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The limits of free trade
Date: Wednesday, November 15 2006
Topic:


Economic dispatch

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The limits of free trade

The challenge for policymakers will be to resist the rising tide of protectionism in world trade

William Keegan
Tuesday November 14, 2006
Guardian Unlimited

The difficulty the Bush administration is having in trying to normalise trade relations with Vietnam is indicative of the huge problems facing the Doha round and the general trade liberalisation movement.

The Republicans failed to gain approval for "trade normalisation" last night, dashing hopes for clinching a deal before President Bush meets the other Apec (Asia Pacific Economic Cooperation) leaders in Hanoi this weekend.

The Apec forum was inaugurated in 1994, aiming at "free and open trade and investment in the Asia Pacific" for industrial countries by 2010. The group includes the US, Canada, China, Japan and Australia.

Older readers will no doubt rub their eyes at the thought that communist/capitalist Vietnam is now a member of the World Trade Organisation (as well as the International Monetary Fund) and hosting a trade talks meeting at which an American president will be present. So many memories of the Vietnam war have recently been evoked, not least because of the more obvious parallels with Iraq.
The concern of US senators from textile states is obvious: the benefits of free trade may be a kind of religious mantra among economists and trade officials, but the wonders to economists of comparative advantage, where sectors specialise in areas of respective strength, do not seem so obvious to people whose jobs are threatened by a reduction in trade barriers.

A couple of years ago at the Davos World Economic Forum I was particularly struck when someone who had been a senior international official promoting free trade and open markets for many years told me he had had experienced what he called an epiphany at a college reunion.

http://business.guardian.co.uk/economicdispatch/story/0,,1947577,00.html







[Proofreader's note: this article was edited for spelling and typos on November 17, 2006]

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