TCS Daily


WTO Delegates, Just Look Around You

By James K. Glassman - December 15, 2005 12:00 AM

HONG KONG -- The World Trade Organization meeting here this week is more than a technical negotiation on tariffs and subsidies. It's a showdown between two distinct moral visions -- a conflict barely less important than the old clash between communism and western democracy. Unfortunately, this time, the good guys may lose.

One vision sees globalization as a frightening threat. By opening up to the outside world, farmers and businessmen -- and the politicians who back them -- risk being swept away by gales of creative destruction and innovation.

The other vision sees globalization as the means to broad prosperity. By reducing the prices people pay for what they use, by giving them a larger audience to buy what they produce, and by exposing them to ideas and practices that create efficiencies -- globalization raises living standards.

The best evidence that this second vision is the right one is on vivid display here in Hong Kong, famously described in the mid-19th century as a "barren rock" with no natural resources other than a good harbor. Today, gorgeous skyscrapers outdoing New York or London spill down the hills to the waterfront.

With a population of just 7 million, Hong Kong has the world's 33rd largest economy, a GDP greater than countries like Argentina (pop. 40 million),and per-capita output on the same level as Italy and France.

One big reason is free trade -- there are no tariffs here. But instead of becoming a dumping ground for cheap goods that destroy local jobs (as the anti-globalists would have it), Hong Kong has an unemployment rate that's half of Germany's or Spain's.

Hong Kong has moved smartly up the economic food chain, responding to competition by exchanging bad jobs for good. It's gone from making textiles to assembling electronics to becoming a world center for finance, insurance and other business services, of which it is now the 10th largest global exporter.

But in the debate on globalization, statistics don't carry the day. This is a moral battle. The foes of globalization -- media-seducing protesters in Victoria Park wearing chicken suits with placards that say, "WTO: More Dangerous Than Bird Flu," and high-decibel groups like Oxfam, which accuses developed nations of "robbery against the world's poor" -- understand the moral and emotional dimension well. That's one reason they have been so successful.

The other is that no one stands up to them. Advocates of globalization carry little righteous indignation into the fight. They lack the courage and the anger of their convictions, including the willingness to say that the anti-globalists -- the whole crew, on both the right and the left -- are keeping the poor ill and destitute.

The worst players in this clash of globalizations are the Europe's political leaders. They ride a high horse and claim they want to "make poverty history." But, instead, unlike the Americans, they refuse to offer significant cuts in farm subsidies and tariffs. U.S. Trade Representative Rob Portman is dead right when he blames Europe for the lack of progress here.

The Europeans, as well as the Japanese, are only too happy to distract attention from their own failures by trying to focus this trade conference on everything but trade, including issues like foreign aid, access to medicines, labor and the environment.

But European hypocrisy and intransigence don't give developing nations, which have the most to gain, an excuse to keep their own markets closed.

Alan Oxley -- the former chairman of the GATT (the predecessor to the WTO) who now heads World Growth, a group with a market approach to ending poverty -- wrote in the South China Post: "The purpose of the WTO is to assist countries to build growth by liberalizing trade. Yet few members of the WTO are behaving as if they believe that, or are interested in pursuing this purpose."

Instead, poor countries, encouraged by the anti-globalists, insist on keeping their trade barriers intact unless rich countries, whose remaining barriers are lower, tear down theirs even more. But refusing to liberalize trade -- no matter what the rich nations do -- is merely keeping poor countries poor.

The answer for developing nations is to dismantle their own barriers -- a simple and powerful step toward the globalization that has turned Hong Kong from a barren rock to a prosperous center of world commerce.

And if the Europeans refuse to provide moral leadership? Well, then, the developing nations -- along with the United States -- will just have to do it themselves.

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2 Comments

Trade is the Business of Prosperity
"And if the Europeans refuse to provide moral leadership? Well, then, the developing nations -- along with the United States -- will just have to do it themselves."

The US should resolve to expand global free trade and make deals with any and all who think likewise. There is no evidence to support the contentions of the opponents of free trade. Forget Oxfam, forget the EU and forget the WTO if necessary...and get on with the business of prosperity.

fantasy
Alan Hong Kong success has come at a large cost to average Joe in Hong Kong. It's never been big on that little democracy thing and unskilled labour wages rates are a issue, as well as a skills shortage. As for free trade maybe it’s your new role on TCS that stops you from having a go at the US because as you and I both know while the EU desperately needs to do more in the fee trades area so does the US. It’s ag subs are closer to the EU then say Australia’s. One of the biggest issue with free trade which your not addressing is sovereignty. Most courtiers wish to be able to support themselves. The Ag subs in the US are a good example with many farm lobby groups pushing the national security angle.

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