The U.S. may advertise itself as an economy that’s open to the world. But compared to Singapore and Hong Kong we’re practically behind a Berlin Wall of tariffs and trade barriers, according to a new study of economic openness from the International Chamber of Commerce.
The ICC’s latest Open Market Index puts the U.S. 38th – just behind Romania – of the 75 countries it ranked on things like the level of imports as a percentage of gross domestic product, the quality of infrastructure and ease of logistics, and openness to foreign direct investment.
Singapore and Hong Kong ranked at the top – the only two countries to get near perfect scores. Ethiopia was last, with Sudan and Bangladesh just above it.
To be fair, the index is not perfect. It is biased towards small economies that, because of their size, need to import and be open to the world to survive. With its open trade and financial system, Singapore is an important entrepot and entry point to Asia; without them, it is a humid tropic island with a nice hotel and an overly sweet cocktail to its name.
Luxembourg, Belgium and Malta round out the top 5, evidence of the types of nations the index favors.
Indeed the U.S.’s ranking is dragged down by one particular component of the index related to the share of trade as a percentage of gross domestic product – something that is comparatively low in the U.S. because the economy is so large.
But the ICC study does make an interesting point: the major economic powers in the world, on the whole, don’t fare so fell. Combined, the Group of 20 nations come in below average. Several big ones – including Japan and France – fall in the middle of the pack with the U.S. Others – including Brazil and China – earned a below average score for market openness.
Of the G20, only Canada and Germany – both nations that thrive on trade – earned an above average composite rank.
While the G20 as a group has pledged more trade openness, the recent crisis have pushed some countries the other way – whether it’s Buy America or the more sweeping sorts of measures used in places like Brazil to restrict imports.