UN should prioritize ease of trade to fight poverty

This week the United Nations begins debating future priorities during its annual General Assembly. Economic recovery from COVID-19 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 low-income 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.

Matt Warner is president of Atlas Network where he also leads the economic development project DignityUnbound.org.