The Potential for Expanded U.S. Trade with Middle Income Countries

Report

The Potential for Expanded U.S. Trade with Middle Income Countries

Middle income countries collectively represent an approximately $35 trillion marketplace. By 2030, this could reach $50 trillion.[1] Some nations are acting to seize those opportunities, recognizing that the potential payoff merits a massive political and financial investment. By contrast, the U.S. falls further behind in this competition with each passing day.

This paper builds on a recent Stimson report to consider the potential for expanded trade between the U.S. and middle income countries.[2] After outlining the stakes, economic and otherwise, it highlights several areas where U.S. decision-makers should focus their attention and resources for the most effective trade policy and country engagement. It then considers what strategy and organizational toolkits are needed to pursue those priorities.

While the closely related issues of international investment relationships are also discussed, they will be the focus of a subsequent paper.

We suggest several relevant priorities for recalibrating the U.S. government’s policy and organizational approach, along with some guiding principles and concrete steps to chart the way:

  • With the support of Congress, the executive branch must act with urgency to forge a clear strategy for broadening and deepening trade relations with middle income countries. 
  • Regional and plurilateral trade agreements must return to the agenda. Bilateral agreements should be pursued judiciously – and even then, the longer-term goal should remain larger integration and harmonization with other trade partners.
  • Congress and the Administration must provide commensurate resources for the number and caliber of personnel needed to develop and execute a proper strategy.
  • U.S. commercial diplomacy programs need to build on lessons learned quickly enough to keep pace with 21st-century commerce, to learn from past successes and failures generally, and to tailor the trade and economic objectives outlined in this paper more specifically. This type of institutional learning will be essential.
  • There is an opportunity – or, more candidly, an urgent need – to enhance commercial diplomacy by more effectively empowering and supporting ambassadors and country teams. The country team is best positioned to ensure that commercial diplomacy and trade capacity building initiatives are well targeted and properly implemented.

Expanding trade with middle income countries need not come at the expense of trade with other countries. The two goals can be pursued in tandem, as a whole that becomes greater than the sum of its parts. But doing so requires sound strategy, organization, and understanding of the ever-evolving global business landscape

 

[1] Homi Kharas, The Unprecedented Expansion of the Global Middle Class: An Update (Washington, DC: Brookings, February 2017) 2, 8, accessed December 14, 2017, https://www.brookings.edu/wpcontent/uploads/2017/02/global_20170228_glob....

[2] Richard Ponzio and Robert Berg, Engaging the New Majority: U.S. Perspectives and Experience (Washington, DC: Stimson Center, August 2017), accessed January 9, 2018, https://www.stimson.org/sites/default/files/file-attachments/Engaging%20....