Inflammation and stories on trade

Trade EmbargoesIn a world dominated by complex international relations, tumultuous geopolitical conflicts and volatile financial climates, the sense of protectionism and the implementation of trade barriers are becoming more widespread. An embargo is a term that can be defined as the complete or partial ban on trade, business activities and relations occurring between two countries. Similar to trade sanctions, trade embargoes are involved when countries seek to establish barriers or constraints often for political motives, purposes and gains. But, do they work?

Cuba and the U.S. Trade Embargo

Countries like Cuba, Libya, North Korea, Venezuela, China and Russia have often been on the receiving end of trade embargoes for decades. In the past, U.S. trade embargoes have resulted in sporadic political changes and dire effects on foreign policy.

For instance, Cuba, in particular, has been adversely impacted by the U.S. trade embargo since the culmination of the Cuban Missile Crisis of the 1960s, particularly in regard to the collapse of the sugar industry. The initial decline was catalyzed by the imposition of the Smoot-Hawley Tariff Act. Production further declined after the fall of the Soviet Union and a rise in the embargoes by the United States.

Trade Embargoes and Economies

At times, trade embargoes work because they can contribute to more peace and stability, and they can even prevent the debilitation of human rights violations, terrorism, aggression and nuclear threat. However, long term restrictions can be quite damaging and aggravate poverty and the standard of living for civilians. Owing to the sheer level of economic isolation and threat to trading relationships, the effects of trade embargoes can be especially damaging to the business, trade and commerce of a country, impacting a country’s GDP as well.

As a result of the negative effects of trade embargoes, domestic industries and producers often suffer a decline in their export markets and revenues, thereby threatening jobs and livelihoods. Countries that tend to overspecialize in certain commodities, goods and services may be most affected by these constraints as key sectors of the economy may be adversely impacted. Given their level of development, poorer countries are often restricted to producing goods in the primary industry that may have relatively lower returns.

Unintended Consequences

Trade embargoes may lead to grave economic and geopolitical problems like retaliation, such as the Russian counter-embargo after the 2014 EU Energy embargo during the Russian annexation of Crimea. This can result in an escalation in trade and price wars in the long run. Incidentally, the U.S. and China may now also be on the verge of a major trade war due to the new imposition of trade barriers, most recently on steel and China’s HUWEI chip sales.

Due to deficiencies in the country’s power to export goods and services during an embargo, its trade balance will also tend to suffer to a great degree. For instance, a U.N. arms embargo has been placed on North Korea concerning all armaments and related goods. Since December 2017, trade restraints have also been placed on key industries like oil and agriculture. This has created issues for the North Korean economy, but it has done little to deter the government from nuclear testing.

Open Trade Benefits Economies

According to the IMF, there is significant evidence that countries with open economies are more likely to achieve higher levels of economic growth. With new levels of trade liberalization and globalization, expanding economies are benefitting from massive inflows of capital and investment from stakeholder groups around the world. Moreover, in recent years, burgeoning and fast-paced economies like China are graduating to an open trade policy so that they can bolster trading ties with other key trading players.

In the year 2014, members of the World Trade Organization (WTO) agreed to sign the Trade Facilitation Agreement (TFA). In order to ensure greater ease, competitiveness, and efficiency in trade in the future, trade facilitation measures are now being implemented so that weak bureaucracy and productivity issues may be addressed. TFA will also aid developing economies to boost their exports and have greater access to markets.

The answer is not simple. Trade embargos can work under the right circumstances, but they are not always as effective as one would hope. Furthermore, they can have unexpected consequences. Given the vast scope and potential of free trade and development in a dynamically changing world, eliminating barriers and encouraging greater economic integration may provide a more effective way to address important social and economic issues and have profoundly positive impacts in the long term.

Shivani Ekkanath
Photo: Flickr

Changes in Transcontinental Trade Look to Lift African Economies
Despite being home to many rapidly growing economies and an abundance of essential natural resources, Africa also contains numerous countries with some of the highest poverty and food insecurity rates in the world. However, new legislation and foreign support hope to ease the flow of domestic trade in Africa, allowing broader access to necessities and helping to build a strong continental economy.

The High Cost of Shipping

While Africa regularly exports goods to places such as the U.S. and Europe, only 13 percent of traded goods remain in Africa. Underdeveloped road and highway systems between neighboring countries translate to high costs in transcontinental shipments, ultimately raising the cost of transported goods to the point of unaffordability for most impoverished Africans.

