T
he United States spends more than any other country on international development. In 2007, the U.S.
foreign aid budget exceeded $20 billion.1 But foreign
aid is not the only indicator of a nation’s commitment to development.
The Center for Global Development’s Commitment
to Development Index (CDI) looks at a range of policies
on trade, foreign investment, migration, the environment,
security, and technology transfer. The CDI ranks developed
countries according to how much they “help poor countries
to build prosperity.”2 On a list of the 21 richest donor nations,
the United States’ rank was 14.
Achieving the Millennium Development Goals (MDGs),
which were adopted by virtually every country in the world
in 2000, requires commitment to a broad set of issues and
policies. The MDGs set specific targets for reducing poverty
and hunger, increasing school enrollment, empowering
women and girls, reducing child mortality, improving
maternal health, halting and then reversing the spread of
deadly diseases, and ensuring environmental sustainability.
To help meet these targets, the MDGs call for countries to
create a “global partnership for development” that includes
commitments to improve trade rules, fairly address the
unsustainable foreign debt owed by developing countries,
and provide better access to key technologies, especially in
the areas of essential medicines and communications.
But thus far many developed countries, the United States
included, have been less than steadfast in their commitment
to meeting the MDGs. In three areas in particular—trade,
migration, and intellectual property rights—the United States
could do a better job of aligning its policies and programs
with the MDGs. This would not only be consistent with
the objectives of U.S. aid, but also would improve the aid’s
effectiveness.
Trade
U.S. agricultural policies are sorely in need of reform.
Between 1986 and 2006, the government spent nearly half
a trillion dollars on U.S. farm programs. (Over the same
period, the 15 countries of the European Union spent well
over a trillion dollars in support of their farmers.3) Farm
payments shield U.S. farmers from loss during periods when
prices for basic commodities such as rice, corn, wheat, and
soybeans are low. This protection allows farmers to continue
planting even when it would otherwise be unprofitable,
leading to large surpluses and an increase in U.S. exports.
Both of these reduce prices in world markets. Farmers in
the developing world simply cannot compete against these
heavily subsidized farmers.
Cotton is a good example of a crop where smallholder
farmers in developing countries have been harmed by policies
2 Briefing Paper, August 2008
in developed countries. In West Africa, smallholder farmers
grow cotton for local, regional and even global markets.
These countries, and the region as a whole, would benefit
from higher, more stable prices. But cotton p rices remain low
compared to the early and mid 1990s, partly because heavily
subsidized U.S. cotton farmers are able to sell their product
at an artificially low price. Between 2001 and 2003, the U.S.
government spent some $7.2 billion supporting U.S. cotton
farmers.4 These trade-distorting payments cost farmers in
Mali, Burkina Faso, Benin, and Chad $400 million in lost
revenues over the same period.5
In addition to subsidies, barriers to market access—such
as tariffs—also conflict with development goals. Tariffs in the
United States and other high-income countries have been
lowered for manufactured goods, a move that has helped
to fuel the growth of the manufacturing sectors in countries
such as China, Vietnam, and Bangladesh. But tariffs on agricultural products remain four to seven times higher than
those on manufactured goods.6 Tariffs hit developing countries particularly hard. A study that examined the average
tariff applied to U.S. imports from Ethiopia, Tanzania, Guatemala, Namibia, and Thailand found that all of these countries faced higher average tariffs than France, Germany, and
the United Kingdom.7 Yet it is developing countries rather
than industrialized countries that could benefit most from
greater access to U.S. markets.
High tariffs on agricultural products are one problem.
Tariff escalation—increasing tariff rates as products become
more highly processed—is another that affects developing
countries seeking to export value-added products. An
example is soybeans. Unprocessed soybeans can enter
the United States duty free, but there is a 20 percent tariff
on soybean oil.8 Many other crops grown in developing
countries—cocoa and sugar among them—face higher tariffs
in their processed forms. Tariff escalation discourages
entrepreneurs in developing countries from producing and
exporting more lucrative value-added products.
In 2001, the World Trade Organization (WTO) launched
a new round of trade negotiations, often referred to as the
Doha Round. Recognizing that “international trade can play
a major role in the promotion of economic development
and the alleviation of poverty,” WTO members, the United
States among them, agreed to place trade and development
“at the heart of the work program.”9 A successful conclusion
to the Doha Round could significantly benefit developing
countries, with one study suggesting up to $30 billion
in gains.10 Most would be captured by a small number of
countries, notably India and China. But the gains to other
countries, in particular the world’s least developed countries
(LDCs), would increase if they had unlimited market access
to developed country markets. The International Food Policy
Research Institute estimates that an ambitious trade deal that