Critics of Obama's decision worry that it will "embolden" Russia, causing more aggressive behaviour abroad. Yet they forget that the Bush administration's antagonistic policies failed to provide security to Russia's neighbours. These policies didn't prevent Russia's war with Georgia, the repeated gas disputes with Ukraine, and a serious cooling of relations with countries such as Poland. Far from being restrained, Russia's confrontational attitude had a lot to do with its perception that the U.S. was busy encircling the country with missile bases and alliances.

The critics also imply that Russia is preoccupied with external expansion, but that hardly seems appropriate today. Russia's GDP is set to plummet by 8 percent this year. Russian analysts estimate that the country needs up to $2 trillion to renovate its dangerously clapped-out infrastructure. In major industrial cities, Russia's dilapidated factories are mulling huge job losses. For the foreseeable future, Russia's leaders are likely to be preoccupied with thorny domestic problems.

Faced with such daunting challenges, it's entirely logical that both Medvedev and Putin say they are keen to kick-start American trade and investment. Responding to Obama's decision -- which he described as "brave and correct" -- Putin immediately linked it to economic issues. He called for the U.S. to back Russia's entry into the World Trade Organisation (WTO), and scrap Soviet-era trade restrictions against Russian companies, especially those that regulate technology transfer to Russia.

On the same day, at an investment summit in Sochi, Putin held well-publicized meetings with the CEOs of General Electric, Morgan Stanley and Texas Pacific Group -- all major U.S. companies. When it comes to the economic sectors that Russia says it is most eager to develop, American investment will be especially crucial. The crisis has underscored the need for Russia to wean itself off dependence on natural resources, and develop new high-technology sectors, such as IT and nanotechnology, where U.S. companies are at the cutting edge.

This means that the U.S. still has plenty of bargaining chips left as it seeks to gain Russia's cooperation on global issues. The bigger problem could be persuading U.S. investors to come. No matter how much Russia's leaders appear to welcome foreign investment, there remain huge obstacles, including corruption and bureaucracy, which they seem largely powerless to deal with.

Nor does the tentative thaw mean an end to diplomatic tensions. Russia's relations with its immediate neighbours may well remain stormy, potentially causing renewed strains with Washington. Still, it's hard to argue that by extending his olive branch to Russia, Obama increases the likelihood of such upsets. The evidence of the last few years implies just the opposite. The frostier Russia's relations have been with the U.S., the more determined Russia has been to resist U.S. encroachment in nearby countries, increasing regional tensions.

Now, Obama's gesture has opened up the possibility of a fresh start, creating prospects for mutually beneficial economic cooperation. The Russians would be foolish not to jump at that opportunity.

The U.S.-China tire dispute threatens to spill into other sectors and squeeze Chinese exporters’ already razor-thin margins further. It might seem mind-boggling to many that Chinese manufacturers are still hanging on to weak overseas markets even though the domestic economy looks much healthier and surely offers more potential.

But there are structural reasons why the grass is greener outside China. The risk of not getting paid, or getting paid late, is significantly lower when dealing with foreign buyers. The cost of international shipping has dropped so much that it can be cheaper to send goods over the Pacific Ocean than across the country.

In addition, selling to large buyers such as Wal-Mart creates volumes large enough to compensate for weak margins. Moreover, Chinese exporters get all sorts of export rebates and local government incentives which help to lower their costs.

But as the tire spat has illustrated, Washington can slap punitive duties on Chinese imports simply by pointing to a significant increase in imports from China. By imposing penalties in this case, President Obama has opened the door for a slew of similar complaints against Chinese goods. It will only be a matter of time before other countries, worried about where those displaced Chinese exports might end up, start to follow suit.

That’s why Chinese policy makers need to get more serious about stimulating domestic spending. It is time for Beijing to revamp a system built over the past three decades that explicitly and implicitly favours exports and to encourage manufacturers to prioritise selling to the domestic market.

A good first step would be to reduce some of the export incentives China offers to certain industries. These effectively subsidise foreign consumers at the expense of domestic customers. For example, Chinese tyre-makers get a tax rebate of about 9 percent on the value of the products they sell abroad. That’s why tyre makers can afford to price exported tyres more cheaply than ones sold at home, according to Xu Qiyuan, a researcher at China’s Social Science Academy.

To date, however, China’s response to the credit crunch has been to boost incentives to prop up export markets. Beijing raised export rebates on 3,802 items from April 1. Textile exporters also got an increase in their rebate to 16 percent from 15 percent. This activity is not illegitimate and many countries subsidise exports. But the U.S. enforcement action shows that this policy may have practical limits.

