Trade and Aid for Effective Foreign Assistance

By Mark Green, Ambassador and Congressman (ret.)

I recently began posting a series of pieces with some of the reasons why I believe (a) America needs foreign assistance reform and (b) Conservatives should take up the cause.  Done right, foreign assistance can play a crucial role in our foreign policy. Unfortunately, the status quo isn’t “done right” or, at least, done as well as it could be.

To summarize, here are my first six reasons:

Reason 1: Our current foreign aid system is organizationally incoherent.

Reason 2: We need to reform the system to make our precious taxpayer dollars go much further.

Reason 3: Foreign assistance reform is a great opportunity for Conservatives to reaffirm values and initiatives we care about. 

Reason 4: Simply put, Conservatives (and Republicans) have a long history of standing up for EFFECTIVE foreign assistance.

Reason 5: The combination of fragmented authorities and overlapping bureaucracies in our current assistance framework is watering down public diplomacy efforts.

Reason 6: Making our foreign assistance operate as effectively as possible is a moral and ethical imperative.

And now . . . Reason 7: The lack of coordination between our foreign assistance programs and our trade policies is hurting the effectiveness of both.

Mark Green-nurseryConservatives believe, in the words of Ronald Reagan, “The best possible social program is a job.”  In that same spirit, in the international realm, we believe the best possible development program is trade – because it creates jobs and reinforces the values of entrepreneurship.  Again in President Reagan’s words, “I recognize … the inescapable conclusion that all of history has taught: The freer the flow of world trade, the stronger the tides of human progress and peace among nations.”

While Americans sometimes complain that foreign assistance is merely a “giveaway” (a view to which I do NOT subscribe), robust trade is mutually beneficial – it boosts OUR job creators and entrepreneurs as well as allowing them to compete in an increasingly challenging commercial world.  This potential benefit has never been more important: developing countries are the fastest growing markets for American goods and services. They already account for 40% of our export markets.

Conservatives, of course, aren’t the only ones who recognize the value of growing trade.  President Barack Obama recently said in a policy address, “We are at a moment where it is absolutely necessary for us to get beyond those old debates. . . . Those who once would oppose any trade agreement now understand that there are new markets and new sectors out there that we need to break into if we want our workers to get ahead.”

What too many policymakers don’t realize is the potential for American foreign assistance to accelerate our trade opportunities inMark Green-flowersthe developing world.  On the other hand, successful business leaders do – and it’s a principle reason so many support our foreign assistance programs. Foreign assistance, done right, can help foster conditions that strengthen consumerism, democratization and markets.  It can, for example, help to seed microfinance programs in the developing world that help farmers and entrepreneurs to grow and expand.  It can help provide technical assistance to transportation authorities to make it easier to ship goods in and out of countries. It can support democratization programs that enhance stability – a prerequisite for long term investment.

As Andrew Natsios, Administrator of the U.S. Agency for International Development under President George W. Bush puts it, “There is no real example of a country leaving the ranks of the poorest countries and becoming a middle income country without an export-based strategy. . . . However, you can’t do it in the absence of aid. Trade is essential, but it’s not aid or trade. It’s trade and aid.”

Mark Green-textilesSo why is trade an argument for foreign assistance reform? As with so many other aspects of foreign assistance reform, it comes down to the need for better coordination and communication amongst the myriad agencies, departments and offices involved in these programs.  Unless those sectors which administer assistance are closely coordinating with those involved in our trade initiatives, we can end up with policies that undermine the effectiveness of both. For example, in its 2010 report, “The Business Case for Foreign Aid Reform,” the Initiative for Global Development revealed that the U.S. government had given“$120 million in aid to two extremely poor countries, Bangladesh and Cambodia, while at the same time collecting $853 million from them in import duties – as much as was collected from France and the United Kingdom combined.”  As David Beckmann of Bread for the World, put it, “So we are taking away with one hand, and we give with the other.”

In short, Conservatives should support foreign assistance reform because (a) we believe in the power of robust American trade to improve the economic fortunes of both ourselves and our trading partners, (b) the developing world is an increasingly important part of our trade potential, and (c) our foreign assistance programs significantly affect how trade functions in many parts of the world. When foreign assistance and trade policy operate at cross purposes, everyone seems to lose ground. But when assistance and trade work together, entrepreneurs on both sides of the equation win.

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