High unemployment and underemployment, often a result of slow economic growth, are among the most critical issues in predominantly Muslim countries. U.S. assistance programs attempt to address this issue with reforms to improve the investment climate. Such reforms could include business registration, dispute settlement, financial sector and agricultural reforms, combined with education, job training, and health programs.
The U.S. strategy of Total Economic Engagement pursues economic reform, rule of law, and global economic integration, in countries with predominantly Muslim populations. Total Economic Engagement includes:
Integrating Predominantly Muslim Countries into the Global Trading System
There are a number of U.S. government-funded programs to promote predominantly Muslim countries' integration into the global trading system. The following table lists U.S. government funding for trade and capacity-building programs in these countries.
|USG Funding for Trade and Capacity-building1|
|Country||USG FY-2008 Funding|
World Trade Organization (WTO) Awareness and Accession. USAID programs with components dealing with WTO awareness, accession, and compliance are being implemented in the following countries:
USAID Global Export Promotion Programs. USAID global export promotion programs include Afghanistan, Bangladesh, Indonesia, and Pakistan:
Customs Reforms. Customs reforms are supported by USAID programs in Egypt and Afghanistan.
USAID Africa Bureau Programs. Programs managed within the USAID Africa Bureau include Sub-Saharan integration into the global trading system, the driving forces of which are the African Growth and Opportunity Act and the African Global Competitiveness Initiative. Program efforts are focused on helping countries build a sound enabling environment including policies, laws, and regulations governing business and trade; improving infrastructure to facilitate trade; strengthening financial services to small and medium-sized enterprises and other businesses; and developing the energy sector to meet the needs of growing African economies.
USAID Asia Bureau Programs:
Central Asia Region. The Regional Trade Liberalization and Customs Project has been operating in Kazakhstan, the Kyrgyz Republic, and Tajikistan since July 2007. The project seeks to help host governments and the private sector capitalize on the advantages of greater regional and global economic integration, by providing assistance and training to improve conditions for international and cross-border trade and transit. Support includes advice on: simplification of tariffs, preferences, and pre-export barriers; World Trade Organization accession or improved compliance with obligations; customs procedures to reduce delays and costs to traders; efficiency of transport and transit for goods and traders; and private sector access to market information.
The Business Environment Improvement Project was launched for Kazakhstan, the Kyrgyz Republic, and Tajikistan in October 2006. This program supports the streamlining of legal and regulatory processes and facilitates multi-party engagement to improve the business, trade, and legal environment.
The Central Asia Infrastructure Integration Initiative, under the Regional Electricity Market Assistance Project, helps to establish a transparent and competitive regional electricity market to increase regional electricity trade, stimulate economic growth, and provide market-based solutions for regional disputes related to hydro facilities and reservoirs.
USAID supports the U.S.-Central Asia Republics Trade and Investment Framework Agreement to help foster increased regional trade through reduced transaction costs for businesses through streamlining of border-crossing procedures and increasing information.
Kazakhstan. The Regional Trade Liberalization and Customs Project provides analysis and recommendations on World Trade Organization (WTO)-compliant laws and regulations, including technical regulations, amendments to the Customs Code, veterinary, food safety and phyto-sanitary controls; and copyright, trademarks, patents, and trade-related intellectual property rights. Training is provided for WTO-compliant implementation for proposed food safety reforms; implementation of the Customs Valuation Agreement; and calculation of aggregate measures of support in agriculture. Support to Customs modernization includes analysis of Integrated Border Management issues, assessing status and capacity building on risk management. Activities to improve trade and transit include legal analysis and advice on recommendations for a “Single Window” system for pre-customs clearance, which is designed to streamline required paperwork and reform the import and export licensing system. The Kazakhstan Small Business Development Project, funded in October 2006, aims to promote the development of small business.
Kyrgyz Republic. The Regional Trade Liberalization and Customs Project provides support to the World Trade Organization (WTO) Department within the Kyrgyz Ministry of Economic Development and Trade (MEDT). Among its goals are to strengthen MEDT’s technical capacity in legal and regulatory processes to meet outstanding WTO compliance obligations, including technical regulations and protection of trade-related intellectual property rights. Training is conducted on requirements of accession to the WTO Government Procurement Agreement and on improved implementation of the Customs Valuation Agreement. Assistance on trade facilitation includes assessment of the Customs risk management system, developing draft instructions on the interaction of state control bodies for border-crossing points, and expert advice on simplification of export and import procedures and documentation.
