Friday, November 04, 2005

What if international trade was not evil?

Left and left are now divided over free trade. It used to be fairly simple: in economics, the classical left was protectionist, fearing global companies, promoting local shops and national sovereignty; while the classical right was in favor of Smith and Ricardo's theories on trade that said: the freer, the better. Those were the good ole days.

Today, the right has its protectionist in rich countries who couldn't care less about poorer countries. And the left has its free trade champions who see gains for the poor in access to market. The problem is not free trade per se, but the way it's done. Just like Oxfam (and fair traders), I'm one of them.

Protectionism has become a battle to protect jobs in rich countries against jobs in emerging countries (there goes my political career...). The contradiction between fighting for a better world and fighting to restrict the capacity of poor countries to attain economic growth has become too apparent.

Sure, there will be losers in rich countries when an economy reduces its trade barriers. But there will be winners too, most probably more of them, and the losers have the support to find new ways to participate to the economy: strong education systems and social security for instance. There is no such thing in developing nations who are waiting for an access to our markets.

Also, there's no such thing as a "loss of sovereignty" when a country signs a trade agreement - no more than there's is a loss of sovereignty when they sign a "good" agreement like the Kyoto Protocol. The sovereignty becomes shared, not lost. Countries agree to abide by shared rules because they see a gain to it. For global warming, it's obvious that no nation alone can win the battle. For global trade, there's an overall potential gain from an increase in global output.

The real scandal is that foreign nations do not have a say on a country's trade regime, because all trade partners are affected by that regime. Shouldn't the basis of democracy be that everyone has a say in the conduct of affairs that affect him/her? Then foreign affairs of foreign nations are to be included, and that's what international agreements are for until we find a better way to share responsibility.

All of this to say that I find myself an odd bedfellow of George W. Bush when he says"The Doha round really trumps the FTAA as a priority". Non-global trade agreements are not just a step towards open frontiers, they're an obstacle. Energies to open trade and fight potential losers would be better invested in the real goal: a global market where everyone has a chance to compete.

Call me a free trader. I'll say thank you.

Update: the left-of-the-center Prime Minister of Canada is on the same page.

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