All Talks, No Action (Foreign Policy)
Charles Kenny's weekly Foreign Policy Column on Doha and trade in developing countries.
From the Article
The Doha round of World Trade Organization talks is teetering once again on the edge of total collapse, about to miss yet another absolute and final deadline for an agreement. Last month, Director-General Pascal Lamy beseeched members of the WTO's Trade Negotiations Committee to "reflect on the consequences of failure," especially for "the smaller and least-developed [member countries] which are more dependent on an improved set of global trade rules."
But, in fact, there are plenty of incredibly valuable trade reforms that poor countries can carry out without a global agreement. There are a range of trade barriers in place in developing countries that don't make sense even to those who like tariffs and quotas to support industrial development. With little local political opposition to overcome in these cases, there's no need for a WTO-style international grand bargain to push them through. And if they re-engineer their tariffs and quotas to ensure a maximum variety of goods at home, countries with small economies will do an immense service to their citizens.
Basic trade textbooks harp on about comparative advantage, the idea that countries are relatively more efficient at producing certain types of goods because of the comparative cost of things like labor and capital, and that this is what drives trade. It's the theory most commonly trotted out to justify trade agreements, among other things. But international trade is actually much more complicated than that. The nature and benefits of global trade flows are increasingly determined by maximizing the variety of goods, not the relative efficiency of their production.
