Ease of trade to fight poverty

The Pak Banker - - FRONT PAGE -

This week the United Na­tions be­gins de­bat­ing fu­ture pri­or­i­ties dur­ing its an­nual Gen­eral Assem­bly. Eco­nomic re­cov­ery from COVID19 is at the top of the list of agenda items as the world's aid and donor coun­try rep­re­sen­ta­tives de­ter­mine what can be done to stem the tide of ex­treme poverty that is threat­en­ing to wash out the last three decades of eco­nomic progress for low-in­come com­mu­ni­ties.

Tak­ing de­ci­sive ac­tion is im­por­tant, but those as­sem­bled should fo­cus less on new ini­tia­tives and take a hard look at what we should stop do­ing to pre­vent low- in­come fam­i­lies from find­ing re­lief.

For ex­am­ple, in Sri Lanka, di­a­per tar­iffs have kept these es­sen­tial daily prod­ucts out of reach for young fam­i­lies, many of whom have re­sorted to theft in or­der to get med­i­cal at­ten­tion in some hos­pi­tals. Fac­ing ar­ti­fi­cially high prices them­selves, hos­pi­tal ad­min­is­tra­tors have in­sti­tuted a "bring your own di­a­pers" pol­icy be­fore agree­ing to pro­vide im­por­tant med­i­cal treat­ment. These kinds of trade dis­tor­tions are per­va­sive and, dur­ing a pan­demic, un­con­scionable.

Low-in­come fam­i­lies spend a dis­pro­por­tion­ate amount of their house­hold in­come on con­sumer goods and im­ports. In this way, high tar­iffs amount to a re­gres­sive tax on those least able to pay for needed goods and for which they have no sub­sti­tutes. In­stead, many just go with­out.

Go­ing with­out is what has his­tor­i­cally kept many women and girls out of the work­place and out of school when tar­iffs on san­i­tary nap­kins made them too ex­pen­sive for rou­tine use. Those are the kinds of tragic, anti-de­vel­op­ment rip­ple ef­fects of bad trade pol­icy.

Such con­se­quences are not sur­pris­ing. In re­sponse to tar­iff wars among the world's rich­est na­tions, many de­vel­op­ing coun­tries end up play­ing de­fense with their do­mes­tic trade pol­icy, in­sti­tut­ing pro­tec­tion­ist and na­tivist mea­sures that ben­e­fit the few at the ex­pense of the many.

This year might be dif­fer­ent. In pur­suit of eco­nomic re­cov­ery dur­ing COVID-19, some de­vel­op­ing coun­tries are pri­or­i­tiz­ing the ba­sic needs of low-in­come fam­i­lies over geopol­i­tics.

Ear­lier this year, In­done­sia's min­is­ter of trade eased re­stric­tions on sev­eral food im­ports and, in Bu­rundi, bor­der check­points have been sim­pli­fied and even re­moved to fa­cil­i­tate the faster move­ment of goods. In Morocco, im­prove­ments to the new PortNet sys­tem are help­ing to ac­cel­er­ate trans­parency and lo­gis­ti­cal speed in or­der to meet ur­gent, lo­cal needs.

Donor coun­tries, in­clud­ing those as­sem­bled at the UN this week, can play a lead­er­ship role in elim­i­nat­ing high tar­iffs on con­sumer goods. This will have many pos­i­tive down­stream ef­fects in a cri­sis.

Nat­u­rally, there are many con­stituen­cies con­cerned with trade pol­icy, but it's time to rec­og­nize that our most fun­da­men­tal re­spon­si­bil­ity is to our re­spec­tive low­in­come cit­i­zens who stand to ben­e­fit con­sid­er­ably when we pri­or­i­tize free and open trade.

The avail­abil­ity of con­sumer goods has se­ri­ous im­pacts on the lives and liveli­hoods of the world's poor­est peo­ple. The World Bank warns that COVID-19 threat­ens to re­verse his­toric gains in end­ing ex­treme poverty. And yet, our trade re­stric­tions are work­ing at cross pur­poses with our aid ef­forts.

As the UN scram­bles to do its part to pre­vent this from hap­pen­ing, those as­sem­bled this week would do well to re­mem­ber that free and open trade is one of our most pow­er­ful and re­li­able tools for achiev­ing our shared de­vel­op­ment goals.

As de­vel­op­ing coun­tries take the ini­tia­tive to chip away at trade bar­ri­ers dur­ing this mo­ment of cri­sis, ma­jor economies such as the United States can and should lead the way in min­i­miz­ing trade re­stric­tions. The ef­fects of those ef­forts will mean faster, more rel­e­vant and more di­rect re­lief to those who re­ally need it.

Fail­ure to meet this hu­man­i­tar­ian re­spon­si­bil­ity would be like tak­ing di­a­pers from a baby.

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