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June 11, 2007

Larry Elliott on Doha

At last, something I unequivocally agree with from Larry Elliott:*

By no stretch of the imagination is what is on offer a development round - it is the usual mercantilist stitch-up with the great powers seeking to extract as many concessions as they can while giving the bare minimum in return.

How can we still be having trade talks in which people act as if ignorant of the facts about trade?

The G8's approach to trade is harder to explain than its foot-dragging on aid. This, after all, is a pretty rightwing bunch, steeped in the orthodoxies of market economics. One article of faith is that free trade is better than protectionism, and that if a country lowers its tariffs to foreign importers but gets nothing in return, both parties benefit. There's not been much evidence of this thinking in the Doha round so far.

Institutionally the US has never really believed this and from the look of things nor does the EU. Which is part of the problem of course.

We should be starting from the plainest and most obvious result in all of trade theory: if we lower our tariffs, then we benefit. Even in theory (a theory I don't think applies in the real world) the exception to this is the infant industry argument and that doesn't apply to the already rich nations. So economic logic should be driving us to lower tariffs, without asking for reciprocation.

But that's not the way the talks go, sadly. As clear an example as you need of the fact that we are not ruled rationally.

* I'm sure Mr. Elliott is just as excited about this as I am.

June 11, 2007 in Make Poverty History | Permalink

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Comments

Indeed, but the G8 leaders are often speaking from within a pork-barrel. Inevitable incoming trade is a nice little earner. It is Robber Baronacy nationalised.

Posted by: Roger Thornhill | Jun 11, 2007 9:41:55 AM

What Roger says.

Posted by: Mark Wadsworth | Jun 11, 2007 10:17:04 AM

'Fraid so, Rog, Mark: just thieves the lot of them.

Posted by: dearieme | Jun 11, 2007 11:08:06 AM

Tim:

Looks like there's agreement all 'round. All of the "free trade" talks and agreements, etc. made and being made are just an extension of the domestic gangs in each state sending their emissaries to cut deals protecting their privileged status.

It's all perfectly rational of course--just proceeding along lines different from those publicized. Not worth arguing or even talking about. The guys doin' it understand it just as well as do we but get their bread buttered (and their palms greased) by putting on a satisfactory show. It's simply the case that the privilege is worth big bucks--sometimes existence itself--to the protected firms and labor sectors and not so intensively costly to everyone else as an individual expense item--so the con luxuriates. Even in Keillor's Lake Woebegone (where every kid's IQ is above average) you probably couldn't convince 'em that unilateral free trade made sense (and even if you could do it, they wouldn't remember it by the time they grown up and began voting).

This is all "pissing against the wind" and nothing much is going to change. The best that can be said is that protectionism is probably less pronounced today than in the years when protected sectors in the US and the UK convinced the Germans (and Austrians and Turks) they had no other choice than to wage war against the injustice--or starve. And to do it again later with Japan taking the place of the Turks.

Properly understood, protection (whether tariff or subsidy) is a real, tangible
assault on the justly-earned livelihood of foreign producers and domestic consumers and is exercised by those who feel in a position to enforce their specific claim to a "piece of the action" militarily.

Posted by: geneberman | Jun 11, 2007 8:10:03 PM

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