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With foreign trade continuing to increase, the United States is presented with the opportunity to utilize its trade and commercial policies to promote democracy and reform. This panel explored this opportunity and its impact on the Middle East and North Africa.

Cathy Novelli’s remarks on the panel were off-the-record, and as a result are not included in this summary.

John Sullivan discussed various aspects of corporate governance in the Middle East. Sullivan noted that despite significant economic assistance, reform in the region has progressed slowly due primarily to the lack of government transparency. Sullivan recommended an international standard for corporate governance that would seek to end bribery and establish institutions that cultivate financial trust—particularly in the banking sector. Sullivan also cited a number of reasons for optimism--a widespread conceptual change in the region, which involves economic principles being shared with the general public instead of only to an English-speaking elite, as well as an increase in the stability and transparency of local governments,

Unilateral economic sanctions, according to William Reinsch, are often driven by domestic interests and incur significant costs for the US economy. Economic costs, he argued, include lost jobs, exports, and investments, as well as a diminished reputation as a reliable supplier and decreased regional competitiveness. Often, politicians are presented with a powerful domestic demand to “do something” in regard to foreign problems, and economic sanctions provide an easy solution. Other nations, however, are not precluded by unilateral sanctions from trading with the “sanctioned nation,” and this dilutes their effectiveness. In fact, Reinsch argued that sanctions can be counterproductive to the growth of democracy and the rule of law. Dictators are almost always motivated by the munificence of power and will rarely risk their own personal power by giving in to US pressure. Rather, dictators take advantage of sanctions as a scapegoat for domestic problems and weaken opposition groups who are separated from Western support.

Arguing the view of US workers, Thea Lee discussed how labor agreements affect labor standards. She cited two major problems in the Middle East: the lack of free association and the horrendous mistreatment of migrant workers. US trade policy, she believed, should be utilized to remedy these problems. The Jordan Free Trade Agreement, for Lee, is the beginning of a coherent strategy where both parties agree to enforce labor and environmental standards and use trade policy to address social and labor concerns. Lee criticized those who attempt to inhibit the effectiveness of the agreement, particularly the US Chamber of Commerce, which according to Lee attempted to diminish labor standards included in the measure, and the Bush Administration, who she said left enforcement of the agreement to individual countries. She concluded by stating that while her organization was by no means a supporter of protectionism, it did recognize the limits of free trade-- essentially that job creation would be minimal, and wealth creation, because of the significant US trade deficit, would not be distributed evenly among nations. While trade liberalization is beneficial, she asserted, it must be accompanied by strong labor and environmental standards to address the social issues that accompany increased trade.