For example, while the United States Agency for International Development (USAID) estimates that East Africa produces enough food to support everyone living in the region, the high cost of transportation has halted trade in the area, resulting in food insecurity for 27 percent of the people living on the continent. However, recent legislative changes and foreign support signal that trade in Africa is beginning to take on a new shape that allows for transcontinental trade and a collective African economy.

The Transcontinental Trade in Africa

The Continental Free Trade Area (CFTA), which was proposed at a meeting of the African Union in 2012, set forth goals of enhancing trade among the eight Regional Economic Communities (RECs), made up of geographic subdivisions with interconnected economies, and creating a continental trading system that would encourage foreign investment and a competitive marketplace.

While the CFTA has yet to be fully implemented, ongoing discussions, including the December 2017 meeting in Niger of 54 countries in Africa, emphasize that an economic overhaul of this magnitude is a long-term goal with results that will not be immediately apparent despite the progress being made.

In addition to internal policy changes by African governmental leaders, foreign investors seeking to take early advantage of the promising African markets have expedited growth with contributions to urban development. In Ethiopia alone, Chinese investors funded the construction of the African Union’s headquarters in the capital city of Addis Ababa in the amount of $100 million. Road and highway systems, an airport and various energy and rail transportation programs are underway with the intent of modernizing Africa’s infrastructure and turning its economy into a thriving market with a high return rate.

Improving Agriculture and Trade

USAID has been working to improve trade in Africa through the creation of Trade and Investment hubs. Furthermore, through their Feed the Future initiative, USAID is working to educate various African countries on how to improve agricultural production and how to create trading systems that both improve the economy in the trading region’s while giving others access to goods not ordinarily available in their own region.

To complement the interests from investors abroad, foreign government organizations have worked from afar and on the ground to improve trade in Africa to create a flourishing, self-sufficient set of nations and to improve living conditions for the impoverished and the food insecure people throughout the continent.

Due to the large scale of growing trade in Africa to a place of higher economic security, progress may not be readily apparent or may not appear to be moving quickly enough. However, African government officials are hopeful that, by improving trade and economic conditions at the regional level and working outwards toward an efficient continental market, Africa may soon achieve its ultimate goal and find itself in a competitive position in the world market.

Rob Lee

Photo: Flickr

U.S. Benefits From Foreign Aid to Gabon
As the United States faces potential cuts to its foreign aid budget, it is important to recognize that the relationship between the United States and any country receiving aid is not a one-way transaction. The benefits reaped by both countries outweigh any costs. The many ways the U.S. benefits from foreign aid to Gabon is one such example. With a diplomatic friendship stretching back 58 years, the U.S. assists Gabon with funds that power humanitarian programs. These programs fight poverty, human trafficking and disease in Gabon. In return, the U.S. has gained a stable trading partner and international ally.   

The Partnership Between the U.S. and Gabon

When Gabon gained independence from France in 1960, U.S.-Gabon relations grew quickly. During the cold war era, Gabon was an ally of the West and has always sought to remain close with U.S. leaders, no matter who occupies the Oval Office. Gabon’s large oil reserves have received investments from U.S. presidential administrations, starting with Nixon and going all the way to the Obama administration. Gabon’s oil industry has been key to the development of strong trade partnerships with the U.S.

As reported in 2018, the U.S. had been importing about 30,000 barrels of crude oil from Gabon daily.  However, it isn’t all about oil; Gabon is ranked 134 as the U.S.’ largest goods trading partner. In 2016, there was a total of $192 million in goods traded. The U.S. exported a total of $89 million in goods to Gabon, and in return, imported $199 million in Gabonese products, clearly showing that the trading benefits alone outweigh any foreign aid costs.

The main products being imported from Gabon include mineral fuels, wood products and rubber while the U.S. mainly exports poultry products, beef products, cotton and sweeteners. While there is a certain amount of trade occurring between both nations, the number of goods being exchanged could be improved substantially by an increase in the amount of aid that Gabon is receiving from America. As more trading occurs as a result of Gabon’s ongoing development, the more the U.S. benefits from foreign aid to Gabon.    

