Middle East Times | November 15, 2007

OP-ED: Lessons from Morocco

By LARA BIRKES

Bilateral trade accords are driven by politics more than economics, and the U.S.-Morocco free trade agreement, or FTA, is no exception.

Ranking beyond the 80th largest trade partner for the U.S., commercial potential was not the motivating factor for the agreement. The FTA was born of the desire to support an ally in an unstable region through commitments to economic development; the theory being greater market integration leads to prosperity, and thus the generation of goodwill in an area increasingly hostile to American interests. The Morocco FTA illustrates the United States’ tendency to advance the expansion of trade and use it as a tool for promoting wider security and political interests, but the effectiveness of this policy is in question.

At a point when skepticism about the benefits of trade is at an all time high, focusing on a compromised approach to trade policy is key to overcoming the issues that make trade divisive between Democrats and Republicans. The Morocco FTA stands to give both sides a reason to coalesce around a single policy. The agreement offers Republicans the opportunity to support provisions that raise principles of key importance to Democrats; namely aid to help developing countries with transitions stipulated in FTAs, as well as special consideration for labor and environmental standards. In making these policy concessions, Republicans stand to win back the lost support of free-trade Democrats; a strategy that holds the added benefit of allowing FTAs to become the very instruments for policy change, with potential for real and long lasting impacts, that Republicans, and this administration in particular, have sought to achieve through their pursuit of foreign policy driven trade accords.

In the case of Morocco, and developing countries like it, there is a danger in trade pacts between economically divergent nations. That danger lies in poorly executed trade agreements that not only compromise local economies, and stand to leave them worse off, but also fail to tailor terms and conditions specific to the unique needs of trading partners. Binding language in U.S. FTAs must differ, just as individual signatories differ. The economies of the U.S. and Morocco have few parallels and, as such, should compel the U.S. to commit ample resources to address major discrepancies. High expectations exist for the agreement to fulfill a series of commingled commercial and foreign policy objectives while, at the same time, failing to provide the support necessary to ensure the agreement can succeed. Effective assistance, like financial and technical support, is necessary if the FTA is to facilitate domestic reform and economic growth while transforming negative perceptions of the U.S. in the region. With unemployment rates hovering around 10 percent, considerations of utmost importance include those that build Morocco’s ability to trade and compete by working to ensure the agreement benefits the average Moroccan through tangible domestic improvements like employment, enhanced export opportunities and a dependable business environment - to name just a few.

With this in mind, the real issue becomes the extent to which the benefits of the FTA will extend to the vast majority of Morocco’s society. Engaging in free trade with the world’s largest economy is a significant undertaking for Morocco. The FTA paves the way for trade with the U.S. but, in doing so, stipulates stringent commitments and reforms that pose formidable social and financial burdens. As a result, the possibility of destabilizing the economy and significant portions of Morocco’s workforce exists. This all comes at the risk of deepening societal divides, exacerbating precarious relations and anti-American sentiments in the region, potentially derailing the stability the pact seeks to cultivate. For these reasons, as the FTA leads to major transformations in Morocco; like reforms to investment and intellectual property laws, customs regulations, the judicial system and obligations to enhanced labor and environmental provisions, it is vitally important that programs be implemented and resources employed to help the country adjust and compete in a new FTA environment.

Unfortunately, over 18 months into the agreement’s implementation, U.S. assistance continues to be inadequate. Some funding and technical retraining programs are in place, and they are a good start, but are insufficient to fulfill the ambitious regional security goals the U.S. has for North Africa and the Greater Middle East. Adequate and dependable foreign aid must be allocated to develop an operational infrastructure within Morocco given their limited resources for implementing FTA provisions single-handedly. Both the U.S. and Morocco have vested interests in the agreement’s success and, to a large extent, each have the same goals in mind: boosting Morocco’s economy, raising living standards and decreasing unemployment. Morocco is engaged for purposes of improving these socio-economic problems, whereas the U.S. views the FTA as a means of enhancing security and stability in the region through economic integration. Neither partner can afford for the agreement to fall short of these individual yet integrated goals, and the terrorist attacks in Morocco and Algeria in recent months are acute reminders of the region’s precarious condition and what is now at stake.

Strengthening economic ties with developing countries in the Middle East and North Africa does hold the potential for improving overall relationships, but it can only succeed as part of a broader more comprehensive trade policy strategy. It is in the interest of the U.S. to stand behind, and fully support, the underlying needs of the Morocco FTA, as well as other economic pacts negotiated with developing countries in the future. Morocco is a longstanding friend and ally in a strategically located region where it is advantageous to the U.S. to have a stable friend and partner. Therefore this relationship must be fostered, not merely supported with modest funding and short-term technical assistance.

As trade negotiations move forward with potentially vulnerable economies, the U.S. must design a new trade strategy commensurate with the unique needs prevalent in emerging market countries. The incoming administration in 2009 would do well to revisit the sufficiency of aid for its trade partners, and see that it is commensurate with the broader foreign policy goals the U.S. has for those regional trade policies. A failure to do so will not accomplish the objectives of either trade partner, nor will it ease the impasse among politicians drafting the country’s trade policies in Washington. U.S. trade agreements hold the potential to be far more than mere commercial exercises, and this is the time to see that these important agreements reach their full potential.

Lara Birkes, a graduate student at the Monterey Institute of International Studies, in Monterey California, spent over a year conducting research in Morocco as a Fulbright Scholar. The focus of her work was the U.S.-Morocco free trade agreement.