Development & Aid, Economy & Trade, Headlines, North America

TRADE: U.S. Policies Risk Isolating Seed-beds of Terror – Report

Emad Mekay

WASHINGTON, Feb 7 2003 (IPS) - U.S. trade policy could be isolating Muslim countries, including those that joined Washington in its self-styled ”war on terror”, deepening poverty and increasing social dissatisfaction – fertile grounds for anti-U.S. sentiment says a leading think-tank here.

According to the Washington-based Progressive Policy Institute (PPI), a conservative Democratic organisation, U.S. free trade initiatives are underway in most areas of the globe, except for the western Muslim world and the least-developed parts of Asia.

In a statement distributed electronically this week, PPI said that its most recent report on trade issues, ‘Blank Spot on the Map’, finds that U.S. trade policy may in coming years find itself unintentionally at odds with the war on terror, despite assertions by officials in the administration of President George W. Bush that trade is an important tool against terror.

Since 1980, the western Muslim world – about 32 countries from Morocco to Central Asia and Bangladesh – has seen its share of world trade drop from 10 percent to 3.8 percent, and investment fall even more sharply.

At the same time, its population has grown from 380 million to over 600 million, with most of this growth in cities.

The economic result has been sluggish growth and declining income; the social costs are unemployment, political anxiety, and growing fascination with religious extremists, said the report, written by Edward Gresser.

"The combination is creating a large pool of unemployed urban young people – the type of person most susceptible to political extremist groups and religious fundamentalists," it adds.

Economic decline has fuelled calls within Muslim countries for economic changes. Last year a United Nations publication, the ‘Arab Human Development Report’, called for major restructuring efforts in countries such as Bahrain, Jordan, Egypt, Qatar and the United Arab Emirates.

But the PPI report suggests that the current U.S. trade agenda may make it harder for such efforts to bear fruit.

Washington’s regional and bilateral trade initiatives planned for 2003-2005 include deals with Singapore, Chile, Central America, the Southern Africa Customs Union, Australia, Morocco, renewal of the African Growth and Opportunity Act (AGOA), the Enterprise for ASEAN Initiative and the Free Trade Agreement for the Americas (FTAA).

The United States’ existing free trade partners are Canada and Mexico (within NAFTA) Israel and Jordan.

Only one Muslim country, Jordan, a tiny kingdom of 4.5 million people and limited natural resources, and later Morocco, a country of 30 million people, are on the list.

By 2005, assuming the administration achieves its goals, Washington will have created wide-ranging free trade concessions for 70-90 countries in Africa, Latin America and Southeast Asia.

The agreements will have their greatest impacts on the relatively few products for which the United States retains high trade barriers – some agricultural goods, clothes, fabrics and luggage.

Most major exporters to the United States – including China, Korea, and the European Union – will experience only slight effects since they are not highy dependent on these products.

By contrast, the economies of the poorest Asian countries and the western Muslim world rely very heavily on exports of high-tariff products like clothes and fabrics. These goods are the principal export for heavily populated majority-Muslim states like Pakistan, Bangladesh, Turkey and Egypt, and important to Indonesia, the country with the world’s largest Muslim population..

Duty-free treatment for Latin America, Africa and Southeast Asia in these sectors will be a potent draw for investment, and by extension, a deterrent for investment in the Muslim world, says the report.

"The consequence – in the absence of a new initiative to provide some degree of parity for these countries – will likely be that reformers attempting to improve economic policies and trade regimes within the Muslim world may find their efforts frustrated; and efforts to ‘drain the swamp’ will become more difficult," says the report.

In the introduction to the report, Gresser says such findings contradict starkly with assertions made in late September 2001 by U.S. Trade Representative Robert Zoellick, who said trade policy could help fight terrorism by promoting growth and economic assimilation.

"Earlier enemies learned that America is the arsenal of democracy; today’s enemies will learn that America is the economic engine for freedom, opportunity and development. To that end, U.S. leadership in promoting the international economic and trading system is vital," Zoellick said in a Sep. 20, 2001 article in the Washington Post.

But according to Gresser, "In practice, though, the Muslim world is the blank spot on the Bush administration’s trade agenda – and because of this, that trade agenda risks undermining, rather than supporting, the war on terrorism”.

”And, as America’s trade regime tilts more sharply against Muslim states, U.S. trade policy may not supplement the war on terror ‘a la Zoellick’, but actually work against it by reducing the Muslim world’s growth opportunities and ability to reach world markets,” he added.

But this ”perverse result is not inevitable”, said Gresser, who recommended that a strategic trade initiative geared toward the Muslim world could end, or at least ease, the slant.

”At minimum, such an initiative – analogous to programmes now available for Central America, the Andean nations, and Africa – could avert creation of a trade regime that complicates the campaign against terrorism,” Gresser said.

By pushing reform and economic integration of Muslim countries, such an initiative could play its own role by sparking growth and creation, and so limit the magnetism of radicalism and religious fundamentalism, adds the report.