Real wisdom on trade

I give my last class on trade on Monday, and this is what I have asked my students to read. It is a piece by the Michigan trade law scholar Robert Howse, and it is one of the most intelligent pieces I have read on the world trade regime and directions for its reform.

It is a very different kind of writing than what I have subjected my students to all semester: no equations, no regressions, and the only numbers are those on the top of each page. But Bob Howse knows his economics and a whole lot else besides, and what he says about the WTO is full of insight. The paper is too substantial to summarize neatly, but here is an excerpt. 

If, today, we want to preserve and enhance a basic multilateral bargain to contain generalized recourse to protectionism, but under conditions in which the trade regime has collapsed into politics ... then we may want to reopen the kind of tool kit that was used by the original GATT drafters, and revisit and
perhaps dismantle some of the more rigid architecture that was produced in the 1990s. If the Washington consensus has been discredited and we cannot return to the Keynesian welfare state accepted by embedded liberalism as an assumed normative benchmark, then it is important to cast new trade rules and the institutional framework for their implementation, in a manner that allows democratic experimentalism at the domestic level with new economic and social institutions, and mechanisms for development. In the services area, for instance, should not commitments that members make to market access be adjustable,
as they experiment with forms of delivery of public goods that reflect neither traditional welfare-state orthodoxies about state monopolies nor 1980s orthodoxies about privatization?

The paper is particularly good in its discussion of how "insiders"--trade officialdom, experts at the WTO, and Northern academics--have misunderstood the reasons why GATT was so successful and how the "technocratic" model of trade policy they have pursued is a dead-end. 

But Howse is not your usual anti-WTO pundit. He applauds the jurisprudence of the WTO's appellate body on many occasions--in particular in the shrimp-turtle case--and argues that these decisions show the way for a better, more permissive WTO. 

In essence, the Appellate Body threw out the window [in the shrimp-turtle case] the conventional insider wisdom that one could not bring such measures [e.g., unilateral measures aimed at safeguarding the environment] within the purview of the trading system without threatening its coherence or integrity. The fact that the United States lost the case, or apparently did, was actually more damaging to the insider outlook than if the United States had simply won—for what the Appellate Body showed is that one could in fact control the problematic or potentially problematic aspects of these kinds of measures (e.g., knee-jerk unilateralism, indifference to the specific situations of other countries, hidden protectionism) within the legal framework of the WTO system. With this ruling, the Appellate Body enfranchised the previously “external” constituencies, who had been marginalized as “critics,” as “trade and . . .” people.

This is as good an answer as anyone has given to the insiders' endless preoccupation that the introduction of non-trade concerns into the WTO will necessarily degenerate into crude protectionism. 

Comments

[dale]

Many liberal neo-liberals have been arguing for more embedded Keynsian social democracy (welfare state in the negative formulation used by the author)as the appropriate response to our current trade regimes. This author is saying that we cannot "return" to that social compromise.

It seems to me that western Europe has been relatively successful in managing the negative effects of WTO policies precisely by using traditional social democractic policies.

I appreciate the comment about the "non trade concerns" leading to crude protectionism. Its not as if our current trade regimes do not intrude upon non trade concerns and set up the need for democratic self-protection.

[hari]

Dani -
Thanks for returning to the original discourse on Gatt and its historical tradition which, I might add, was strengthend by binding arbitration procedure introduced under WTO.

However, if you recall my earlier inputs in this debate, I was confounded by the introduction of so-called non-trade authority which was part and parcel of what became known as "globalization" under Clinton/Rubin.

The EU Council (last week) decided that after legal adoption of the (revised) EU Treaty, this weekend in Portugal, they'll make an official declaration on their collective next step: namely, to tackle the issues related to globalization!

I'd like to see you take up their official declaration under your blog and see what kind of reaction is forthcoming.

[wjd123]

"Adjustment, the management of an internal economic crisis in a manner that would be politically and socially sustainable domestically, but also not threatening to the integrity of the international legal order, was facilitated as well by the other Bretton Woods institutions, the International Monetary Fund (IMF) and the World Bank. A global financial order based upon managed or supervised exchange rates and exchange rate adjustments, and emergency liquidity assistance from the IMF, would provide means of working out macroeconomic instability that would neither threaten liberal trade, nor on the other hand lead to beggar-thy-neighbor macropolicies or currency devaluations." --Robert Howse

So what amounts to wisdom here is helping to legitimize the WTO by having it bring in the outsiders. However, what the outsiders want to bring to the table isn't necessarily trade specific. They want to place environmental rights, labor rights , human rights, and other value issues on the table. Isn't the task of returning to the spirit of Bretton Woods through the use of the lawyer as poet to finesse such issues made all that more difficult after the social consensus of the New Deal has been broken by the Reagan revolution at home, and abroad American power is waning.

Today's differences are that much harder to reconcile no matter how much poetry lawyers may have in their souls--especially when the members of the WTO fear standards as deal breakers on trade issues, and outsiders brought to the table still see the WTO as an organization without either law making ability or enforcement capabilities.

Not only is it an organization run by a judiciary. The legitimacy of its pronouncements are not only made weaker by the breakdown of the social consensus that may have existed after WWII but also by an ever growing body of people who don't support free trade as practiced today.

Surely, finessing this situation through the law as poetry is weak tea. Lawyers finding ways to bring outsiders into the WTO does help improve the problem of WTO legitimacy, but it remains an organization ill suited to handle value questions.

Unless one can make the argument that WTO practices have little effect on the economic morality of nations, wouldn't it be better to scrap the WTO and start over with international governmental bodies like the EU which are better suited to resolve both value and trade questions than to maintain the WTO whose trade regime acts to undermine not only values but legitimacy. For instance actions that made sense within the EU are made non sense by actions within the WTO. Why, for instance, support the right of labor to free association and then allow businesses to hollow out that right with WTO allowances.

Better a bevy of interlocking international organizations with governmental powers than one WTO.

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[lachou]

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[Volumerates]

For instance actions that made sense within the EU are made non sense by actions within the WTO. Why, for instance, support the right of labor to free association and then allow businesses to hollow out that right with WTO allowances.

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raf sistemleri

Thanks.

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Raf
raf

Thanks ...

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Raf Sistemleri
raf

Good Work !!! Old man ...

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Many places and centers offer business and trade promotions to both buyers and supplier.What about the differences in skill intensities across industries? The job losses in the relatively unskilled-labor intensive battery industry should have little effect on the relatively skilled-labor intensive machinery
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