Trade: Duplication of Individual Effort on Grand Scale

Article excerpt

Unhappily, trade is often viewed as a dull subject, full of arcane detail lost on most of us. But like health care, which can be equally tedious, the matter is nonetheless important, so we must pay attention to it.

Trade is actually no more than a duplication of our personal experience on a grand scale. We all spend our working lives exchanging labor for money and arguing about the terms of the transaction.

International trade agreements are also about the terms of exchange. And just as the rules governing the sale of our labor are imperfect, so are those of international trade.

The latest GATT deal, while flawed in many respects, is nonetheless a distinct improvement over the current rules. The alternative, which we very nearly got, was no deal at all.

The perfect must not be viewed as the enemy of the adequate.

In the infinitely difficult circumstances of bargaining among 117 sovereign nations, any agreement at all must be regarded as a triumph.

Because we live in the present and the immediate future, a deal promising more trade by reducing some barriers, even if not all, is pure gain.

That the pact contains blatant and bizarre exceptions is simply an unavoidable fact of life. That politics, national pride and the power of special interests helped create them is only to be expected.

More important is that these special interests - which by and large like things the way they are - could not kill the deal.

The GATT agreement also conferred three particular benefits that have received insufficient attention.

The first is what it does for economic growth in the Third World.

The West's commitment to gradually remove barriers to trade in textiles will permit developing countries to earn more by selling what they produce for less than anyone else. This will put additional money in the hands of their people.

If there is any hope for worldwide growth, Third World consumers need much higher incomes than they presently have in order to buy what the West wants to sell them. Trade gives them many times what direct foreign aid does or could.

As well, the reduction in tariff barriers keeps the West on the path to open markets, crucial to Third World prosperity. In an era of rising unemployment and recession, the opposite result could easily have occurred. Indeed, it nearly did.

What's more, opening Third World markets to Western goods - even if only slowly - will increase their imports, spurring competition and reducing prices, again raising the people's incomes. …