'Unfair' is what makes trade negotiators look bad back home
July 13, 2009
By Ethel Hazelhurst
Trade - fair and unfair - is high up on the global agenda. It is difficult to define fair trade. However, trade negotiators usually find it easy enough to define unfair trade - an arrangement that would make them look bad back home.
The issue has become a high profile one because, in most countries, vested interests are calling for protection. Whatever their differences in other contexts, business and labour usually see eye to eye on this issue - both groups want to shield themselves against competition from the world's best producers.
And, because protectionism is emotively labelled "saving jobs", governments often go along with these lobbies. And they are prepared to overlook the interests of consumers, who benefit when prices are lower, and of taxpayers who have to pay for state support to inefficient unviable protected industries.
But many governments who are aware of the mistakes made in the 1930s, when protectionism turned a recession into the Great Depression, are anxious to avoid a rerun of that economic calamity.
Their concern has been heightened because trade volumes are falling anyway, as the financial crisis dries up trade finance and the global recession erodes demand. And, if protectionists have their way and global trade stalls, many more jobs will be destroyed around the world.
There are some realities that have to be faced: when times change people have to change. And they have - very successfully - since before the Stone Age.
The rank and file of the human race has adapted to a multiplicity of technological advances, since they started to come down from the trees. And people will have to continue to use their innate ability to adapt and survive, whatever trade unions do to prevent it.
The first instinct of people in the modern world is to call for government intervention when the world changes shape around them. But there's a limit to what governments realistically can do.
Let's illustrate the point with an example. If coal mines in a region are mined out, the government can't after all put the coal back so miners can once again extract it. Nor can a government realistically support the out of work coal miners for the rest of their lives.
They can support them for a period and they can assist them in the adaptation process - for instance by helping them to migrate to another area which needs coal miners or by reskilling them so they can do other jobs.
This logic applies equally to other industries that have run their course.
In southern Africa, trade issues have been highlighted by trade negotiations between countries in the region and the EU.
The countries of the EU are, of course, Africa's former colonial powers. This means the relationship got off on a bad footing - colonies are created after all for the express purpose of exploitation and unfair trade.
Now the world has moved on. The countries of the north have perceived the value in promoting growth in the countries of the south because the richer the former colonies are, the more lucrative the market for the ex-colonisers' exports. But they are reluctant to give away too much of their traditional advantages.
One of the greatest distortions to global trade has come from tariff protection and subsidies for agriculture in the US, the EU and Japan.
Against all economic sense, countries with unsuitable climates have subsidised industries such as sugar, while logic dictates that it is best imported from subtropical regions, which have a comparative advantage in producing sugar.
The EU and the US have started to dismantle the barriers and subsidies but it's a painfully slow business.
For their part developing countries have resorted to high tariff barriers, to protect their interests.
The issues are simple but the solutions are complex. And the details are so technical that the debate is difficult to follow.
|
|
