Last week the Obama administration ended trade benefits for Madagascar, Guinea, and Niger, citing movements away from democracy in those countries. Aid Watch noted a few weeks ago that this move would eliminate 100,000 (relatively) high-paying jobs in Madagascar alone, and that removing access to U.S. markets makes little sense for the promotion of democracy or development:
The reasoning seems to be that political instability and violations of democratic procedures hurt the Malagasy people, so the natural US government response is to—hurt them more by taking away their jobs?
But a look at the AGOA eligibility requirements shows there is some room for interpretation. There must be, if non-shining examples of democracy like the DRC, Guinea, and Guinea Bissau get to stay on the list while Madagascar is kicked off.
Trade skeptics Eyes on Trade, however, love the move and wish such provisions were built into all trade agreements, like those with Honduras:
Our trade policy should be promoting democratic governance instead of handcuffing our ability to discourage coups and dictatorships. Signing CAFTA-style trade agreements is a surefire way to diminish our capacity to conduct effective foreign policy.
Is there any reason to think that punishing undemocratic regimes by restricting trade access will have a positive effect on democracy? It might depend on the specific cases, but in general there is little reason to think so. Countries that are engaged in global trade markets tend to be more democratic than those that are more isolated. For these purposes it doesn't much matter which direction causality runs (i.e. whether trade leads to democracy or democracy leads to trade), since either interpretation would lead us to conclude that Obama's decision to isolate these countries will be counterproductive.
Aid Watch's motto is "Just Asking That Aid Benefit the Poor". I like it a lot, but in this case it needs a bit of modification. How about "Just Asking That Democracy-Promotion Promote Democracy"? Would the Eyes on Trade folks agree with the sentiment?