The Rainforest

The two countries also cooperate to spearhead conservation efforts that seek to protect the country’s rainforest from deforestation and poaching. As a central African nation, Gabon part of the second largest rainforest in the world: the Congo Basin. The Congo Basin’s many natural resources provide food and shelter to more than 60 million of its inhabitants. Land in this area creates many viable, renewable products that have long reinforced a strong trading partnership with the U.S.

The United States Agency for International Development, (USAID), has employed an initiative called the Central Africa Regional Program for the Environment (CARPE) in Gabon and six other nations in the Congo Basin: the Central African Republic, Cameroon, Equatorial Guinea, Democratic Republic of Congo, and the Republic of the Congo.

The program seeks to bolster conservation efforts in these six countries as they battle poaching and deforestation while, at the same time, trying to improve responsible land management in the Congo Basin. CARPE works with communities and governments and nonprofits in these central African nations to speed up the transition from developing states to financially and politically secure democracies. It provides funding to ensure that the region’s rich, biodiverse habitat is preserved and that the transition from developing nation to developed nation is accompanied by low emissions and environmentally conscious economic strategies.  

Looking Ahead

Looking to the future, it is clear that the relationship between the U.S. and Gabon is beneficial for both countries. The ways that the U.S. benefits from foreign aid to Gabon will only be strengthened as Gabon continues to develop, bolstered by USAID through programs such as CARPE. The 58-year relationship between the two countries serves as an example of the mutually beneficial results of foreign aid. 

Jason Crosby
Photo: Flickr

Brexit and Poverty in Britain
In 2016, 51.9 percent of voters in The United Kingdom voted for Britain to leave The European Union. This controversial decision left many scholars and politicians scrambling to predict what social and economic consequences would follow for the country. Many significant studies have been conducted on the possible effects of Brexit and poverty in Britain, but it is impossible to definitively know what repercussions the transition will bring.

In March 2019, the transition out of the EU is set to begin. Many facets of British life, politics and economics will be impacted by this shift, yet the effect of Brexit on poverty in Britain remains complicated and vague. Some may claim that Brexit will not increase British poverty rates while others argue that it will. Some of the most influential determinants of national poverty are healthcare, food security, and household income and expenditure.

Health Care and Medical Services

The British National Healthcare System (NHS) has historically been dependent on non-U.K./ EU nationals to contribute to the medical workforce. In 2017, 60,000 workers in the NHS were non-U.K./EU nationals. Since Brexit, however, many medical professionals have left The U.K. due to uncertainty about legal status and protections post-Brexit. Leaving the EU also makes recruiting international employees more difficult as there will be less recognition of professional qualifications received in other countries.

Immediately after the Brexit vote, the number of non-U.K./EU nurses applying to join the British nursing register fell by about 96 percent. Patients are being forced to wait over longer periods of time for treatment simply because there are not enough medical professionals available. This is a dangerous and potentially fatal repercussion of Brexit.

Food security

In the case of a no-deal Brexit, food security would suffer as 30 percent of the national food supply comes from the EU The country does not have a clear food stockpiling location as it is accustomed to importing food and consuming it rather quickly afterward. The EU is such a large provider of food for Britain that no other country could easily replace this supply.

The U.K. itself will have trouble producing enough to make up for the deficit since it faces its own problems with food production as a result of things like changing weather conditions. Many are concerned that a no-deal Brexit could cause catastrophic food shortages in the country.

Household costs and incomes

Brexit will have a negative impact on the ability of the U.K. to import any kinds of foreign European goods and services. Because of this, the prices of goods and services will increase. Of course, this will affect all populations in Britain, but it will be felt most intensely by poorer households who will not be able to keep up with these price increases.

On the other hand, it is possible that if Brexit may lead non-U.K./EU workers to leave Britain, there may be an influx of job opportunities in the country. This could mean that some poor British citizens may be able to find more lucrative work.

As Brexit approaches, the United Kingdom is beginning to take precautions to ensure that the transition occurs smoothly. Though there is disagreement on what a proper Brexit would entail, all seem to agree that the priority should be the protection of the British citizenry. The political and partisan debates over what Brexit will mean for the country can only involve precaution and prediction as no one can be certain what March 2019 will bring or what the effect of Brexit on poverty in Britain will be. One can only hope that the well being of vulnerable citizens will be considered.