China needs more than just a change of heart on subsidies. Longer term, Beijing needs to foster the development of a healthy credit culture for suppliers so they can get paid on time, and to improve China’s transportation infrastructure in order to reduce the cost of moving goods around the country, and most importantly, to break down local protectionism that discriminates against suppliers from other provinces. It may seem odd but China needs to create a single internal market.

Despite all the talk about Chinese consumers being unwilling to spend due to a lack of a social safety net, one important reason that they don’t buy much at home is because prices are often too high . When “frugal” Chinese consumers go to Hong Kong or London, they immediately become big spenders, splashing out thousands of dollars on clothing, cosmetics, bags and watches. The irony is that a lot of the things they buy are actually made in China, but are simply not available there, or cost much more.

Moreover, the lack of a single market hampers foreign companies seeking to sell to China. Although foreign executives might fancy China as a giant market with 1.3 billion customers, the reality is that it is extremely fragmented, so economies of scale are hard to achieve. Transporting goods from one province to another can incur hefty tolls levied by local governments keen to raise local revenue and make it harder for companies to break into their local markets.

The credit problem also needs to be addressed. Big Chinese retailers only pay for goods on delivery. An exporter, by contrast, gets a letter of credit when the order is placed, and this can be cashed in to finance production.

China’s rebalancing away from export dependence has barely begun, and it will take a long time to change attitudes. But now would be a good time to make a start. The recent trade disputes over Chinese tyres and toys should serve as warning shots. China’s leaders must start to make the domestic market more friendly to suppliers and consumers.

– At the time of publication Wei Gu did not own any direct investments in securities mentioned in this article. She may be an owner indirectly as an investor in a fund —

President Obama’s trip to Ghana highlights one of Africa’s leading success stories - a country that has held five consecutive democratic elections, recently transferring power peacefully to the opposition after it won a razor thin victory.

Ghana is not alone. Sub-Saharan countries made tremendous progress in the past decade. Freedom House ranks seven out of ten of Sub-Saharan countries as free or partly free. Through 2007, Africa experienced 10 years of uninterrupted economic growth, the last five at rates above 5 percent. Foreign capital inflows increased from only $7 billion in 2002 to $53 billion in 2007.

Yet continued progress is not inevitable.  If Africa is to realize its potential, the hard work Africans have exerted over the past decade to improve the continent’s governance and economic policies must continue, and despite the myriad of pressing issues elsewhere, engagement by the international community in general, and the United States in particular, cannot flag.

Supporting Africa’s progress is not just about providing additional aid.  Aid is an important element for financing Africa’s development, but aid flows to Sub-Saharan Africa have nearly tripled since 2000 and will quadruple by 2010 if donor commitments made at the Gleneagles G-8 Summit are met.  More important now are efforts to help Africa increase its trade, solidify democratic norms through its own institutions, and resolve its remaining conflicts.

The United States can lead the world to provide an immediate benefit to Africa through trade.  The stalling of the Doha Development Round of trade talks is a missed opportunity that would have been worth billions of dollars for Africa.  Yet all is not lost - the United States could agree to implement those aspects of the Doha package that will benefit Africa now without waiting for a final deal with all WTO members.

This means eliminating domestic agricultural subsidies. The U.S. has held out on conceding these economically unjustifiable programs for a comprehensive deal, which would offer our farmers greater access to emerging markets like China and India.  But with deficits exceeding $1 trillion, we can no longer afford these $20 billion programs that mostly benefit fewer than 200,000 large farms at the expense of millions of poor farmers across the globe.  Acting now will counter the impact on Africa of the global financial crisis, which threatens to stop Africa’s economic progress in its tracks, and give us standing to insist the EU follow by opening up its massive market to African agricultural products.

Now is a critical time for African democracy as well.  In 2009, sixteen African countries went or will go to the polls for presidential or parliamentary elections.  The African Union (AU) intends to monitor them all.  Ensuring the AU has the resources and staff to not only validate the results on election day, but to do the pre-election assessments that encourage a level playing field will raise the standards for democracy on the continent and make likely more examples of the peaceful transfer of power most recently witnessed in Ghana.

Finally, the U.S. needs to use its voice in the United Nations to increase support for peacekeeping on the continent.  Done right, peacekeeping can lead to dramatic successes, as has been the case in Liberia and Sierra Leone.  Liberia initially had 17,000 peacekeepers for a population of 3 million people, giving the peacekeepers enough firepower to dissuade any “spoilers.” 

