The US: Putting Up New Barriers to Global Sourcing

When it comes to global trade, some of the most innovative companies look beyond the ordinary sources (e.g., China, India, Brazil, etc.) to identify highly competitive low cost suppliers. But now, some of the advantages of sourcing from areas such as Thailand and Eastern Europe for certain categories look to be under fire, as the US considers rolling back its Generalized System of Preference (GSP) program. GSP, a program originally designed to lower US import barriers for developing countries, is a decades-old system that enables the duty-free importation of 3400 products from 133 designated countries including Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, the Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela. But now it is under a full congressional review, as the current program expires at the end of 2006, and unless renewed, will end entirely.

I sincerely hope our trade-challenged legislative and executive branch understands the economic and moral implications of revisiting this agreement. For as I've written about in the past, the advantages of global sourcing go far beyond helping US companies become more cost competitive. As a positive force that can drive world peace and prosperity, the US -- and the rest of North America and Europe, for that matter -- has an obligation to help developing regions by promoting trade policies which encourage economic development. Indeed, the great thing about trade policy that lowers tariffs and duties is that we can support global economic development indirectly without aid packages simply by opening our borders to low-cost imported goods. And let us not forget about the Spend Management benefits of global sourcing!

Unfortunately, given that most members of the majority in DC are firmly in the RINO category (Republicans in name only) when it comes to trade issues and the Democrats are as bad or worse, it's unlikely that the current GSP renewal will go through without a hitch (consider how we recently walked out of the Doha trade talks). In my view, we can keep our trade borders open to developing nations now or we can send in armies and economic and military aid later. For a global viewpoint on this issue check out what India's Business Standard has to say on the issue. The Bangkok Post also offers another perspective as well.

Jason Busch

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