Julia Bloechl
Photo: Flickr

US-China Trade Tensions
The U.S. has recently started enforcing tariffs on China to address the trade imbalance between the two countries. The Trump Administration’s goal is to pressure China into altering its trade policies to favor the U.S. In response, China has enforced its own tariffs leading to the US-China trade tensions.

From May to June this year, the Chinese Renminbi fell 4.3 percent against the U.S. dollar. Many fear an impending trade war if neither side backs down. Unfortunately, the trade tension also has the potential to significantly impact not only the economies of the U.S. and China but developing nations as well.

Impact of US-China Trade Tensions on Developing Nations

The impact of US-China trade tensions on developing nations would be especially significant in Asia. Economic success is a pathway to alleviating poverty and advancing progress globally. The trade tension would serve as a roadblock. Should it continue, China and the U.S. are not likely to immediately feel major shock waves from the tariffs given the enormous size of their economies.

Smaller nations, however, are getting caught in the middle. According to JP Morgan economist, Sin Beng Ong, Asian countries like Japan, Malaysia, Singapore, Thailand, South Korea and Taiwan would be hit the hardest from a possible trade war. Each nation is export dependent and is intertwined in the complex supply chains in the tech and automobile industries. Chinese goods are often made using components produced in other nations. For example, Taiwan’s supply of components to China makes up two percent of its GDP. Tariffs on China then also impact Taiwan by proxy.

South Korea is similar. Compared to last year, exports were up by 13.2 percent in May and following the trade tension it dipped to 0.1 percent in June. OCBC Bank measured the impact of the US-China trade tensions on other nations as well. It projected a drop of 0.2 percent for South Korea and a drop of 0.3 percent for Japan if the U.S. continues with new tariffs on the $250 billion worth of Chinese goods.

Closer allies like India, Canada, EU and Turkey have noted concerns on impending harm in the long run as well. This would not only erode their economic progress but negatively impact our diplomatic relations as well. As a result, these countries have retaliated, despite being allies, fearing lack of jobs and an overall harm to their respective economies.

The US-China trade tensions have the potential to unite the world against the U.S. in order to protect years of economic development and avoid increasing poverty.

Trade Tensions and Poverty

As of 2013, the World Bank has reported the poverty headcount ratio in South East Asia to have significantly improved. The number of individuals living with just $1.90 a day was listed as 15.1 percent: a significant improvement from previous years. The US-China trade tensions, however, will impact this progress negatively.

The impact of the US-China trade tensions on development in the U.S. is mainly centered on food. China has targeted pork through multiple 25 percent tariffs and other products such as soybean. This hurts farmers economically because they now have to sell their products for much less.

Trade War and Nonprofits

In Asia, several nonprofits have a continued mission of resolving the issue of poverty. Organizations such as the Peace Corps and Care have existed for several years. In the event of a trade war, their work will have increased importance in impacted nations.

International groups, such as the World Trade Organization, have worked to quell the escalations through advocacy. WTO Director General Roberto Azevedo noted that the “escalation poses a serious threat to growth and recovery” in nations around the world.

A recent WTO report also mentioned, however, that the global trading system would be able to resolve such issues. Specifically, it asked the G20 economies to alleviate the issue and advocate for trade recovery.

As the US-China trade tensions escalate, it is imperative to the health of developing nations as well as the U.S. and Chinese economies that the issue is resolved. With organizations such as the WTO and nonprofits in South Asia working to minimize tensions, the goal of alleviating the issue is still attainable.

– Mrinal Singh
Photo: Flickr

US Benefits from Foreign Aid to MauritaniaNestled between Senegal, Mali, and Western Sahara, Mauritania is a mostly desert country. The population is roughly 4.3 million people, making Mauritania the fourth least densely populated country in Africa. Half the population lives at or around the coastal capital of Nouakchott. The country faces the challenge that only 0.5 percent of its land is measured as arable. It suffers an extremely hot and dry climate, leading to dust-laden wind and occasional droughts.

The History of U.S.-Mauritania Relations

The U.S. was the first country to recognize Mauritania’s independence when it became independent from France in 1960. The U.S. had excellent relations with Mauritania from 1960 to 1967 and aided the country with a small amount of economic assistance. In 1989, U.S.-Mauritanian relations were disturbed by the Mauritanian governments expulsion of Senegalese citizens. Ties were further deteriorated by Mauritania’s supposed support of the 1991 Gulf War.

