The Left vs. Trade Liberalization in SeattleCommentary by Pete du Pont
November 18, 1999
Looking for some excitement? The World Series was a big yawn this season, and Lennox Lewis vs. Evander Holyfield was a bust. So how about the battle in Seattle commencing November 30? A swarm of activists will descend on Seattle to try to disrupt the ministerial meeting of the World Trade Organization (WTO). In one corner we will have tens of thousands (the activists claim) of fightin' mad greens, reds, Naderites, unionists and other assorted anti-market zealots, and in the other, 5,000 bureaucrats from around the world. Admittedly, it's hard to root for either group.
Will the left rise from the dead in Seattle? Can it strangle "corporate globalization" in its crib and build on last year's success in killing a multilateral agreement on investment rules? In the left's view multilateral organizations suspicious to begin with, a threat to national sovereignty and a prelude to corporate domination of everything, so shouldn't they be controlled and stopped before it is too late?
Waves of protectionism crippled international trade during the Great Depression, teaching the world the hard lesson that trade wars lead to real wars, so the major countries of the world set up the General Agreement on Tariffs and Trade (GATT) after World War II. The WTO, which succeeded GATT in 1955, has had a good record, avoiding a repeat of the1930s trade war, cutting average tariffs from about 40 percent to about 5 percent today, and promoting a vast increase in world trade and human welfare.
With 135 member countries, and a new US-China deal paving the way to add the most populous nation, the WTO sets rules for trade, provides a forum for members to hammer out new reductions in trade barriers, and offers a mechanism to settle disputes.
Aside from leftists climbing buildings and pulling other stunts for the media, nothing very dramatic is likely to happen in Seattle. Discussions on trade liberalization usually move slowly, and the requirement for consensus limits how far agreements on trade reforms can go. The Uruguay round began in 1986 and concluded in 1993. The Seattle round is already scheduled for three years of negotiations. Past negotiations show success on lowering trade barriers in manufactured goods but far less on agriculture, textiles, services, and other areas of international commerce like investment. And that's where the new action will be.
France and the EU proposed a wide agenda for this "Millenium round," but the lame-duck U.S. representatives want to restrict talks to a few topics like eliminating agricultural subsidies and price supports and dropping non-tariff barriers in agriculture, finance and other services. The U.S. will continue to battle the Europeans.
What really is at stake in the Seattle round is further liberalization of trade rules. It's tough to liberalize because not only the know-nothing left but also the right-wing protectionists are hostile to trade liberalization. Governments are all beholden to domestic interest groups, and on no other issue does the public know so much that isn't so.
Let's remember the basics. Trade - domestic or international - benefits both parties or it wouldn't occur. A major reason that America is a colossus in the world is that our 50 states constitute the greatest free trade zone in the world. As consumers, we also benefit tremendously by access to all that's best and cheapest around the globe. Trade with the rest of the world increases options and lowers prices for consumers. On trade, consumers have already voted - at the mall.
The critical issue for each economy is whether it is making the best use of its resources. Trade helps ensure that American labor and capital are employed where, in Adam Smith's phrase, they have advantage. Locking in old jobs simply jeopardizes new jobs. That's why open societies grow more rapidly than closed societies.
Is there any mischief in this administration's trade policies? While President Clinton fortunately advocates "outward looking trade and investment policies," thorns lurk among these roses. The administration's trade policies include advocacy of environmental and labor standards that can only impede trade and investment, hinder economic progress in poor nations and become a slippery slope for U.S. interference overseas. The administration's help in establishing a new World Bank "emergency facility to support social safety net spending" in "crisis-afflicted countries" is another example of its diligence in spreading the welfare state worldwide.
But these statist measures pale in comparison to the ongoing wealth creation facilitated by a more liberal world market order. Even Karl Marx and Friedrich Engels recognized this in the Communist Manifesto 150 years ago: "The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization."
So the Seattle round should ignore the statist thinking of the protesters on the left and get on with the task of making higher quality goods and lower market prices available to all the people of the world.
The National Center for Policy Analysis is a public policy research institute founded in 1983 and internationally known for its studies on public policy issues. The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.