World trade can improve life for all
By JOHN CARON
World trade can be a win/win situation for rich and poor, developed and developing countries. Will everyone benefit? No. Those industries that are inherently inefficient and are perpetuated only though protective measures such as tariffs, quotas, subsidies or other non-tariff barriers will not benefit from world trade.
The World Trade Organization is built on the premise that trade improves standards of living for all parties involved. The role of the WTO is, therefore, to increase world trade and provide a mechanism to resolve disputes over measures that restrict trade.
The NCR editorial of Dec. 10, 1999, headlined World Trade Organization bad for our world condemned the WTO in strong terms: Workers, both in the United States and in China will suffer ... ; The WTO principle of unrestricted movement of goods incorporated in the North American Free Trade Agreement has significantly lowered real wages on both sides of the U.S-Mexican border; WTO has done outrageous harm; It has taken only five years for the WTO and its promotion of globalization to upend the role of nation states; [T]he WTO is in fact protectionist; and so on. All of these statements can and should be challenged.
Contrast the NCR editorial with statements made by respected voices regarding the WTO Seattle meeting.
Kofi Annan, U.N. secretary general said, (The New York Times, Nov. 29, 1999), ... globalization should not be made a scapegoat for domestic policy failures. ... Practical experience has shown that trade and investment often bring not only economic development but higher standards of human rights and environmental protection as well. ... So it is hardly surprising if developing countries are suspicious of those who claim to be helping them by introducing new conditions or restriction on trade.
Former Labor Secretary Robert Reich quoted in The Nation commented, Poor people around the world would suffer a great deal were we to put up trade barriers, but I dont see any better way to get the winners to compensate the losers than for the losers to threaten to block trade as a bargaining chip.
An editorial in The Economist (Dec. 11, 1999) summed up many opinions: As the dust has settled and the tear gas has dispersed, a new parlor game has taken hold. People are vying to decide who won and who lost from the failure of the World Trade Organizationss meeting in Seattle last weekend. Did the protesters, the greens, trade unions or anarchists win? Did Bill Clinton, or Mike Moore [the head of WTO], or big business lose? As the game is played ... one group, representing more than 5 billion of the worlds 6 billion people, sits bemused and befuddled, more or less ignored -- just as in Seattle. These 5 billion live in the developing countries and include the poorest of the worlds poor. They are the real losers from this whole sorry episode.
The NCR editorial stated, without explanation of the reason for the WTO ruling, that the giant sea turtles lost their protection under the Endangered Species Act when foreign commercial shrimpers protested. Venezuelan oil companies succeed in quashing the U.S. Environmental Protection Agencys air quality standards for imported gasoline.
The facts are: The WTO ruled in both cases that these regulations were discriminatory on the part of the United States and thus an unfair barrier for the following reasons.
The U.S. banned imports of shrimp from Malaysia, Thailand, India and Pakistan on the grounds that they did not force their fishermen to use turtle excluder devices that enable sea turtles to escape shrimp nets. These countries objected to the ban in the WTO and won.
What did the WTO actually rule? The Appellate Body concluded in October 1998 that the environmental objective of the U.S. law was legitimate under WTO rules. But the application of the law was held to be selective and discriminatory. The four countries affected by the ban had been given four months to meet U.S. standards, while other nations were given three years. In addition, the U.S. ban affected all shrimp imports from those countries, even if the shrimp had been caught with turtle excluders. The WTO did not require the United States to lift the ban immediately: Rather, it told Washington it had to treat all countries similarly. At any rate, Thailand is now equipping its shrimping fleets with the devices.
Similarly, environmental groups complain that the WTO undermined gasoline regulations in a WTO case won by Venezuela. The issue in that case, however, was not the stringency of the U.S. regulations but the Environmental Protection Agencys decision to apply one standard to domestic gasoline and another more stringent standard to foreign gasoline. The WTO found that this was unfair discrimination (Wall Street Journal, Dec. 6, 1999).
Tariffs are the usual way to restrict trade. But there are many more subtle restrictions to trade that the WTO is attempting to address. For example, the United States is accused of restricting trade by using anti-dumping laws (for example, steel, New Zealand lamb), establishing quotas on imports such as textiles, and providing subsidies for U.S. farmers.
Proponents of increased trade are concerned that placing conditions on trade will result in less trade. Kofi Annan also said, What is needed is not new shackles for world trade but greater determination by governments to tackle social and political issues directly. We need to show the same firm leadership in defense of human rights, labor standards and the environment as we already do in defense of intellectual property. The United Nations -- with its Environment Program, its commissioner for human rights, and its specialized agencies such as the International Labor Organization -- exists for that purpose.
Egyptian trade minister, Youssef Boutros-Ghali, was quoted in The New York Times (Dec. 2, 1999), If you start using trade as a lever to implement nontrade related issues, that will be the end of the multilateral trading system, maybe not this year, but in 10 to 15 years.
The groups that demonstrated in Seattle served a purpose. Issues were raised that concern people and must be addressed. A recent poll by the Pew Research Center found that 43 percent of Americans think the global economy would help the average citizen in years to come; 52 percent said it would hurt. Unless the public feels that globalization and increased trade will benefit them, there will not be the political support necessary to implement the policies that will result in increased trade. But the debate must be rational. People of good will may differ on how to achieve the end of increasing standards of living throughout the world, but it would be a tragedy if the benefits of world trade were not recognized.
John Caron, a Connecticut businessman and member of the NCR board of directors, is engaged in promoting progress in Third World countries.
National Catholic Reporter, February 4, 2000