Compare that to the Democratic Republic of Congo, where a similar number of peacekeepers are seeking to stabilize a country of 66 million people 21 times the land area of Liberia; or Somalia, which currently only has slightly more than 4,000 peacekeepers for a country of more than 7 million. In such instances, spoilers can outgun the peacekeepers and gain prestige by attacking them. Many will argue that peacekeeping budgets are limited, which is true, but the cost of new funding for peacekeeping pales beside the cost of failing to keep the peace.

Africa has achieved much in the last ten years.  If this decade is to be a precursor of sustained development success in the future instead of a temporary hiatus from the steady decline of the past, its friends need to act now to support Africa’s leaders and institutions in establishing peace and security, raising democratic standards, and integrating the continent into the global economy.

–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with important economic partners.  Now China and Canada are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector.  Other countries may follow suit.

This week China reported that the government now requires stimulus projects to use domestic suppliers when possible, even though in February it promised to treat foreign companies equally.  The Chinese $585 billion stimulus package has resulted in a World Bank growth forecast of 7.2% for China this year, far above other industrialized countries.

And on June 6 the delegates at the Federation of Canadian Municipalities passed a resolution calling on “local infrastructure projects, including environmental projects such as water and wastewater treatment projects, [to] procure goods and materials required for the projects only from companies whose countries of origin do not impose trade restrictions against goods and materials manufactured in Canada.”

The tragic losers of “Buy America” are free trade agreements and potential job growth in the American economy. Seductively, “Buy America” promises workers they can have it all — cheap goods from China, oil from Canada, as well as protection from global competition. But real life just doesn’t work that way.  In reality, “Buy America” is shorthand for fewer jobs as other countries retaliate.

Many markets no longer have national boundaries but global reaches. America sits at the center of global markets for technology, equipment manufacturing, finance, banking, fashion, and advertising — to name but a few. When international markets expand, America grows. When barriers are erected to trade, jobs — and also wages —shrink.

Trade creates jobs not just through investments of foreign companies at home, but also by increasing employment at exporting firms. This effect, though less obvious, is far more significant. That’s why “Buy America” hurts employment.

Andrew Bernard, a professor at Dartmouth College, together with economists Bradford Jensen and Peter Schott, find that firms that trade goods employ over 40% of the American workforce. They conclude that approximately 57 million American workers are employed by firms that engage in international trade.

They analyze American imports and exports using customs documents that accompany shipments of goods crossing the border, along with reports of firms’ employment. The resulting information provides the most precise picture available of the employment effects of American trade.

Back in February, Caterpiller spokesman Jim Dugan declared, “Our position is that, while ‘Buy American’ may sound good, in fact we’re very concerned that if this stimulus legislation contains the ‘Buy American’ provision, other nations and regions of the world would follow our lead and pass similar provisions.”  He was right.

Trade also benefits millions of families who cut their shopping bills by buying low-cost imports. To take just one example, the amount that Americans spend on clothing has declined by 21% in real terms over the past 20 years, yet our closets are fuller than ever.

The benefits of free trade, such as increased employment, higher economic growth, and lower prices, are often taken for granted. But the disadvantages of free trade — such as the occasional instances of shuttered plants and lost jobs where American firms are not as efficient as international competitors — are all too visible.

Trillions of international dollars pass through America each year not because we are isolated, but because we are the hub of the world. Terrorists twice attacked the World Trade Center because the building symbolized international trade. They destroyed a building and murdered thousands of innocent Americans, but they failed to vanquish world trade. Sadly, politicians who erect barriers to trade are hostile not only to trade but to our country and to our jobs.

Asia has come of age. When leaders from the Group of 20 nations converge in London, Asia’s rising powers - China, India,  Korea and Indonesia - will be sitting at the global high table to decide on ways to reshape the world’s financial and economic order.

There are expectations that the meeting will include concrete steps to revive economic growth, a boost in funding for the International Monetary Fund, and an understanding on the new financial architecture to restore trust in the financial system.

Asian policy makers are looking for two other critical assurances from the meeting: one, that the developed countries will keep their markets open; and two, that global capital flows needed to finance trade and investment will remain unchecked.

No one doubts the difficulty of reaching consensus. But the stakes have never been higher.

Amidst the frenetic attempts by individual governments to tackle the biggest economic crisis since the Great Depression, it is easy to forget that the progressive dismantling of barriers against international trade and investment contributed to the biggest economic boom the world has seen.

