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December 29, 2009

Trade Preferences Suspended in the Name of Democracy

The Obama administration deserves applause for suspending the African Growth and Opportunity Act (AGOA) trade preferences of Niger, Guinea, and Madagascar last week.  Under the AGOA legislation, the President has the power to deny AGOA preferences to a country that has not “established, or is making continual progress toward establishing….the rule of law, political pluralism, and the right to due process, a fair trial, and equal protection under the law.”  The Obama administration suspended the trade preferences of Niger, Guinea, and Madagascar because they have all experienced undemocratic transfers of power recently.

It’s too bad the standard trade agreement model doesn’t contain these types of democracy-preserving provisions, as Hondurans found out when their democratically elected President was ousted in a coup this June. 

Given that 70% of Honduran exports go to the United States, the threat of trade sanctions would have been a powerful bargaining chip as the U.S. tried to reverse the coup. Our reckless trade policy came back to bite us, however. In an August press call, the State Department explained the source of our powerlessness:

REPORTER: Yeah. I just wanted you to elaborate why [suspending trade preferences] is not a possibility.

SENIOR STATE DEPARTMENT OFFICIAL ONE: We have an agreement called the CAFTA agreement [i.e. the Central American Free Trade Agreement], and apparently provisions in that make it impossible – very difficult, if not impossible, for us to do that, so we can’t – it looks like we cannot go down that route.

Our trade policy should be promoting democratic governance instead of handcuffing our ability to discourage coups and dictatorships.  Signing CAFTA-style trade agreements is a surefire way to diminish our capacity to conduct effective foreign policy.

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Todd Tucker

This is a great point.

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