A Revitalized Trade Agenda

By Barshefsky, Charlene | Harvard International Review, Fall 2000 | Go to article overview

A Revitalized Trade Agenda


Barshefsky, Charlene, Harvard International Review


Complications and Directions in World Trade Policy

This year, America's trade agenda concerns much of the world and an enormous array of issues. But each of our initiatives ultimately shares common goals: to create opportunities to raise the living standards of Americans, to spur development and growth worldwide; to advance American values; and to build a stronger peace. Our international trading system, now embodied by the World Trade Organization, rests upon a foundation of American commitment to open markets, freer trade, and the rule of law in world commerce. Americans have taken this position for more than half a century. In one sense, this is a matter of economic logic. Open markets abroad enable us to export goods and services, and exports are essential to a strong domestic economy. Nearly 96 percent of the world's population, and almost 80 percent of world economic consumption, is outside the United States; yet foreign tariffs and trade barriers are substantially higher than ours. As markets open more fully to Americans, farmers face less of a risk o f gluts that drive down prices, workers see opportunities for higher-wage employment, and firms gain economies of scale that help them invest in plants, jobs, and research.

Open domestic markets are equally important. Imports create a range of choices that raise family living standards--especially for the poor--and help to dampen inflation. Accompanied by commitment to education and job training, imports help American workers specialize in the most technologically sophisticated and financially rewarding fields, and give businesses access to inputs--raw materials, parts, business equipment--that reduce costs and thus improve efficiency and competitiveness. But our work has rested on more than economic logic. For more than 50 years, it has had a base in practical experience with the unsavory alternatives.

In 1948, when President Harry Truman and 22 other international leaders joined to form the WTO's predecessor (the General Agreement on Tariffs and Trade, or GATT), they were attempting to transform this insight into a lasting set of policies and agreements. This was one in a series of policies and institutions that have served us ever since: collective security, reflected by the United Nations, NATO, the Rio Treaty, and our alliances with the Pacific democracies; commitment to human rights, embodied by the Universal Declaration on Human Rights and a series of more recent conventions; open markets and economic stability, with the creation of the IMF and World Bank on the one hand and the foundation of our modern trade policies in the GATT. Truman and his colleagues believed that by reopening world markets they could rebuild a shattered world economy, restore growth, and raise living standards. Over the long term, they believed that open markets, together with a strong and confident security policy, would give nations a greater stake in stability and prosperity beyond their borders, thus strengthening a fragile postwar peace.

That is exactly what has happened. Since 1948, the world has completed eight rounds of negotiations and 113 new members have joined the 23 GATT founders. During these years, global trade has expanded fifteen-fold; the world economy has grown six-fold; and per-capita income has nearly tripled. As a result, hundreds of millions of people have escaped poverty, which is clear in statistics of social progress: since the 1950s, world life expectancy has increased by 20 years; infant mortality has dropped by two thirds; the threat of famine has begun to recede from all but the most remote or misgoverned corners of the world; and the openness of our own economy has helped to power America's economic success this decade.

Future Goals, Pragmatic Insights

Where does our trade policy go from here? First, we need to pursue a course that ensures the strength of our own economy. Second, it is a moral imperative that the trading system also advance the integration and development of the world's poorer countries. …

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