More than 200 million jobs were created worldwide between 2000 and 2007, according to the Institute of International Finance, and millions of people in the developing world were lifted out of poverty, as a result of free flow of capital, goods and services.

Yet, as the crisis continues, governments and businesses in Asia are increasingly worried that the world’s biggest and most developed economies will explicitly or implicitly legislate to encourage manufacturers to keep production onshore and, banks and insurance companies to keep money within their borders.

Any such protectionism comes at a dark time. Although Asia remains fundamentally robust, thanks to high private savings, conservative balance sheets of companies and financial institutions and mammoth foreign reserves, the ongoing financial turmoil has caused consumers and lenders in developed countries to tighten their purse strings.

Steps to ensure that trade and capital keep flowing ought to be at the top of the agenda for the G20 leaders.

A good start

Getting developing nations to the table with the Group of Seven developed countries is a good start. The G20 was born as a response to the Asian financial crisis of the late 1990s and, although a G20 group of finance ministers and central bank governors has been meeting since 1999, it is in this financial crisis that its role has taken center stage.

The G20, whose member countries account for over 80 per cent of the world’s output and two-thirds of the world’s population, is a forum which truly represents the global economy. But will it produce real benefits for Asia?

At this summit, the emerging Asian powerhouses are expected to assert more leverage due to the relative strength of their position. Though weakened, the economies of China, India and Indonesia are still expected to show reasonable GDP growth this year of 6.8 per cent, 5 per cent and 4 per cent respectively, according to Standard Chartered economists’ forecasts.

The emerging powers have already notched up some gains. The G20 finance ministers, meeting in London in March, agreed to expand the Financial Stability Forum - a body which will set new standards for global financial institutions — to include developing country members. These countries will also join global forums that will set new international accounting and risk regulatory frameworks.

Greater participation of the rising powers in such key decision-making bodies should help resolve potential conflicts and go a long way in helping to rebalance the world economic order.

Ironically, it is the financial upheaval in the West which has brought the systemic importance of the emerging markets to the forefront. It is now clear that the imbalances between the high saving nations in the East and overspending economies of the West led to the asset bubbles in the United States and Europe.

To correct the imbalances, the big savers, particularly in Asia, will have to find ways to spend more to boost domestic economies. Higher local consumption will help the economies reduce their dependence on exports. Domestic spending will also help ameliorate the slowdown in investments from the West.

China has made a decisive move on this front, with its stimulus plan to spend almost $600 billion, largely in infrastructure projects. It has also pulled out all stops to make foreign direct investments easier for domestic companies.

New trade routes

Asian economies will also need to trade more between themselves and with the Middle East and Africa. That is already happening in some trade corridors. Trade between China and Africa has expanded 20-fold in just over a decade. For some countries in the region, China has replaced the U.S. and Europe as the biggest export market. This process is likely to accelerate as western consumers cut back on spending and increase savings.

Asian members of G20 are also looking to the international financial institutions such as the IMF and the World Bank to revive investments into the region’s developing economies. But the IMF is cash-strapped after bailing out several East European economies. It is hardly in any position to rescue another medium-sized economy in Asia, Africa or Latin America should the need arise.

The meeting of G20 finance ministers made some headway on this issue. The ministers agreed to substantially expand the IMF’s resources, possibly increasing the Fund’s emergency borrowing program by $500 billion, so that the institution can once again play its role as a lender of last resort in times of international crisis.

The Asian Development Bank also plans to triple its capital base to $165 billion, enabling it serve the poorest and most vulnerable sections of population in the region.

Emerging Asian powerhouses such as China and Korea, apart from the established members like Japan, are now expected to provide a significant part of the funding required to recapitalize these global financial institutions.

However, greater monetary contribution from the rising powers would have to be accompanied by giving them a greater say in the running of these institutions. For instance, today, Korea has more than twice the economic output of Belgium, but Belgium’s representation in the IMF is 50 per cent greater than Korea’s. This is where the developed countries will have to give up some more ground.

G20 leaders must accelerate the process of revising the quota allotted to IMF member countries so that the emerging markets can get voting rights in the Fund which reflect their financial weight.

Progress has been made since the G20 leaders first met in Washington in November with the aim to restore normalcy to the global economy and markets. But risks remain.

It was the progressively free movement of capital, goods, people and services across borders that fueled the economic rise of the emerging markets and raised affluence in the developed world. The risk is that this could unravel if the current financial turmoil leads to heightened protectionism, curbed capital flows and fragmentation of the global economy. The G20 has the duty to ensure this does not happen.

