A note from Fred Smith on the battle for free trade

Some thoughts on why our side is losing in its efforts to promote and defend free trade:

  • From the time of the GATT onward, the primary approach to trade liberalization has been based on mercantilistic arguments.  What will another nation sacrifice to gain the right to benefit our consumers?  That approach — always based on real-politics – not intellectual considerations arguably worked in a world where rent-seeking was limited, where the trade negotiation entity (the GATT) was weak, when the focus was on global arrangements rather than regionals or bilaterals, and when trade had not become the tool to advance “social justice” in the world.  None of those conditions any longer exist.  Isn’t it time to rethink whether it might not be politically possible to advance free trade as unilaterally beneficial to the citizens of each country?  That is, is it not conceivable that efforts to strengthen the consumerist forces around the world might not prove an offset to the producer and utopian pressures to see trade as a means of advancing special interest agendas?
  • I note that when an attempt was made to appeal directly to the European consumers (“Do you know how much more you’re paying for food?”) by US negotiators some time ago, the EU politicians went berserk, suggesting that they (at least) viewed this strategy as politically possible.
  • The willingness of governments around the world to allow trade policy to become the instrument for all social agendas leaves little hope for advancing economic liberalization.  If we must wait for agreement by environmentalists, human rights activists, labor groups,. women and religious groups, pro-democracy advocates and so forth, there is little scope for agreement on what is already a very complex process.
  • Moreover, the mercantilist bias of trade negotiations has allowed protectionists to seize the moral high ground.  We care about economics; they care about justice.  “Fair” trade coffee ‘Yes!’ – Free trade coffee, ‘No!’
  • That failure reflects, of course, in part the dominance of the NGO movement by coercive utopians but there are also a growing array of economic liberal NGOs around the world and these  have not yet been effectively organized or mobilized both to challenge the domestic producer groups, nor to retake the moral high ground in the global debate.  Even some of the traditional NGOs are becoming aware of the risks attendant on their fellow NGOs antipathy to trade.
  • This suggests the possibility that a group promoting greater trade freedom might play a critical role in seeking to organize a ‘Grand Alliance’ of economic liberal NGOs (especially from the developing world) and pro-trade economic interests from the developing world.  The counter-alliance – anti-trade NGOs (the Lori Wallachs of the world) and anti-trade economic interests ( Lou Dobbs and the sugar sector) already exist and provide the model for creating our own Holy Alliance. -Fred