At the end of the 1990s, the Mauritania government began to adopt new policies, which were higher regarded by the U.S. As a result, U.S.-Mauritanian relations grew significantly, and military cooperation and training programs soon followed.

The U.S. condemned Mauritania’s military coups in 2005 and 2008. However, the U.S. supported the nations transition to democracy after the coup d’état in 2005. Furthermore, the U.S. assisted in election-related business, such as voter education and election support in 2007.

Since 2009, funding has returned to Mauritania. The U.S. continues to support the Mauritania government and to encourage political leaders to continue democracy. The U.S. benefits from foreign aid to Mauritania because of key issues the nations fight for together: food security, counterterrorism, strengthening of human rights, and the promotion of trade. This is most evident through the growth of trade and counterterrorism movements.

Trade Growth

Although it is slow, the U.S. benefits from foreign aid to Mauritania by growing trade and investment relations within this country. The two countries are linked through the U.S.-North Africa Partnership for Economic Opportunity (NAPEO), a regional public-private partnership that improves the network of businesspersons in the U.S. with the five Magherb countries, including Mauritania.

Counterterrorism

Mauritania is among five other nations (G5) that work with the Multinational Joint Task Force to end terrorism. They are an important member in creating African-led solutions to counter instability and terrorism. The G5, Mauritanian authorities, and the U.N. have worked closely together to implement solutions of counterterrorism. The representatives set out plans that aim to:

  1. Increase education
  2. Support the role of women in reforming security
  3. Bettering investigative abilities
  4. Reintegrating previous offenders
  5. Strengthening border security

In October 2017, the U.S. government pledged up to $60 million toward the G5’s counterterrorism initiatives. The funding was to be used to train and equip members of the Joint Task Force. The goal of this funding is to entrust nations, like Mauritania, to provide their own safety.

Terrorist organizations are still active in this region and had launched a series of attacks through Mauritanian from 2005 to 2011. Foreign aid workers and tourists were targeted during this time. Although the threat of terrorism in Mauritania remains high, it is on its way toward improvement because of the counterterrorism actions being taken in 2017, made possible by foreign aid.

– Stefanie Babb
Photo: Flickr

U.S. Benefits from Foreign Aid to Equatorial Guinea
People often think of foreign aid as the provision of emergency assistance without many tangible benefits in return. However, providing foreign aid offers numerous benefits to countries such as the U.S. For the U.S., Equatorial Guinea is by far one of the most important potential trading partners in the world, and aid to Equatorial Guinea is one of the surest ways to create such partnerships. The U.S. benefits from foreign aid to Equatorial Guinea, as it gains access to one of the world’s largest energy exporters.

Equatorial Guinea and Its Neighbors

In order to see how the U.S. benefits from providing aid, it is important to first understand the situation in Equatorial Guinea. As a largely underdeveloped country, Equatorial Guinea also suffers from the woes that plague many of its continental neighbors.

Political turmoil and internal corruption have caused sharp drops in foreign development assistance to the country since 1993. For example, in 2013 the government cracked down on freedom of assembly by shutting down protests and arresting political dissenters, sparking international outcry.

In addition, worsening economic conditions have caused the country’s economy to shrink by nearly 25 percent since 2014 despite this trend of reversed growth being rare among African countries. Most African states have managed to maintain positive economic growth rates in spite of rampant poverty.

For example, although Equatorial Guinea’s fall in growth stabilized at -3.2 percent in 2017 from its all-time low of -9 percent in 2015, most of its neighbors have maintained positive growth rates for years.

Cameroon to the north had GDP growth of 3.2 percent for 2017 and hasn’t dipped below zero since 1993. To the south, Gabon had a growth rate of 1.1 percent for 2017. Although Gabon’s growth has steadily declined since 2008, Equatorial Guinea is unique for having a consistently negative rate several years in a row.

Increasing Economic Prosperity

Nonetheless, the country has a strong export-based economy. In 2016 alone, Equatorial Guinea exported around $4 billion worth of goods, while importing a little over $1 billion. Its trading power has made it one of the few countries in the world with a trade surplus, especially one of that magnitude.

Equatorial Guinea’s economic health relies heavily on its natural resources. In 2016, its largest exports consisted of crude oil (which comprised over half of its exports, at $2.79 billion out of $4.06 billion) and petroleum gas (which accounted for approximately $762 million). Increasing global demand for oil, coupled with heavy reliance on this finite energy product, could make Equatorial Guinea one of the most important developing economies in the 21st century.

