Free-trade deals leave out Muslim countries

Saturday, December 4, 2004

WASHINGTON -- The war on terrorism was high on the mind of U.S. Trade Representative Robert B. Zoellick as he signed a free-trade agreement with the Persian Gulf kingdom of Bahrain in mid-September. "A contest for the soul of Islam" is raging, and "we can help" by striking trade deals that generate jobs and reduce poverty, Zoellick said.

But Bahrain, an island nation with a population of 678,000, is an exception in securing access to the giant U.S. market. Excluding oil, imports from Muslim countries have increased by just 3.2 percent since 2000, their growth suppressed by tariffs of 20 percent or more on key goods such as textiles, according to an analysis of U.S. trade statistics.

Meanwhile, countries in the Andean region, sub-Saharan Africa and elsewhere -- granted preferential, duty-free access to the U.S. market -- have enjoyed a comparative boom, with exports to the United States rising nearly 40 percent in some cases.

The figures reflect a bias in U.S. trade rules that work against strategic allies such as Pakistan, Egypt and Turkey. Under current rules, for example, T-shirts made in Lesotho or Peru or El Salvador come into the country duty-free, while shirts from Turkey or Pakistan are hit with a 20 percent tariff. Looking at trade statistics in light of the 2001 terrorist attacks, some analysts question whether U.S. trade policy is adequately backing the country's national security goals.

"It is hard to argue that the greater Muslim world is of less strategic interest to the U.S. than the Andean region or sub-Saharan Africa," said Brink Lindsey, vice president for research at the Cato Institute, a free-market-oriented think tank. "Our de facto discrimination against Muslim imports sends a terrible signal."

The Bush administration has hardly been stingy in providing financial assistance to its less-wealthy allies, particularly those in the forefront of confronting Muslim radicalism. Washington last year helped put together a $3 billion, five-year aid package for Pakistan, and engineered the recent deal among rich nations to forgive 80 percent of the $38 billion owed to them by Iraq.

But when it comes to trade, officials of some Muslim nations complain that the United States is failing to provide meaningful export opportunities because of protectionist pressure from U.S. industries.

The United States has free-trade agreements with Jordan, Morocco and Bahrain, and has begun negotiations for similar deals with Oman and the United Arab Emirates -- smaller Arab countries whose industries would pose little threat to U.S. manufacturers.

But the United States has specifically rejected granting trade concessions to Pakistan and Turkey, larger countries felt to be critical to the anti-terrorism effort. After the 2001 attacks, both countries asked for the right to export more textiles to the United States, hoping to bolster an industry key to economic growth, and which employs about 60 percent of Pakistan's industrial workforce. Both were turned down. Negotiations for an agreement with Egypt have stalled.

U.S. reluctance to grant concessions may soon have more adverse consequences, Lindsey said, when international textile and apparel quotas expire on Jan. 1.

Once the quota system expires, creating more of a free-for-all in the industry, China is expected to grab an enormous share of the global textile and apparel market. India is also poised to vastly expand its share. Many developing countries fear that the only way their industries can survive Chinese competition is with preferential tariffs that give them a price advantage in the United States and Europe.

"Many countries in the Muslim world are facing a trade shock" when the quotas are lifted, Lindsey said.