Throw Some Cold Water on Free Trade

By Francis, David R. | The Christian Science Monitor, November 28, 2005 | Go to article overview

Throw Some Cold Water on Free Trade


Francis, David R., The Christian Science Monitor


Failure of the current round of world trade-liberalization talks might be a good thing. If they succeed, the result will be more free trade and an acceleration of already widely unpopular globalization.

The Doha round, named after the capital of Qatar, where it began in 2001, continues to move forward - but perilously.

"A lot of economies are handling all the disruptions and adjustments they can deal with already," says Peter Morici, an economist with the University of Maryland's business school, in College Park.

In a way, he has a "stop the world, I want to get off" view. Change is just too fast for many nations to absorb. Throwing cold water on freer trade for a while would let the dust settle.

That's far from conventional wisdom.

Most economists regard freer trade as a grand opportunity for greater prosperity. Under their "law of comparative advantage," each nation or business specializes in certain goods and services, becoming highly efficient. In that way, all trading partners eventually benefit through cheaper or better cars, clothes, computers, software, etc. But in the short run, freer trade means more discombobulation - for many, lost jobs and damaged businesses.

Freer trade results in losers as well as winners. Concern over the losers is prompting various nongovernmental organizations to gear up to protest when the 149-member World Trade Organization meets in Hong Kong Dec. 13-18 for a key ministerial meeting.

With eight earlier multiyear deals in the post-World-War-II period, international trade and investment has become highly relevant to most of the world. World merchandise exports reached $8.9 trillion in 2004 and are probably up another 6.5 percent this year, the WTO estimates.

To Mr. Morici, this current round of trade negotiations "is no good. We [the United States] do all the giving and don't get anything in return. We need a new round."

Whether that's true or not, success in the Doha round could be delayed until 2009, after the election of a new US president, suspects Harald Malmgren, a Washington trade expert who helped negotiate the 1964-67 Kennedy round.

Here's how Mr. Malmgren sees the Doha scene:

In Hong Kong, the negotiators could agree to a statement affirming some progress and spelling out remaining differences. The Office of the US Trade Representative, under former congressman Rob Portman, is better prepared for this ministerial meeting than was the case at earlier ministerial sessions. Most real negotiations are done outside these cumbersome gatherings. Ministers want to make 15- minute speeches for home consumption. …

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