Washington DC - The political problem with trade negotiations is that while the benefits of lowering obstacles are diffuse, the losses are concentrated. The owners and workers of companies that are adversely affected by lower trade barriers are fewer but...
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All Comments (2)
So what does this mean for regionalism? One of the main reasons free trade agreements have become so popular is because of this inertia in the WTO. And, I would argue, enabling developing countries to liberalize bilaterally before they open their borders on an MFN basis is actually better for them in the long run. In particular because few of them have domestic firms that are able to compete or social safety nets for the workers that will bear the brunt of the adjustment costs.
While I agree that the lack of forward movement in the WTO is loss for all states, I disagree with the previous poster's assessment that unrestricted trade is the solution. And more specifically to the author of the article, I'm not sure that the expansion of trade in the aggregate is the right way to measure forward movement in the international economy. What does the composition of that trade look like? If you measured it in value terms you're looking at oil money and the high price of commodities like copper. I'm not sure that's helpful for development.
July 30, 2006 6:24 PM | Report Offensive Comments
Posted on July 30, 2006 18:24
The statement that there are "forces at work that are far more powerful than governments" is just whistling in the dark.
Trade has flourished in large part due to the restraint exercised by governments in the post-WW2 era. But keep in mind that for most of that era, Soviet, Chinese, and Indian protectionism and economic mismanagement kept the majority of the world's population from enjoying the benefits of trade - and thus impoverished billions. Where were the "forces far more powerful than governments" then?
Hopefully we have actually entered a new age when governments will forever after be unwilling or unable to restrict the free flow of goods and information. But don't count our chickens before they hatch. Remeber that the last big era of globalization was in the 1920s...and remember what happened after that, and why.
July 29, 2006 7:23 PM | Report Offensive Comments
Posted on July 29, 2006 19:23