The Apollo Project
Liberal Ideas for the 21st Century
Thursday, November 24, 2005
Free and fair trade
by Peter

In the FT yesterday, Martin Wolf provided an astute critique of the claims of the trade justice movement.

A motion before the House of Commons arguing that “the UK government should not push developing countries to open up their markets but respect their right to decide on trade policies that will help them to end poverty, respect workers’ rights and protect their environment” has gathered support from 229 out of 646 members. Opponents, one assumes, wish to perpetuate poverty, undermine workers’ rights and destroy the environment. Naturally, they desire no such thing.


The aritcle is in the subscribers only section so I'll try to summarise his key arguments

1. the weight of evidence shows a positive relationship between openness and income
2. protection is a tax on trade paid , above all, on exports
3. Kenya (for example)has the purchasing power of Lambeth. Has anyone suggested that Lambeth should close down trade barriers to develop internationally competitive infant-industries?
4. Competitive exports require competitive inputs
5. and foeigh know-how (often in the form of FDI)
6. protection by developing countries often hits other developing countries hardest (and so hinders regional trade more than global trade)
7. it is senseless to support aid (which provides cash to pay for imports) and protectionsim at the same time (rather like driving with one foot on the throttle and the other on the brake).

None of this is to argue that the present situation is anyone's interest. The Guardian today runs a depressing story on the obstacles to removing the obscene subsidies for EU sugar production. It will happen, but the beet producers are pressing for the longest possible period of phase-out.

One complaint of the trade justice campaigners that I would like to see acted upon is that rich countries are better able to bring a successful case at the WTO because it is harder for them to get the best legal advice. Let's have legal aid for trade cases, so that poor countries can tackle rich country dumping effectively.
posted by Peter Pigeon @ 2:16 pm  
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"What is Liberalism?: I should say it means the acknowledgment in practical life of the truth that men are best governed who govern themselves; that the general sense of mankind, if left alone, will make for righteousness; that artificial privileges and restraints upon freedom, so far as they are not required in the interests of the community, are hurtful; and that the laws, while, of course, they cannot equalise conditions, can at least avoid aggravating inequalities, and ought to have for their object the securing to every man the best chance he can have of a good and useful life." C-B.

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