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Experts Agree Trade Can Boost Living Standards in Developing Countries - 2002-10-23


A conference in Washington Wednesday focused on ways to bring the benefits of globalization to more people in developing countries. There was agreement that trade can be a principal tool for boosting living standards in poor countries.

Lael Brainard, a senior economic policy maker in the Clinton administration, is now a researcher at the Brookings Institution, a Washington think tank. Ms. Brainard says trade is more important for developing countries that aid. She told the forum organized by the Weidenbaum Center for Public Policy that the United States should further open its markets to products from developing countries.

She says with the new focus on security, Washington must be sensitive to the unequal effect of new customs clearing measures at U.S. ports. She says companies from the European Union have the money to comply with the new regulations while shippers from Indonesia, for example, do not.

"If you were to double the transportation costs, for example, of Indonesia's trade, they would lose 10 to 15 percent of their exports here," she said. "We need to be very careful about that and at the moment we don't have an agenda to make sure that less capable nations can do the security things they need to do."

Ms. Brainard says Washington needs to aggressively promote a free trade agenda in the Middle East. At the moment, she says, the United States has few tools for promoting free markets in Arabic-speaking countries.

"It is remarkable how few of these nations are actually members of the World Trade Organization. It is even more remarkable how closed these countries are, with the sole exception of oil," she said. "And we don't have much of a strategy as a nation. We should, for trying to bring them into the WTO and for trying to increase our trade ties, and trying to increase trade within the region."

Bill Cline of the Center for Global Development says trade brings benefit to people in developing countries.

"The developing countries have a comparative advantage in unskilled labor intensive products," he said. "So it ought to be that trade is precisely the opportunity for them to boost the wages of unskilled workers."

Mr. Cline argues that economic growth is the only sure way to reduce poverty. He advocates changes in U.S. policy that would give preference to imports from the poorest developing countries. He also advocates special tax privileges for companies that invest in the poorest countries, particularly in sub-Saharan Africa.