The authors state rightly that trade policies should be designed to raise living standards and to integrate developing countries into the world trading system. Global poverty (more than 2 billion people live on less than a dollar a day) is the world's most pressing problem.
They say rightly that the developed countries have to date received the lion's share of the benefits from previous trade negotiations. Those ought to do more for the developing countries. The adage should be `help-my-neighbor', nor `beggar-my neighbor'. Right should persevere over might.
Therefore they want to put a radical new trade model on the table of the Doha Round: the Market Access Proposal (MAP). Their model is simple and straight:
All developing countries can have free access to all markets with (1) a larger GDP (Gross Domestic Product) and (2) a larger GDP per capita.
Besides MAP, they give also recommendations for the upcoming trade negotiations, of which many will be extremely difficult to realize, even partly: liberation of labor markets and unskilled services, promotion of labor mobility (immigration), elimination of agricultural subsidies, no technical provisions (like rules of origin), no export subsidies, no tariffs, no non-tariff barriers (dumping duties), no currency exchange manipulations, no arms sales, no briberies, pro-generic drug policies, elimination of secret bank accounts.
They also want better access to financial means for developing countries, institutional reforms (a less costly accession mechanism) and a new international trade tribunal.
By the way, trade negotiations should be about trade, not about intellectual property rights.
Generally, they ask for more democratic media, which are actually controlled by a few rich conglomerates.
Any trade agreement that differentially hurts developing countries more or benefits the developed countries more should be considered as unfair.
J. Stiglitz and A. Charlton have written a most necessary book. The implementation of their simple and radical proposition should constitute a big leap forward for the developing countries and concomitantly for global international trade.
This book is a must read for all participants of trade negotiations and for all those interested in the future of mankind.
N.B. For a viewpoint of the South I recommend Walden Bello's `Dilemmas of Domination'.
on 26 June 2009
Joseph Stiglitz, the Nobel Prize-winning economist, and Andrew Charlton, a Research Officer at the London School of Economics, argue for an international trade regime designed to support countries' national interests, especially the interests of the poorest countries.
They show how previous trade agreements have harmed the poorer countries. The OECD forecast that they would gain $90 billion a year from the Uruguay agreement, but in fact the 48 poorest countries lose $600 million a year from it.
The OECD countries' tariffs on imports from developing countries are still four times those on imports from the OECD countries. Stiglitz and Charlton warn, "Prescriptive multilateral agreements must not be allowed to run roughshod over national strategies to deal with idiosyncratic development problems."
Stiglitz and Charlton propose instead a model for managing trade between the richest and the poorest countries in the interests of all, to ensure that trade serves development. They point out that the poorest countries need social safety nets, retraining programmes, technical aid and development banks. As they note, "To date, not one successful developing country has pursued a purely free market approach to development." The richer countries all used industrial policies to develop.
Nor is free trade the answer. As they write, "the issue facing most countries is not a binary choice of autarky (no trade) or free trade, but rather a choice among a spectrum of trade regimes with varying degrees of liberalisation." Latin America's open capital markets not its relatively closed trade policy caused its 1990s crash. "Latin America's reliance on foreign capital flows and foreign direct investment ... made it particularly vulnerable to global economic shocks."
Latin America's countries have now created the Bolivarian Alternative for the Americas (ALBA), independent of the USA, the IMF and the World Bank, based on the principles of respect for national sovereignty and solidarity.
The US and EU states will never sign a fair international trade agreement because they are driven by the furies of private profit not by principles of social justice.
on 5 January 2008
This book thoroughly explores all the issues in a very balanced and knowledgeable manner, and is worth reading for the well justified arguments made for both sides.
It is also a rather good introduction to the workings of GATT, WTO and the motives behind the various participating nations.
However, this book was tough reading. The authors are not lucid and stray into grotesque minutiae all too often (the graphs and tables of raw data only add to the boredom).
As a book on ways to help poverty there are better reads, e.g. Amartya Sen's outstanding "Freedom as Development". But as a book on the workings of international trade agreements it would be worth reading.