fundamental rules related to transparency;
fully address the underlying shortcomings of the dispute settlement system by
- ensuring that adjudicators better respect the limited mandate provided by WTO members, and do not create rules to which members never agreed;
- making institutional reforms to improve the transparency and accountability of the process, and address the imbalance in decision-making between the WTO Secretariat and the appointed adjudicators; and
- improving the system’s efficiency so it serves as a viable “real-time” alternative to unilateral action; and
recognize that fixing the negotiating function is critical to fixing dispute settlement in a sustainable manner.

The will of all WTO members will ultimately be necessary to achieve the broad-based reforms envisioned in this paper, but improving cooperation and coordination between the United States and European Union is a necessary start. Section II of this paper further outlines some of the existing problems with the WTO system, while Section III details a joint US-EU reform agenda.

To download the full report, please click here.

Revitalizing-the-WTO-Report-author-edit

Clete R. Willems is a Nonresident Senior Fellow with the Atlantic Council’s GeoEconomics Center. Mr. Willems is a partner at Akin Gump Strauss Hauer & Feld, where he advises multinational companies, investors, and trade associations on international economic law and policy matters. Until April 2019, Mr. Willems was Deputy Assistant to the President for International Economics and Deputy Director of the National Economic Council.

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Globalization Comes to the Rescue: How Dependency Makes us More Resilient

Griffin Ursin — Mon, 28 Sep 2020 17:30:51 +0000

A new consensus is growing across the European Union – and other parts of the world too: that globalization has gone too far. The argument goes as follows: as an exchange for higher efficiency and lower prices, Europe has sacrificed its ability to take care of itself and protect its own citizens. The Covid-19 crisis has revealed how much Europe depends on the rest of the world for products like medical goods and medicines. Therefore, if Europe does not want to live through another shortage of essential supplies, the lesson of the Covid-19 crisis is that the EU has to produce these products itself.

This conclusion may sound intuitive but it is fundamentally wrong. Europe is not overly dependent on the rest of the world because most trade in the EU is done within its own borders. New evidence presented in this paper shows that there were only 112 products, making just 1.2% of the value of EU total imports, for which the four largest suppliers were non-EU countries as compared to more than two thousand products for which the four largest suppliers were from EU member states. And while not every product is equally important in the face of a global pandemic, there is not a single Covid-19 related good for which all EU imports only came from non-EU countries.

This paper debunks the idea that the EU is too reliant on other countries. Instead, our analysis shows that imports from the rest of the world make every EU member state more resilient by diversifying its sources of supply.

Because of their geographical location and economic integration, if there was to be a shock like a pandemic, a plague, or a nuclear disaster, groups of EU countries are likely to be hit simultaneously. Having sources of supply outside the EU is therefore critical to reduce Europe’s vulnerability to these shocks. Europe’s recent experience has shown that international trade is a strength, not a weakness, and the EU was blessed to be able to tap into the manufacturing capacity of the rest of the world to buy urgently needed medical goods from abroad during the hardest months of the pandemic.

Preparing for future crisis like Covid-19 is extremely complex. Nobody knows which type of shock will come after Covid-19, which economic activities will be impacted, or what kind of goods will be needed to protect our citizens. Yet, any debate about the merits of re-shoring should be based on figures and not on narratives. This paper analyzes EU imports on more than 9,000 products and concludes that Europe should not build its resilience by the mandatory re-shoring of economic activities. That is the opposite of diversification. Besides, reshoring will increase costs and hit citizens in the poorest countries the hardest.

An economy that is served by multiple firms across multiple locations is more resilient to random shocks than one where goods are produced by fewer firms in the same location. While re-shoring may bring the illusion of control, in reality, the EU will be more vulnerable and dependent on fewer and larger companies. This is why globalization and the EU’s reliance on the rest of the world is what makes the EU more resilient.

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Oscar Guinea is a Senior Economist at ECIPE. Florian Forsthuber is a Trainee at the European Central Bank.

