U.S. urged to boost trade with Muslim countries

U.S. urged to boost trade with Muslim countries

Doug Palmer, Reuters, Washington

The United States should add an economic component to its war on terrorism by making a strong push to integrate Muslim countries into the world trading system, several trade experts said this week.

"What's clear is that since 1980 the population of the Muslim Middle East has nearly doubled and at the same time it's share of global trade has plummeted 75 percent," former U.S. Trade Representative Charlene Barshefsky told Reuters.

"This is a very dangerous situation for the United States. U.S. trade policy must turn its attention to programs that enhance the integration of the Muslim Middle East, including with Israel ultimately."

The United States should work with other Western nations to bring Muslim countries like Saudi Arabia and Algeria into the World Trade Organization and should consider preferential trade packages to help them diversify their economies, she said.

Outside the oil sector, many Muslim countries have few products they export to the rest of the world. The dearth of job opportunities, combined with a well educated and frustrated population, has created a volatile mix, Barshefsky said.

Ed Gresser, director of the trade and global markets project at the Progressive Policy Institute, said a few statistics illustrate how Muslim countries in both the Middle East and Asia lag in economic development.

Since 1980, the share of world trade held by the 57 member countries of the Organization of the Islamic Conference has fallen from 15 percent to just 4 percent.

The same countries -- with a combined population of 1.3 billion -- attracted US$13.6 billion worth of foreign direct investment in 2001. That is just $600 million more than Sweden, which has 9 million people.

With more Muslims living in cities and fewer jobs available, "you have an economic environment that is naturally going to create angry and radicalized people," said Gresser.

A preferential trade package could help deal with that problem by providing more job opportunities to young Muslim men addressing an apparent unintentional tilt in U.S. trade policy against Muslim countries, he said.

While the United States has cut tariffs on textiles and other products for countries in Latin America, the Caribbean and sub- Saharan Africa, it has not developed a similar package for Muslim countries. As a result, countries like Bangladesh, Pakistan, Tunisia, Egypt, Turkey, Indonesia and Morocco face U.S. tariffs of 15 percent or higher on many exports.

Mohammed Ghulam Hussain, commercial counselor at the Bangladesh Embassy in Washington, said the Bush administration has ignored his country's request for a preferential trade arrangement like the one for Africa and the Caribbean.

"We approached the U.S. government for similar treatment, but the response has not been positive," Hussain said.

More than 80 percent of Bangladesh's exports to the United States are textiles. Those have taken a huge hit recently because other countries can ship their goods duty-free, but Bangladesh still faces tariffs of 16-17 percent, he said.

The United States does have a free trade agreement with one Muslim country -- Jordan -- and will begin talks with Morocco later this month on a similar pact. But Raj Bhala, a professor of international trade law at George Washington University, said a much more aggressive effort is needed to integrate Muslim countries into the world trading system.

"When you're starting with Morocco, you're starting at the margin and working in. I'm not sure that we have enough time. I mean suicide bombs are going off every day," Bhala said.

The problem of developing a U.S. trade strategy for Muslim countries is complicated by long-standing U.S. sanctions on Iran, Iraq, Syria and Libya because of concerns that they support terrorism. The United States routinely blocks efforts by Iran, Syria and Libya to join the WTO, Bhala said.

"I think as a political matter the U.S. position will remain unchanged" because of policy decisions those countries have made, said Barshefsky.

Even so, the United States should step up its effort to work with other Muslim states on their WTO bids, she said.