Expensive Trade

As a student of economics, I've learned that free trade is beneficial to all participants. As a member in the activist community, I've learned that the free trade movement is sucking the ever-dwindling life out of Third World nations. Through my own experience, I've learned that free trade does not exsist.

Today the New York Times reported on the WTO's Doha Rounds. These international talks started in 2001 to promote global trade and the elimination of tarriffs. The NYT's article reports that a overhaul of the current trade system could add hundreds of billions of dollars to the world's income. I think it would also ignite cultural synergy like never before.

The Doha Rounds have not produced much of anything. Many people blame First World nations for rigity with their policies, especially the US's argicultural subsides, which inflate domestic prices and leave many Third World nations unable to compete in the global market. The activist community has called for the elimination of these subsidies, claiming that they only support large agribusinesses while stagnating Third World economies. I agree with the elimination of these subsides, as do most involved with global politics, activist or otherwise.

What many activists organizations, especially the famous "One" campaign, ignore is the complexities behind these trade talks. Many would like to frame this trade battle as a First versus Third World, a poor versus rich, corrupt versus innocent. However, it is not as simple as that. Peter Mandelson, the top European trade negotiator, said in the NYT's article:

"This is not a classic North-South conflict. It is also South-South. The developed countries and the emerging economies have a responsibility to help the poorer countries."

The "emerging" economies that Mandelson refers to are countries like China, India and Brazil (commonly called "BRIC", with the R being Russia). China and Brazil are wary to lower their tariffs, as they are afraid of cheap Chinese imports flooding their markets. China has also refused to unfix the Yen, which artifically lowers their exports even more.

Many Thrid World countries feel that they should not be all grouped together, as is common. China, India and Brazil have the post power in the Third World, and many other, slower growing nations don't think they are accuratley respresented by the concerns of BRIC and similar countries.

The NYT's article gives a comprehensive layout of trade complexities. It reports that 70% of traiffs paid by poor countires goes to poor countries, giving a new perspective on assumed exploitation of the Third World by the First. (This statistic was reported by a US trade representative, so it could be exploitative on its own.) Also, the US has said it will losen some of its trade restrictions if India and Brazil do the same.

I am not saying, contrary to popular belief, that these trade talks are successfull. I think they are crippingly breaucratic and a waste of time. Poor countries are being ignored by most of these trade talks (especially when it comes to agricultural subsidies), but not in a good-versus-evil way that most groups working on the Doha Rounds would like us to think. Trade is a complex topic, and free trade is even more complex. There is no one right way to create a universially benificial trade deal, but it can be done and must be done.