The Foreign Service Journal, December 2008

the United States richer by $1 tril- lion per year, creating about $9,000 of additional wealth each year for the average Ameri- can household. Developing nations also gained from globalization. On average, poor countries that opened their markets to trade and investment have grown more than three times faster than those that kept their markets closed. Studies conducted by World Bank econ- omist David Dollar show that globalization has lifted 375 million people out of poverty. And the benefits have not been only economic. As governments liberalized their trade regimes, they often liberalized their political regimes. Compliance with a set of trade rules encourages transparency, adherence to the rule of law and respect for property. This, in turn, strengthens stability. Future Benefits from Opening Trade Self-interest alone should persuade Americans to urge their government to continue to work to open markets and to bring the current round of trade talks to a suc- cessful conclusion. Dr. Hufbauer calculates that a fur- ther opening of global trade would raise U.S. incomes by an additional $500 billion per year, making the average U.S. household richer by $4,500 per year. It is hard to think of another policy decision that could come close to having such a positive impact on U.S. economic well- being. In addition, a broad agreement in the current round of global trade talks would help reduce poverty worldwide by building markets for tomorrow, as the first round stim- ulated growth by rebuilding the economies of nations dev- astated by World War II. Today nearly three billion peo- ple, almost half the world’s population, live below the international poverty line of $2 per day. According to studies by economist Dr. William Cline at the Center for Global Development, removing global trade barriers would yield $200 billion annually in long-term economic benefits for poor countries and lift 500 million people out of poverty. About half of the benefit would come from opening markets for agricultural products. Three of the large developing countries involved in the current round of trade talks — Bangladesh, In- donesia and Pakistan— each have roughly 100 million people living below the international pov- erty line. In addition, six African nations — the Democratic Re- public of the Congo, Kenya, Mo- zambique, Nigeria, Tanzania and Uganda — together account for another 200 million people living in poverty. Dr. Cline calculates that, on average, when a develop- ing country increases its ratio of trade to total output by 1 percent, it achieves an equivalent reduction in its level of poverty. Reducing global poverty is not simply a humanitarian measure. It is one of the most effective ways to strength- en our security. Impoverished states lack the ability to enforce their laws and secure their borders, making it much more difficult for the U.S. government to deal effectively with transnational problems: terrorism, orga- nized crime, narcotics trafficking, money laundering, ille- gal arms sales, disease pandemics and environmental degradation. As part of that effort, the current round of trade talks should correct gross inequities in the global trading sys- tem. For instance, agricultural tariffs are five times high- er than tariffs on industrialized goods. That dispropor- tionately harms the economies of poorer countries, which tend to have large rural populations. Making matters worse, tariffs are much higher on goods like textiles, apparel, heavy glass and footwear that are primarily pro- duced by poor countries. Most Americans would be astonished to learn that last year Bangladesh paid the United States $120 million more in tariffs on its $3 billion of exports to us than France paid on its $37 billion in exports. That works out to be a 15-percent tariff on Bangladesh’s goods and less than 1 percent on France’s. Making the Case for Trade With so much at stake, why have our politicians turned hostile toward trade agreements? It is not that those seeking elective office had an epiphany causing them suddenly to reject 60 years of bipartisan consensus favoring open trade. Rather, they have focused on polls that show that Americans have soured on such policies. In a March 2007 Wall Street Journal /NBC poll, 54 percent of Democratic voters said F O C U S 48 F O R E I G N S E R V I C E J O U R N A L / D E C E M B E R 2 0 0 8 Misinformation and anxiety about the economic future explain the growing hostility toward trade agreements.