The Value of Foreign Aid and Investment

Equatorial Guinea’s economic potential suggests that it is a viable potential trading partner for any country, and providing foreign aid to Equatorial Guinea may be a strong gage for determining how robust such potential trade agreements could be. Increased foreign aid could encourage Equatorial Guinea to work with donor countries in opening new supply chains through trade agreements, complementing international development assistance with long-term economic partnerships.

Providing foreign aid will also help Equatorial Guinea grow its economy and reach its full potential. For example, as foreign donors began slashing development funds to Equatorial Guinea between 2010 and 2014 (from $85 million to $520,000 respectively), its economy began to contract several years later, from $22 billion in 2012 to $12 billion in 2017.

However, despite such alarming figures, there has been some help in the form of an increased focus on infrastructure development. In 2015, China agreed to commit $2 billion to Equatoguinean infrastructure. This support has not only helped revitalize Equatorial Guinea’s economic growth but also brought Equatorial Guinea and China closer together diplomatically.

Equatorial Guinea and the U.S.

In contrast, the U.S. has no trade agreements with Equatorial Guinea. In fact, it currently exports more to Equatorial Guinea (at $278 million) than it imports (at $193 million), signaling a large trade imbalance for Equatorial Guinea.

Furthermore, the U.S. does not supply any foreign aid to Equatorial Guinea. However, it does provide a generous amount to Equatorial Guinea’s neighbors; in 2017, Cameroon received approximately $80 million in U.S. foreign aid funds, while Gabon received over $2 million.

Increased foreign aid to Equatorial Guinea is one of the most practical ways to improve trade relations between the two countries. Each nation has something that the other needs. As one of the wealthiest countries in the world, the U.S. has plenty of foreign aid funds available (specifically, a foreign assistance budget of $50 billion in 2015) to improve the economic outlook of Equatorial Guinea.

Additionally, as one of the largest oil harvesters in the world, Equatorial Guinea has a slew of energy reserves available to export to the U.S., at a total of 1.1 billion barrels of oil as of 2012. It is evident that the U.S. benefits from foreign aid to Equatorial Guinea, due to greater access to a growing Equatoguinean hydrocarbon sector.

How the U.S. Benefits from Foreign Aid to Equatorial Guinea

A diversified import sector is critical to the financial well-being of any country. For the U.S., an oil industry with diversified imports creates stable international supply lines and an even stronger economy. Equatorial Guinea’s resources and economic potential suggest that it could be an ideal trading partner.

The U.S. benefits from foreign aid to Equatorial Guinea by improving relations between the two states and opening up new energy markets for American consumers. In addition, robust trade agreements could yield incentives for elevated oil production, thus helping to reverse Equatorial Guinea’s negative economic growth.

– Vincent Giordano

Photo: Flickr

U.S. Benefits from Foreign Aid to MauritiusAfter becoming independent from Britain in 1968, the country of Mauritius began a diplomatic relationship with the United States that is still important today. Mauritius, a small island nation in the Indian Ocean, has become one of Africa’s most developed and stable economies, transforming itself from an impoverished country dependent on sugar to a middle-income nation with a diverse economy. Throughout this period of growth and success, the U.S. has been an important partner and has seen great benefits from foreign aid invested in Mauritius. There are three main ways the U.S. benefits from foreign aid to Mauritius.

Maritime Security

One of the biggest priorities for U.S. foreign aid in Mauritius is maritime security: keeping the Indian Ocean safe from piracy and crime. Maritime security allows for safer trade routes and prevents terrorism that could potentially spring up in the area.

Mauritius is one of the only countries in the region with a strong program for maritime protection and has been an important player in U.S. efforts to keep the Indian Ocean secure. U.S. foreign aid in Mauritius provides security officers with training that deals with counterterrorism methods, seamanship, forensics and maritime law enforcement. Without such measures in place, shipping and trading on the high seas, which have benefited the U.S. and Mauritius, could be more challenging.

Trade and Economic Growth

Mauritius is an example of how foreign aid is a form of investment. As the U.S. used foreign aid to develop Mauritius’ economy and improve trade relations, more and more U.S. businesses invested in Mauritius and experienced great results. The U.S. and Mauritius have a bilateral trade and investment agreement and are active trading partners.

