On May 16, the Senate Finance Committee held a hearing on trade preference programs. The hearing focused on the upcoming expiration of several key trade preference programs and the potential effect on United States trade with developing countries.
Chair Max Baucus (D-MT) said, “Today, we need to assess our trade preference programs, such as the Generalized System of Preferences (GSP), the Andean Trade Preferences Act, and the African Growth and Opportunity Act. Congress first developed these programs to help developing countries use trade to integrate into the global economy. But the world is a different place today than when those programs started.” Sen. Baucus added that “we need to take a good, hard look at our trade preference programs. We must determine whether they reflect the world of 2007. We must rethink and reexamine them to ensure that they continue to promote political stability and sustainable economic growth in developing countries…This reevaluation is overdue. We have not had a hearing on our trade preference programs in seven years.”
Meredith Broadbent, assistant U.S. trade representative for Industry, Market Access, and Telecommunications for the Office of the U.S. Trade Representative, said, “Today, 135 developing countries are beneficiaries of duty-free treatment for nearly 4,900 articles. U.S. imports under GSP in 2006 were valued at $42.6 billion, an increase of 22 percent over 2005.” Ms. Broadbent added, “The Administration is working to ensure that the opportunities provided by the U.S. GSP program benefit as many countries as possible, and we welcome additional congressional direction on how best to accomplish this.” Ms. Broadbent cited results of the GSP program, saying, “The most [recent] GSP renewal period, beginning in 2002, resulted in an average 11 percent annual increase in imports under GSP, including from least-developed beneficiaries such as Lesotho and Guyana, whose imports under GSP grew by 64 percent and 85 percent, respectively. In contrast, between 1994 and 2001, GSP use dropped 2.2 percent annually, on average. Since the program’s inception in 1974, GSP has been renewed nine times, each time after periods of expiration ranging in length from two to fifteen months.” She also noted that “the GSP program has helped influence positive developments in many areas of the U.S. trade agenda with developing countries. GSP benefits have been an incentive to improve worker rights in beneficiary countries, including Swaziland, Uganda, and Liberia. Similarly, increased protection and enforcement of intellectual property rights have occurred in Ukraine, India, and Kazakhstan.”
In discussing development efforts in Bangladesh, Muhammad Yunus, Nobel laureate and managing director of Grameen Bank, said, “Trade, in general, and especially exports of apparel, is a central element in the Bangladeshi development strategy. This sector provides employment for millions of poor and less-skilled women, for whom work in apparel factories offers a means to provide for their families.” Mr. Yunus added, “The apparel sector offers a major opportunity for families to rise up from poverty. Employment in this sector is overwhelmingly female…The garments industry and microcredit programs like Grameen Bank, [which] has provided unsecured loans to seven million of the poorest people, mainly women, are recognized as the two main vehicles for women’s empowerment in Bangladesh…Free access to the U.S. market will safeguard jobs for millions of workers in Bangladesh, many of whom are women with few other employment opportunities.” Mr. Yunus called poverty a “threat to peace” and a “breeding ground for terrorism” and noted that the empowerment of women in Bangladesh has helped halve the poverty rate; increase the number of girls in school, so that girls now outnumber boys at the secondary school level; increase the life expectancy of women; and decrease child and maternal mortality rates.
“Throughout the developing world, women face the greatest challenges to participating in global trade and are among the most vulnerable economic participants,” said Katrin Kuhlmann, senior vice president for global trade at the Women’s Edge Coalition. Ms. Kuhlmann continued, “In certain sectors, including many types of manufacturing [jobs] and agricultural production, women do the bulk of the world’s work. The current system of preference programs, including the [GSP], the African Growth and Opportunity Act, the Andean Trade Promotion and Drug Eradication Act, and the Caribbean Basin Initiative/Caribbean Basin Trade Partnership Act, has led to job creation for impoverished women and low-skilled workers in sectors such as apparel in Africa, jewelry production in Asia, and some agricultural production in the Andean, African and Asian countries. Jobs for women mean support for families: it is estimated that one woman’s job in the apparel sectors supports up to 15 people.” Ms. Kuhlmann added that “U.S. preference programs have helped promote better working conditions in developing countries through eligibility requirements, such as protections for worker’s rights. Extending these to include protection against discrimination in the workplace would help ensure that the benefits of the preference programs reach all members of society.”
Eric Reinhardt, assistant professor of political science at Emory University, and Marcos Iberkleid, president of Ametex in La Paz, Bolivia, also testified.
