In international economic affairs, pro-market analysts have usually thought of developing-world influence in a negative light (demanding more aid, bailouts, and the like). But the events in Cancun have turned the tables, for it is the developing world that is calling for free trade and the industrialized nations that are demanding the special privileges, as summed up in the case of Mexican Avocados. Mexican farmers want to export them, American consumers want to buy them, but the US stands in the way. There are many similar cases. It’s been true for some years that the developing world has represented a force for greater liberalization at these talks, not just in terms of fewer trade barriers but also in resisting the regulatory and labor controls that the US wants to foist on poor countries in order to rob them of their comparative advantages.
Many countries now see the WTO as a threat along these lines: “world trade has never been more politicized. Never before have labor unions, environmentalists, and loopy social reformers been able, so successfully, to use international trade as their preferred ground of political agitation. Never before have protectionist governments—the US a main player among them—had such access to litigation and intervention. Never before has a developing capitalist economy like China been forced to crawl before a cartel of governments just to gain admittance to the world trading system. The WTO has proven to be no friend of a truly liberated international economic order.”
As Grant Nulle writes in the Financial Times (9-13-03):
The World Trade Organisation, dominated by a mercantilist negotiating mindset, is an affront to the very notion of free trade. Indeed, at a 2002 WTO symposium, Luis F. de la Calle, former Mexican trade minister, stated that envoys to that Geneva-based organisation adhered to the simple premise that “exports are good, imports are bad”.
Apologists would contend that the WTO is a member-driven organisation subject to the rule of consensus among all 146 participating states. Therein the problem arises.
Governments by their very nature are institutions beholden to the constituencies that elevated them to power. In democratic states electoral expediency compels political parties to defend even the most pernicious trade-distorting policies, thereby circumscribing ministers’ negotiating mandates. As a consequence, WTO member states perceive trade as a zero-sum game, as opposed to an act of mutually beneficial exchange.
Economic theory persuasively demonstrates that free trade and the subsequent extension of the division of labour unambiguously augment the prosperity of mankind, while trade barriers are ultimately self-defeating. The only impediments to the unfettered exchange of goods and services are national borders, the artificial constructs of mercantilist states. Hence, intergovernmental economic organisations such as the WTO, notwithstanding their professed aims, are inherently collusive arrangements designed to forestall the emergence of free trade.
Only by divorcing politics from economics will unadulterated trade liberalisation be realised.
Posted by Jeffrey Tucker
