Sunday, July 20, 2008

Free trade could ease global recession

In a couple of weeks time the Doha round will stagger on. If the governments of the EU, USA, Japan and poorer countries were rational actors they would treat this as an opportunity, a huge one - to inject some growth into the world economy. The Daily Telegraph tells how important this is.

It would be a chance for the price of food to be relieved by multilateral agreement to abolish agricultural export subsidies, to end non-tariff barriers on agricultural trade, and move towards decreasing tariffs and domestic subsidies. That requires the EU, Japan and the US - whilst Barack Obama seems distinctly unenthused.

It would be a chance for developing countries to respond in kind by reducing their tariffs and non-tariff barriers to manufactured goods and services. That requires India, Brazil and African states.

However there isn't much chance for optimism. In the US, the Democrat led Congress is in protectionist mode, and in the EU Nicolas Sarkozy as EU President is really not interested at all. Meanwhile, the Observer reports how Oxfam and ActionAid are showing their socialist colours, with little interest in the Doha round. It also presents Haiti as an example of how liberalising agricultural trade can go wrong - which of course, ignores the truth that without EU, the USA and Japan liberalising as well, and without the rest of the economy opening up, then Haiti was only going to be half successful.

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