As one of Africa’s most developed economies, Mauritius has engaged in many trade agreements and embraced free-market opportunities, some of which were only made possible with U.S. foreign assistance. In 2016, for example, the East Africa Trade and Investment Hub (funded by USAID) and Mauritius’ Board of Investment signed a Memorandum of Understanding to work together in investment promotion activities. The Hub also agreed to help Mauritius take advantage of trading opportunities with the U.S. and incentivize trade in the nation.

Since Mauritius’ has grown to an upper middle-income country and U.S. brands are purchased commonly in this new market, more than 200 companies and products from the U.S. do business in Mauritius. The U.S. exports agricultural and industrial machinery, jewelry and medical instruments to Mauritius and benefits from Mauritius imports such as textiles, precious stones, processed fish and sugar. Bilateral trade between these two countries is currently valued at $337 million.

Diplomacy and Political Stability

An important sector of U.S. foreign assistance is democracy, human rights and governance. Although Mauritius is already a multi-party democracy, foreign aid to Mauritius is still used to secure future democratic peace and stability in Mauritius and throughout Africa. Political stability in Africa is beneficial to the U.S., as unstable African countries that lack strong governments sometimes become havens for terrorism, threatening national security.

One way that foreign aid is used to foster diplomacy with Mauritius is through exchange programs such as the Young African Leaders Initiative (YALI). This program, started by President Obama in 2010, is an important U.S. effort to invest in future African leaders. The YALI program’s goal is to educate and network young African leaders to work for a peaceful future in Africa.

Since 2010, 66 Mauritians participated in the YALI program in the U.S. and then returned to their country to start new businesses, organizations and programs. There are also Mauritians involved in the YALI Regional Leadership Center in South Africa. These centers act as hubs throughout Africa that enhance leadership skills and teach young people to play important roles in their communities. There are about 1,300 members from Mauritius in the YALI Network, which continually provides online resources for young leaders to learn the skills and connections needed to bring change to their communities and stability to their countries.

These examples demonstrate how the U.S. benefits from foreign aid to Mauritius and the importance of this partnership both now and in the future.

– Alexandra Eppenauer
Photo: Flickr

Examples of Trade EmbargoesTrade embargoes are government-imposed barriers to international trade. Countries often justify these restrictions using political reasons, such as violations of national security or human rights.

10 Examples of Trade Embargoes

  1. U.S. Sanctions on Nicaragua: On July 5, 2018, the U.S. imposed sanctions on three Nicaraguan government officials, in response to the Nicaraguan government’s treatment of anti-government protesters, which has led to over 200 people being killed during violent demonstrations. Due to the 2012 Global Magnitsky Act, the U.S. can implement sanctions against those who commit human rights violations and corruption. The LA Times reported that under the sanctions, “any assets the three men have in the United States will be frozen, and U.S. citizens are barred from business transactions with them or any companies in which they have 50 percent or more ownership.”
  2. U.S. Sanctions on Russia: In April 2018, the U.S. passed new sanctions against Russia, intending to penalize Russian officials for their alleged involvement in the 2016 U.S. presidential election and their presence in Crimea, Ukraine, and Syria. According to CNN, assets will be frozen for 17 senior Russian officials.
  3. European Union (EU) Sanctions on Russia: As of July 5, 2018, the EU unanimously agreed to extend sanctions against Russia for at least another six months. According to PBS, the sanctions’ extension was no surprise and were “imposed after Russia annexed Ukraine’s Crimean Peninsula in 2014 and backed pro-Russia separatists fighting the government in eastern Ukraine.”
  4. Canada Sanctions on Venezuela: In September 2017, Canada enforced an asset freeze and dealings ban on Venezuela. Under the Special Economic Measures Act, Canada prohibits citizens and any Canadian residents from providing  “any goods, wherever situated, to a listed [Veneuelan] or to a person acting on behalf of a listed [Veneuelan].” The sanctions are based upon a U.S.-Canada alliance in response to human rights violations in Venezuela. For example, the Venezuelan government arrested thousands of protestors in April 2017, and many civilians were injured or killed during the protests.
  5. U.N. Sanctions on North Korea: In 2006, the U.N. Security Council (UNSC) imposed sanctions in response to North Korea’s first nuclear test. The sanction prohibited the supply of heavy weapons and select luxury goods. According to the Council on Foreign Relations, the UNSC announced more restrictions—extending to oil and metal imports, agricultural exports, and labor exports in December 2017. However, the U.N. does allow humanitarian aid to enter North Korea.
  6. U.S. Sanctions on China: Most recently, the U.S. and China are in trade wars—each responding with their own tariffs. On April 16, 2018, the U.S. imposed a seven-year ban on exports to ZTE, a Chinese telecom company. The Washington Post explained that ZTE was reprimanded for “illegally exporting U.S. goods to North Korea and Iran.” On June 7, the U.S. ended the ban.
  7. U.S. Embargo on Cuba: In 1962, the U.S. placed a full embargo against Cuba when the Kennedy administration announced the ceasing of all trade. However, in March 2016, President Obama and Cuban President Raul Castro agreed to “allow commercial flights between the two countries for the first time in more than fifty years.” In September 2017, President Trump proposed the withdrawal of two-thirds of his embassy staff from Havana, Cuba and announced the return of travel restrictions.
  8. EU Sanctions on Sudan: The EU imposed an arms embargo on Sudan in 1994. The embargo was amended in 2011 due to the independence of South Sudan and now applies to both Sudan and South Sudan.
  9. U.N. Sanctions on Iran: In 2006, the U.N. authorized an embargo on supplies for uranium production and ballistic missile development, harming Iran’s economy. In April 2015, the U.S. Treasury Secretary Jacob Lew noted that “Iran’s economy was 15 to 20 percent smaller than it would have been had sanctions not been ratcheted up in 2012.”
  10. U.S. Embargo on Japan: In 1941, the same year the U.S. entered World War II, the U.S. imposed a comprehensive trade embargo against Japan. The U.S. froze “all Japanese assets in America,” which eventually contributed to Japan’s loss of “access to three-fourths of its overseas trade and 88 percent of its imported oil.”

