May marks the 87th anniversary of World Trade Month, an opportunity to recognize the critical role international trade plays in driving the world’s economy. Given the global volatility that has characterized the last few years, which has only increased following Russia’s invasion of Ukraine, now more than ever, we must turn outwards and champion global trade.
Economies around the globe are working to recover and move past the challenges created by the pandemic. However, with inflation concerns mounting due to the Russian-Ukrainian conflict, creating growth opportunities is becoming more complex. While Russia and Ukraine are responsible for a relatively small share in output, they supply key essential goods, including food, energy, and fertilizers. With the availability of these goods threatened by war, this conflict will negatively impact the global economy at a critical juncture in its recovery.
While countries worldwide will experience the fallout from this conflict, it will hit lower-income countries the hardest. Fewer supplies and higher food prices mean the world’s poor will be the first to suffer. We cannot allow this outcome, and we must refrain from turning inward. The current crisis calls for protecting and expanding trade to ensure stable, equitable access to necessities. Restricting trade will push a sustainable economic recovery out of reach and amplify the instability many countries are experiencing.
Here in the Western Hemisphere, we have seen the fallout of regional instability firsthand, in the form of mass migration from Central America. Over the past few years, we have had record numbers of immigrants attempt to cross our southern border, and a significant cause for this exodus is economic instability. Increasing trade and incentivizing investment in the region’s key industries can help generate long-term prosperity and stability and mitigate mass migration.
Textile and apparel manufacturing are great examples of industries that have the potential to generate immense economic opportunities and bring stability to Central America. However, the success of these industries is dependent on increased U.S. apparel sourcing from the region. In order to improve sourcing, our leaders must take steps to update and expand current trade policies that currently hinder the ability of these sectors to meet their full potential.
The Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), in particular, lacks the incentives needed to encourage expanded production within the Western Hemisphere. As a result, CAFTA-DR’s utilization rate for apparel sourcing hit a record low last year. President Joe Biden and his administration can reverse this trend by prioritizing trade policies that incentivize manufacturers, investors, and major retailers to expand their engagement in CAFTA-DR countries. In doing so, President Biden could help promote the growth of sustainable manufacturing jobs throughout the region while mitigating the root causes of mass migration.
World Trade Month reminds us of the critical role that global trade plays in creating jobs and strengthening economies around the globe. Our leaders here in the Western Hemisphere can do more to support our allies and bring stability to the region by prioritizing smart trade policies that put workers first, promote equitable growth, and advance opportunity and stability throughout the region.
Beth Hughes is the vice president of trade and customs policy at the American Apparel & Footwear Association. The views expressed are the author's own.