In early January, I travelled to war-ravaged northern Uganda to a dusty village in Pobura and Kal parish in Kitgum District. We were there to see the completion of a 16km dirt road constructed by the community with support from Oxfam under an EU-funded programme.

The road is bringing benefits in the form of access to markets, education and health care. Some parents say their daughters feel safer walking to school on the road instead of through the bushes. Many families have used the wages earned from construction work to pay for school fees and medical treatment. This is the impact of aid.

Having lived and worked in east Africa, I have witnessed the positive effects of aid. But done badly, it can be very limiting and even has the potential to create more harm. To avoid this, it must be provided within an enabling environment in which it is used as a catalyst for change and not as an end in itself. Governments must show leadership through an accountable system.

For individuals, access to resources – including aid - is like an investment. Aid can build up poor people’s assets, support good governance and enhance skills and capacities to bring about transformation. But it can become a bane when it makes communities dependent, lazy and hopeless. Governments, aid agencies and the United Nations need to ensure the delivery of aid is well planned and coordinated, leading to higher self-reliance among poor communities.

Aid is also beneficial when trade is fair. There are several examples in Africa, like the case of coffee farmers in Uganda, where aid has been used effectively to improve the overall quality of the coffee seeds, thereby giving farmers better prices for their produce. When they have access to markets at home and abroad, they generate income which is ploughed back into increased output, better access to health and education, and overall improvement in the quality of their lives. To make this happen, developed countries need to stop procrastinating and put in place fair trade practices.

Aid works well if governments are accountable – in other words, when they are responsible and encourage active citizenship. On this continent, civil society is still weak and needs to be nourished. But stopping aid will not resolve frustrations about poor governance, which is partly a result of weak public scrutiny. Aid should be used to help fight corruption and promote accountability through active input from ordinary people.

As I have argued here, receiving aid is not just an act of charity. It should be understood as the right of poor communities to a life of dignity. As stated in international conventions, people have a right to good health, food, water and education. We all need to ensure the planet’s resources are equitably distributed. As Mahatma Gandhi said, you must be the change you want to see in the world.

So what do you think? Which argument is most convincing?

Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.

“I’m not saying its going to be easy, I’m just saying that there is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development. In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West.”

Moyo believes more than $1 trillion in development aid over the past 50 years has only entrenched Africa’s poverty, distorted economies and fuelled bureaucracy and corruption. She sees alternatives such as encouraging trade - particularly with emerging markets - encouraging foreign direct investment, microfinancing for enterprise and seeking funds from capital markets.

Moyo is not discouraged by the fact that all those options appear more difficult in the current environment.

“It just means the onus is on African governments to come up with a more compelling story as to why African governments are overseeing real asset investment not derivative products we don’t really understand.”

“If you focus on traditional markets like Europe and the United States, you come to the conclusion that markets are really damaged and it’s very hard to raise money in those markets, but if you start to look towards China for example which has $4 trillion of reserves, all of a sudden you could see there might be another opportunity to do a bond issue in the Chinese market for example.”

“The model that’s coming up, that I’m proposing, is essentially one where Africa and Africans become equal partners with the rest of the world, not one where there is kind of a donor and a recipient, where Africans are kind of viewed as secondary citizens,” she said.

“There is no other system, whether a political system or a business system, that has stayed as the status quo for 60 years when we all know it’s not doing what it’s supposed to do, it’s not generating growth and it’s not alleviating poverty.”

Moyo is not worried about the impact of aid being taken away:

“It actually tends to pool at the top so it’s not like the average African is going to suffer. They don’t see the aid anyway. Essentially it‘s going to really affect the bureaucratic processes at the top and would really impact on corruption.”

“You could take me to country X in Africa and say ‘look at this girl here and she’s going to school because of aid’. Yes, that’s true but on a macro aggregate perspective these economies are not growing. They’re not growing fast enough to ensure that when that girl is done with her schooling she can find a job.”

Moyo is unimpressed by Western campaigners such as rock stars Bob Geldof and Bono calling for lots more aid for Africa.

“I fundamentally object to the notion that Africa needs more aid and I do think it’s time to have many more Africans speak out, especially the policymakers, because many of the policymakers actually don’t support aid  and yet they stay in the background and they allow this money to come into the economy.”

“You very rarely see Africans on the global stage saying ‘actually we would like to have much more aid please’.”