Tajikistan. The Regional Trade Liberalization and Customs Project works directly with the Tajik government to prepare it to meet its World Trade Organization (WTO) commitments by revising and updating legislation to bring trade-related legislation into conformity with the provisions of WTO Agreements, currently focusing on sanitary and phyto-sanitary standards, veterinary surveillance, technical regulations, trade related intellectual property rights protection, and customs valuation. Trade facilitation work focuses on improving customs procedures and border transit management, including assessment and recommendations for the Customs risk management system, advising on amendments to the Customs Code to bring it fully in line with the Customs Valuation Agreement; providing expert recommendations on simplification of export and import procedures and documentation; and on measures to increase efficiency of trade management, such as bonded warehouses and expedited border-crossing procedures. Fiscal reform projects focus on reducing regional disparities by increasing the effectiveness of local tax administration and increasing the capacity of local governments to develop and execute budgets.
Turkmenistan. USAID works to foster trade advisory services and implement International Financial Reporting Standards in Turkmenistan.
USAID Europe and Eurasia Bureau Programs
Albania. The objective in Albania is to strengthen its integration into the Euro-Atlantic community and promote its contribution to integration of ethnic groups in the region. USAID worked with the Albanian government to improve the business climate for private sector growth and investment, and to improve private sector competitiveness to meet international export requirements. The Albanian Center for International Trade, founded in 2003, assists the Government of Albania to improve the quality of its trade policies. The Enterprise Development and Export Market Services Project, which ran through September 2008, promoted the competitiveness of small and medium Albanian enterprises in domestic and foreign markets, and accelerated the entry of Albanian exports into global markets.
Azerbaijan. Azerbaijan's program emphasizes economic growth and reform, with a focus on developing the non-oil sectors of the economy.
Bosnia and Herzegovina (BiH). The program in BiH supports progress towards full integration into the EU. USAID/BiH worked to integrate the energy sector into the regional European framework and supported the development and implementation of a coherent regionally competitive direct taxation system. USAID's competitiveness projects promote trade and investment in agribusiness, wood processing, and tourism by improving the competitiveness of the firms, industries, and training firms to meet EU standards.
Kosovo. The objective in Kosovo is to strengthen its economic ties in the region and promote its integration into Euro-Atlantic institutions. USAID’s goal is to help Kosovo make the transition from international administration to self-governance in an effective and peaceful manner. USAID provides training and expert counsel to build capacity in the fiscal and economic policy sectors, private enterprise development, and energy management. One such program is the Kosovo Private Enterprise Program, which assists businesses in targeted sectors (including agriculture, road construction, and forestry and wood processing) by promoting improved productivity, improving the business operating environment, providing workforce training to improve job skills in targeted areas, and identifying trade, marketing, and import-substitution opportunities.
The Regional Cooperation Council (RCC). The RCC was officially launched in February 2008 as the successor to the Stability Pact for South Central Europe. Since Kosovo’s declaration of independence on February 17, 2008, the RCC has encountered difficulties in arranging meetings that involve both Serbia and Kosovo. The RCC has several relevant programs related to global trade that affect parts of the region with significant Muslim populations, including Albania, Bosnia and Herzegovina, and Kosovo. The RCC's Trade Working Group has encouraged the negotiation, ratification, and implementation of a network of bilateral free trade agreements among the members of the RCC and supports negotiation of a single regional trade agreement to harmonize bilateral trade agreements to encompass all RCC members. The United States supports this process by providing technical assistance to lower non-tariff barriers within the region, consistent with World Trade Organization principles.
Under RCC auspices, the Organization of European Cooperation and Development Investment Compact for Southeastern Europe aims to improve the region's investment conditions, by setting out commitments for policy reform and to encourage increasing local and foreign direct investment. Signatories include Albania and Bosnia and Herzegovina.