To download the full paper, please click here.

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A Fresh Start for US Trade Policy: Unilateral Trade Liberalization through a Tariff Reform Commission

Rachel Accorsi — Mon, 14 Sep 2020 13:23:26 +0000

Unilateral trade liberalization has been an underutilized tool to promote the freedom, prosperity, and global influence of Americans. For all the reasons expounded above, cleaning up the tariff code and ridding the nation of these self-imposed and self-damaging taxes on international commerce would promote the US national interest. It would enhance the already considerable strengths of the United States’ dynamic market economy and its leadership as the world’s largest economy. As the acclaimed free-market economist Milton Friedman wrote more than half a century ago,

“I believe that it would be far better for us to move to free trade unilaterally, as Britain did in the 19th century when it repealed the Corn Laws. We, as they did, would experience an enormous accession of political and economic power. We are a great nation and it ill behooves us to require reciprocal benefits from China, Mexico or Europe before we reduce a tariff on products from those countries. Let us live up to our destiny and set the pace, not be reluctant followers.”

Policy models exist for overcoming the institutional barriers to unilateral trade liberalization in the United States. In the Base Realignment and Closure and the Miscellaneous Tariff Bill processes, the US government has already implemented an approach that could be used to successfully reduce and eliminate thousands of economically damaging tariffs that have been imposed either by law or by executive fiat, to the detriment of American producers and consumers alike. While the details will be a matter of compromise, a Tariff Reform Commission in the pattern of the BRAC or MTB processes would be a practical policy goal.

Embracing a process of unilateral trade liberalization would allow the US Congress and presidential administration to implement tariff reforms on a timely basis that would strengthen the US economy and aid in the fight against COVID-19 and other public health threats, while setting a powerful example for other nations. Implementing such a policy would not be an experiment based on theory alone, but the Americanization of a policy approach that has been practiced successfully by other nations for decades. It would be an agreement among Americans to act in their sovereign national interest regardless of the trade policies pursued by other nations.

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Daniel Griswold is the co-director of the Trade and Immigration Project at the Mercatus Center at George Mason University.

Donald J. Boudreaux is the senior fellow for the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics; Martha and Nelson Getchell Chair for the Study of Free Market Capitalism; a Mercatus Center Board Member; and a Professor of Economics at George Mason University

To download the full paper, please click here

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A New U.S. Policy Framework for the African Century

Zimar Batista — Fri, 07 Aug 2020 15:02:38 +0000

The U.S. policy toward Africa has been mired in old thinking for too long. A combination of factors including low prioritization, an insular community of specialists, and deference to “bipartisan consensus” has resulted in policies and practices locked in amber. To be sure, continuity and consistency have their merits, but they also act as brakes on creativity, innovation, and fresh thinking. This policy drift leaves the United States ill-equipped for new challenges and discontinuities—such as a global pandemic, for example. It valorizes a decades-old playbook and reflexively dismisses recommendations that veer from the script. Major U.S. policy initiatives, including the African Growth and Opportunity Act (AGOA), the Millennium Challenge Corporation (MCC), the U.S.-African Leaders Summit, and the U.S. International Development Finance Corporation (DFC) are exceptions to the rule and point to the potential for new policy breakthroughs.

The longstanding U.S. goals to advance democracy and governance; peace and security; trade and investment; and development in Africa remain valid. However, it is the pursuit of these objectives that has become unfocused and anachronistic. Over the decades, U.S. policy toward the region has become too encompassing, overstuffed with sub-objectives, and fixated with inputs, not outcomes. Moreover, it persistently treats Africa as a “region apart,” divorced from developments in other areas of the world. U.S. policy priorities toward Africa are almost exclusively about local issues on the continent and are often oblivious to Africa’s sway in the international system. A new policy framework must-see African expertise and influence as a critical part of a broader U.S. approach to tackling global challenges.

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Judd Devermont, Director, Africa Program CSIS

To view the full report at CSIS, please click here

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