Trade policies becoming streamlined

Freedom New Mexico

The final failure of the so-called Doha Round of multilateral trade negotiations last month has been described as a crisis in trade policy and even in the headline to a Wall Street Journal editorial, as “the end of free trade.”

There’s no question it was disappointing, but it may be that such multilateral get-togethers are simply a failed method of liberalizing trade policies.

The best hope might be that while politicians posture about the harm that unregulated trade does to certain sectors of an economy, at some level they know such faux-populist rhetoric is pure poppycock and behind the scenes they will at least not do too much harm to the international trading system.

It is a measure, however, of how pervasive myths about trade are that denouncing free trade is seen as politically valuable in almost every country of the world.

In the U.S., Democratic politicians serving the narrow interests of trade unions are seen as gallant protectors of the “little people.” In India, Commerce Minister Kamal Nath, the single individual most directly responsible for scuttling the Doha Round talks, is greeted at home as a conquering hero who bravely stood up to the United States and Europe and told former and current imperial powers that the developing nations won’t be kicked around.

It’s a shame ignorance about trade is so pervasive that politicians believe they have to pander to anti-trade sentiments, especially since international trade is probably the single most effective anti-poverty program ever devised.

The five fastest-growing economies between 1990 and 2004 were Albania, Bosnia, China, Ireland and Vietnam — and all of them had annual double-digit increases in trade. The countries that traded the least have seen their economies stagnate and poverty remain pervasive.

As Daniel Ikenson, associate director of the Center for Trade Policy Studies at the libertarian Cato Institute said, however, while the Doha Round of talks under the World Trade Organization — which began in 2001 — were stagnating and eventually failing, hundreds of countries around the world have reduced tariffs and administrative barriers to freer trade.

“In a just-in-time world,” Ikenson said, “countries are competing for investment and talent, so they need to be fairly frictionless.” So even as some ministers are denouncing free trade as an imperialist ploy, they have been streamlining their trading procedures.

The demise of the Doha Round is emblematic of a sad time for the concept of free trade as a politically popular policy. However, even as most U.S. Democrats, for example, denounce free trade and even introduce legislation to restrict it further, others see to it that none of the restrictive legislation gets passed.

Even as India’s Commerce Minister cultivates an image as a brave defier of former colonial powers, India has reduced tariffs and other barriers steadily over the last decade.

Maybe reality is winning despite political pandering.