These 10 examples of trade embargoes demonstrate how countries engage with one another to serve their domestic interests and to punish others for violations of human rights.

– Christine Leung
Photo: Flickr

U.S. Benefits from Foreign Aid to NigerWithin the U.S., there is a misconception of the amount of foreign aid given to developing countries. Some Americans believe the government gives up to 25 percent of the budget, but less than 1 percent gets put towards foreign aid. Niger relies heavily on U.S. aid and from additional U.N. agencies; 45 percent of Niger government’s FY 2002 budget comes from foreign aid. The U.S. benefits from giving foreign aid to Niger because of the positive image and the fiscal and potential foreign policy opportunities.

Niger and the U.S. relations

Niger and the U.S. have maintained a diplomatic relationship since the 1960s. The U.S. is a principal donor to Niger, giving up to $10 million yearly in aid, along with helping to coordinate policy in matters like HIV/AIDS and food security. The U.S. benefits from giving foreign aid to Niger because of Niger’s involvement in the Economic Community of West Africa, a program the U.S. maintains a trade and investment agreement to. Along with this program, there is a bilateral investment agreement the U.S. and Niger share with each other.

Foreign aid in Niger

Being one of the poorest countries in Africa, Niger’s economy relies heavily on agricultural production, which is continuously interrupted by extreme heat and droughts. From June to August in 2010, Niger’s crops were destroyed due to the heat, which caused a famine where almost 350,000 people were facing starvation. International food aid was provided when Niger citizens began suffering from malnutrition and respiratory diseases that sickened many children. In addition to international food aid, U.S. foreign aid aims to improve food security, maintain peacekeeping methods and increase healthcare services. With the Millennium Challenge Corporation compact, which began in January 2018, $437 million will be given to enhance Niger’s agricultural capabilities by increasing access to water, roads and markets. Additionally, Niger is one of six other countries that are involved in the Security Governance Initiative, a program that is labeled as a Counterterrorism Partnership Fund.

With programs and partnerships that the Niger and the U.S. participate in, Niger benefits from foreign aid because it is representative of their yearly budget and allows them to develop more resources to eventually become more self-reliant. In addition to providing aid, the U.S. additionally benefits from foreign aid to Niger. Microsoft founder Bill Gates explains how the U.S. benefits from foreign aid: “The 1 percent we spend on aid for the poorest not only saves millions of lives, it has an enormous impact on developing economies – which means it has an impact on our economy.” This shows that giving aid to third-world countries will positively affect the image of the U.S. and the economy.

– Alyssa Hannam
Photo: Flickr