“I do think a gap has opened up to allow other people to formulate a view on coming to the global debate and offering opinions as to what they think Africans want. But maybe we should start a website called ‘Ask the African’ because I think you might be quite surprised to find that people say ‘we want jobs’, I wouldn’t mind a flat screen television, I wouldn’t mind having my kids go on holiday sometimes ...’”

Picture: Helen Jones photography

On the campaign trail, President-elect Barack Obama pledged to rethink U.S. trade policy.   The initial nomination of Xavier Becerra as United States Trade Representative was a signal that Obama will work to fulfill that promise. Congressman Becerra declined the offer and former Dallas Mayor Ron Kirk has been chosen to head the office instead.  Given Kirk’s enthusiastic support for NAFTA, he will receive close scrutiny as he takes over a USTR that has the mandate of rethinking U.S. trade policy.

Regardless of the messenger, Obama has pledged to fundamentally change U.S. trade policy.  To this end, there are four early priorities for Kirk and Obama: honor existing commitments under the WTO, press for an equitable completion of the Doha Round, conduct a thorough evaluation of major U.S. trade agreements, and enact comprehensive trade adjustment assistance legislation.

The immediate first step is to honor the WTO ruling that deemed that the $3.2 billion in annual cotton subsidies and $1.6 billion in export credits violate trade rules.  The Institute for Agriculture and Trade Policy estimates that U.S. cotton subsidies caused damages of $400 million between 2001 and 2003 alone for poor African cotton-producing countries, where more than 10 million people depend directly on the crop.

Returning to multilateralism by honoring the cotton ruling would not only aid poor farmers but would also allow the U.S. to regain legitimacy at the WTO by sending signal to developing countries that the U.S. no longer preaches a global trade policy of “do as we say, not as we do”.

Second, Obama and Kirk should move to complete the Doha Round on terms that benefit both the U.S. and its trading partners.  A core principle of a reconfigured Doha Round should be the recognition that developing countries need the policy space to deploy the kinds of government measures that have been proven to work for development in the west.  According to separate studies by the World Bank and the Carnegie Endowment for International Peace, the deal debated while Bush was in office would have yielded only $6.7 billion to 21.4 billion (or less than a penny per person per day) for the poor.  Rich countries were projected to see per capita income gains 25 times those in developing countries. (Read the full report here.)

Third, Obama’s first year in office should also honor his pledge to evaluate impacts of the North American Free Trade Agreement (NAFTA) and other major trade agreements. It is essential that the assessment analyzes the economic, environmental, social and regulatory impacts of past agreements on the U.S. economy– and on our trading partners.

Under NAFTA, Mexico did witness a surge in exports and foreign investment, and for a while a bump in employment. However, such increases did not translate into growth and prosperity - economic growth in per capita terms has been just over 1percent annually and poverty, inequality, and environmental degradation remain persistent.  This has cost the U.S. in terms of lost markets and raises political tensions at home due to the fact that NAFTA’s failure in Mexico gives 500,000 Mexicans a year the incentive to migrate to the U.S.

Until a comprehensive assessment of NAFTA and other past agreements is completed, there should be a moratorium on new U.S. trade agreements – including the pending deal with Colombia. According to the UN, the agreement as tailored will actually make Colombia worse off by up to $75 million or one-tenth of 1 percent of its GDP. In addition, reducing tariffs will strip the government of funds needed for combating guerrillas, fighting crime and developing their economy. According to a new study by the Inter-American Development Bank, the tariff revenue losses for Colombia will amount to $520 million per year.

The findings from a comprehensive review should guide the formation of new Trade Promotion Authority legislation that forges clear guidelines for the renegotiation of past agreements and provides a template for future trade policy. Two Democrats, Senator Sherrod Brown of Ohio and Congressman Mike Michaud of Maine, have recently introduced the Trade Reform, Accountability, Development and Employment (Trade) Act that can provide a guidepost for the assessment process. The Trade Act requires a review of existing trade agreements and a renegotiation of those agreements based on the review. It sets terms of what must and must not be included in future trade agreements.

Finally, any new U.S. trade policy should be coupled with strong Trade Adjustment Assistance legislation in the United States that extends assistance to more manufacturing workers and to services workers, creates incentives to redevelop communities hit by the loss of manufacturing, extends healthcare to those affected by plant closures and reforms unemployment insurance for those displaced by trade policies.

Barack Obama supported these types of policies when serving in Congress.  He made a promise on the campaign trail to rethink U.S. trade policy while president.  Ron Kirk’s job is to help make these promises a reality.