International trade fuels emerging-market development through growing a stable middle class, empowering women, and creating jobs and sustainable economies especially in remote communities and neighborhoods where the concepts of “hope” and “a good future” are rare commodities.
The Generalized System of Preferences (GSP) has expanded U.S. imports from emerging markets – 2/3 of the world’s economies – since 1976. More recently, the Caribbean Basin Initiatives (CBI) and the African Growth and Opportunity Act (AGOA) have provided even more opportunities for U.S. importers to source a wider variety of goods duty-free from nations in the Caribbean and Sub-Saharan Africa.
Congressional commitments to use trade to fuel economic stability and growth have been successful. The 20-month lapse of GSP since August 1, 2013, has resulted in U.S. imports under GSP dropping by 13.3% in the first quarter of 2015, as compared to a year earlier and a backdrop of essentially an overall flat U.S. import situation. The negative, in this case, helps to prove the positive.
The current AGOA Extension and Enhancement Act takes the recognition of trade fueling economic stability to a new level. AGOA’s trade benefits would be authorized for a ten-year period, through the AGOA Extension and Enhancement Act. This would address investors’ longstanding needs for duty treatment stability so that they may recoup their investments. Haiti, too, would benefit from the Act’s five-year program extension.
International trade – linking emerging market suppliers to U.S. importers – is also a powerful driver of reconstruction, investment, and economic renewal following natural disasters. An important example is Haiti, for which Congress established the use of trade as a way to help a country recover from a devastating earthquake. The Haiti Economic Lift Program (HELP) expanded opportunities for Haitian-made textile and apparel to enter the U.S. market free of duty.
At first, investment – largely from the public sector – needed to be coaxed. After Haiti’s exports to the U.S. market began to grow, the potential for even greater trade expansion and diversity attracted private and public investment. The results are a new industrial park, infrastructure growth, long-term employment, and ancillary workers’ facilities.
On April 25, 2015, Nepal suffered a 7.8 magnitude earthquake. Many aftershocks have followed, including a powerful 7.4 magnitude earthquake on May 12, 2015. The death toll is nearly 8500 people, with more than 17,000 people injured and 2,500 missing.
The earthquakes’ economic impacts are far-reaching. The U.S. Geological Survey estimates losses could exceed Nepal’s $20 billion annual gross domestic product.
Nepal’s needs are parallel and equally intense to those of Haiti.
Nepal is a land-locked, mountainous country of 28 million people, It is in a challenging, transitional period following the end of a 10-year internal conflict. Nepal is among the world’s poorest countries, with a per-capita gross national income of $730, which is less than half of South Asia’s regional level.
Similar to Haiti, low investor confidence, stagnant export diversification, and growing remittance dependence had characterized Nepal’s pre-earthquake economy. To counter these conditions, the Government of Nepal had just begun to make significant progress. The World Economic Forum ranked Nepal 102nd of 144 countries in global competitiveness for 2014-2015, as compared to 117th a year earlier.
U.S. imports from Nepal totaled about $87 million in 2014, with textile and apparel items comprising more than 75% of the total. Nepal’s businesses and workers had achieved U.S., European Union, and global market presence for its men and women’s apparel, as well as its carpets, pashminas, gloves, and hats. Stable economic growth had begun.
The earthquakes have flattened much of the country, but the use of trade as a way to rebuild has already taken hold. As a way to help their countryman, Nepali businesses and tailors (whose facilities are intact), are donating Nepali shirts for purchase by international consumers with the proceeds to be spent for relief in-country.
The Embassy of Nepal and thousands of Nepalese and friends of Nepal living in the United States hope that Congress will enact S. 81, the Nepal Preferences Act, separately or as part of current trade legislation. Doing so will demonstrate Congressional commitment to use its successful trade-based Haitian earthquake response to help rebuild and attract critically needed investment to Nepal.