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Trade Policy for Development: Reforming U.S. Trade Preferences

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Kimberly Elliott

09/04/2007

nameThis Brief will be released at a September 10 CGD event on U.S. Farm Policy, Trade, and Development

By any measure, the United States is one of the most open economies in the world -- importing more than $1 trillion worth of goods duty-free in 2006 alone. Yet poor nations still pay much higher tariffs than rich countries overall -- an average 15 percent on a quarter of their imports, compared to 2-5 percent for rich countries. Not only is this unfair, it also undermines U.S. interests by hindering growth in the poorest countries, thereby making them more vulnerable to epidemic diseases, terrorists, and transnational criminal organizations, all of which can have direct negative impacts on the United States.

In this CGD Brief, Kimberly Ann Elliott, a senior fellow jointly at CGD and the Peterson Institute, urges that the United States fix this problem by reforming its trade preferences system. She calls for Washington to help to negotiate a Doha Round agreement that reduces tariffs on textiles, apparel, and footwear, and liberalizes agriculture. Regardless of the outcome of those negotiations, however, the U.S. Congress ought to take the lead and reform programs that give preferential access to developing countries, especially the least-developed. Key elements of such a reform would include:

  • 100% duty-free, quota-free market access for all least-developed countries 
  • Simplification of the current maze of programs with less onerous rules of origin 
  • Making the program permanent