Possible Actions to Promote Intraregional Trade and Rule of Law in the Region
The Rule of Law
USAID’s Judicial Reform Support Program assists Indonesia’s Attorney General’s Office (AGO) to implement reforms in the public prosecution system including development of a database to track prosecutors and profiles, development of a code of conduct, continuing legal education for prosecutors, and bureaucratic reform to improve human resources. This support is helping to reduce the backlog of civilian complaints and establish more objective assessment criteria for evaluating performance of prosecutors and work units. Assistance is also being extended to the Supreme Court under this program.
The Millennium Challenge Corporation (MCC). The MCC provides assistance for transformational development in countries that perform well on 17 independent, transparent policy indicators in the areas of ruling justly, investing in people, and economic freedom. Besides the financial support provided by MCC programs, the selection criteria creates an incentive for candidate countries to adopt related legal, policy, regulatory, and institutional reforms.
Summary of Millennium Challenge Corporation (MCC) Activities in Predominantly Muslim Countries:
Compact-Eligible Countries. Based on their good performance on the 17 policy indicators mentioned above, Compact-Eligible countries are invited to apply for substantial grants from MCC for programs that they design and implement through a "Compact."
Mali. Mali signed a five-year, $460.8 million Compact with MCC in November 2006 that entered into force in September 2007. It aims to reduce rural poverty and to help achieve national food security through a sustainable increase in the economic performance of the agricultural sector, and to spur economic growth and reduce poverty by increasing the competitiveness of light industry and increasing the value-added of exports and tourism. These objectives will be met through investments that increase farmers' productivity, enhance agricultural supply chains, reduce transport costs, and create a platform for industry. The Compact focuses on improved infrastructure at the Bamako Airport, a key gateway for trade, and along the Niger River for irrigated agriculture.
Burkina Faso. Burkina Faso signed a five-year, $480.9 million Compact with MCC in July 2008. It aims to promote economic growth in the rural sector by fostering land tenure security; investing in irrigation and watershed management infrastructure for agricultural purposes; constructing national roads, feeder roads, and market infrastructure; and improving existing agro-industrial supply chains.
Morocco. Morocco signed a five-year, $697.5 million Compact with MCC in August 2007 which entered into force in September 2008. The Compact focuses on relieving constraints to growth in the agriculture, fishing, artisan, and small enterprise finance sectors.
Threshold Programs are designed to assist countries that have demonstrated significant commitment to improving their performance on MCC selection criteria, but do not yet pass more than half the indicators in each of the three selection categories of ruling justly, investing in people, and encouraging economic freedom. A Threshold Program provides financial assistance to help improve a low score on at least one of MCC's policy indicators.
Albania. Reducing corruption was the primary focus of the $13.9 million Albanian program signed in April 2006. The MCC program funded projects designed to reform tax administration, public procurement, and business administration and helped to reduce the extensive red tape and below-board payments needed to start a business while increasing the national tax base. Albania signed a second Threshold program with MCC in October 2008, which builds on the success of the first program and seeks to institutionalize reforms in public administration and judicial capacity building to support further anticorruption activities.
Burkina Faso. Burkina Faso’s $12.9 million program, signed in July 2005, officially ended on September 30, 2008. The program sought to improve performance on girls' primary education completion rates. Specific interventions included the construction of 132 "girl-friendly" schools, teacher training, provision of take-home dry rations to girls who maintain a 90 percent school attendance rate, and literacy training for mothers.
Indonesia. Indonesia’s $55 million program, signed in November 2006, seeks to immunize at least 80 percent of children under the age of one for diphtheria, tetanus, and pertussis, and 90 percent of all children for measles. The Threshold Program also has a component aimed at curbing public corruption by reforming the judiciary and strengthening government institutions that fight corruption. Indonesia is also eligible for Compact assistance.
Jordan. Jordan’s $25 million Jordanian program, signed in October 2006, aims to strengthen democratic institutions by supporting Jordan's efforts to broaden public participation in the political and electoral process, increasing government transparency and accountability, and enhancing the efficiency and effectiveness of customs administration. The Threshold Program is also a part of Jordan's reform efforts focused on improvements in public administration, civil liberties, infrastructure, and the economy. Jordan is also eligible for Compact assistance.
Kyrgyz Republic. The Kyrgyz Republic’s $16 million Threshold Program was signed in March 2008 to help the Kyrgyz government fight corruption and improve the rule of law through judicial, criminal justice, and law enforcement reforms.