After a few introductory weeks of theory my International Trade and Legal & Political Analysis of the Global Trade Regime classes are starting to converge on some very interesting topics. In the Legal and Political Analysis class, we have been reviewing the history and make-up of the GATT/WTO. Some of our topics of concentration include how tariffs are actually reduced in negotiation rounds, how disputes are resolved, and what it means for an organization to operate on a ‘consensus’ decision-making basis.
On the other hand, in Trade class we’ve been discussing in great depth the classical theories of Ricardian Comparative Advantage and Heckscher-Ohlin two-factor production. Our topic for this week is more or less to question the future of free trade. Our authors have suggested that infant-industry protection should not be frowned upon as it is how countries like the US and UK developed; and that in today’s world the concept of ‘free trade’ is often unfairly influenced by small interest groups like the American sugar industry, or transnational corporations seeking to lower duties on their products manufactured abroad. One of these authors suggested that a global system of cooperation in the realm of trade needs to exist in order to reduce these inequalities.
It was then interesting to note that the author wrote his piece a few years before the Uruguay Round and the creation of the formal WTO. I couldn’t help but wonder how his ideas would change today given the WTO’s status as an international body formed to promote freer trade amongst all nations. Further, the WTO’s allowance for ‘special and differential’ trading status for developing countries may also tacitly allow certain aspects of infant industry protection. However, the collapse of the Doha Development Round also suggests that the move toward competitive equality amongst all trading nations is far from being realized.
Perhaps the most interesting issue these classes are touching on is trade’s affects on labor standards and the environment. Theory suggests that wages will remain low in a country until its entire workforce (not just the export sector) raises its productivity, yet from the perspective of a developed country low wages tend to be seen as an atrocity. In addition to lower wages, developing countries tend to have lower standards for environmental protection both in the export sector (Southeast Asian lumber) and for domestic reasons (loss of Brazilian rainforest). Some academics and non-profit organizations have suggested the WTO create binding regulations for these issues, much like they’ve done for intellectual property rights protection. Others feel such regulation belongs to the International Labor Organization, treaties like Kyoto, and domestic regulation. It is certainly not my place to use this as a forum for my personal opinions, but needless to say I feel a very interesting discussion coming on in class tomorrow!
