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A debate about more than trade

NB: The authors are from the ultra-conservative Heritage Foundation. US Congress is currently considering whether to approve or reject the US-Morocco FTA.

Washington Times, 21 July 2004

A debate about more than trade

By Brett D. Schaefer/Anthony B. Kim

It would be easy to dismiss the hesitation we see in Congress over the Bush administration’s proposed free trade agreement (FTA) with Morocco as just another chapter in the ongoing debate between free traders and protectionists. After all, the usual suspects raise the typical arguments about labor and environmental standards and how the agreement would affect U.S. jobs.

But this FTA is about more than trade. Advancing long-term U.S. interests requires integrating nations in the Middle East and Africa into the global economy and encouraging the political and economic reforms necessary for this process to occur. Morocco - as a Muslim country, a Middle Eastern country and an African country - can serve as a powerful symbol of development through economic openness, civil society and good governance.

This is not to say the agreement offers no economic benefits to the United States. Our exports to Morocco now face an average tariff of more than 20 percent, while Moroccan imports to the U.S. face only a 4 percent tariff.

The benefits would begin almost immediately. According to the U.S. trade representative, more than 95 percent of bilateral trade in consumer and industrial products will become duty free as soon as the agreement takes effect. And all remaining tariffs would be eliminated within nine years.

An FTA also would open up Morocco to most U.S. agricultural products and service industries, both of which could see significant gains in trade. Finally, Morocco has agreed to improve protections for U.S. investors and intellectual property.

Similarly, Morocco stands to gain. The $10.9 trillion American economy is more than 200 times the size of Morocco’s, so gaining tariff-free access to the U.S. market would be a significant coup for Moroccan exporters.

An International Trade Commission study estimated Moroccan exports to the U.S. would increase $199 million (from $465 million in 2003) once the FTA is fully implemented.

The biggest winners, however, would be Moroccan consumers. They would be able to purchase U.S. goods at dramatically cheaper prices - delivering an immediate improvement in their standard of living.

As important as the economic benefits could be, though, they’re only part of the equation.

The major U.S. security concern is fighting terrorism. A key part of this fight is combating poverty, which can fuel the resentment, desperation and hopelessness that terrorist organizations utilize to recruit new members and muster support for their activities.

Poverty is largely imposed on a people through a government’s ill-conceived and repressive economic policies. The solution to poverty is to deliver greater economic freedom, which provides the opportunities that lead to greater growth. This is why economic freedom is a key component of any long-term solution to terrorism: It eliminates some of the circumstances under which people can be enticed by terrorists.

From America’s perspective, a stronger economic relationship with Morocco makes sense because it would advance U.S. political and security interests. With its demonstrated commitment toward political and economic reform, Morocco is an ideal ally in the region. For example, Morocco was recently awarded status as a major non-NATO ally, a privilege that grants the country special privileges in military assistance, purchases and cooperation.

The administration recognizes that improved relations with Morocco would have both economic and national security benefits and is "working to build bridges of free trade with economic and social reformers in the Middle East," says U.S. Trade Representative Robert Zoellick. And an FTA with Morocco would be only the beginning. "Our plan offers trade and openness as vital tools for leaders striving to build more open, optimistic and tolerant Islamic societies," Mr. Zoellick says. A separate deal with Jordan has been signed, and one with Bahrain is in the works.

Without these initial agreements, there would be virtually no chance of realizing the Bush administration’s goal of negotiating a U.S.-Middle East Free Trade Area by 2013. That plan is a key part of the administration’s strategy to integrate the Middle East into the modern global economy and spur growth in the region.

Only by establishing mutually beneficial relationships with countries such as Morocco can the United States hope to send a fundamental signal to the Middle East and Africa that we’re willing to work with their nations to increase prosperity. An FTA is the logical starting point.

Brett D. Schaefer is the Jay Kingham fellow in international regulatory affairs in the Center for International Trade and Economics at the Heritage Foundation ( Anthony B. Kim is a researcher there.