US Trade Policy, "Do as We Say, Not as We Did"

by Mark Weisbrot

"Do as we say, not as we do," is the advice from the United States to the low- and middle-income countries of the world when it comes to trade. Lately the press has taken aim at this aspect of modern colonialism. They have pointed out the hypocrisy of the US and other rich countries subsidizing their agriculture or protecting their steel or textile industries, while demanding that countries as poor as Ghana open their markets to goods and services from the North.

This allows the punditry to fancy itself the champion of the world’s poor, joining hands in righteous indignation with the leaders of the world’s most powerful economic institutions: the International Monetary Fund, World Bank, and the World Trade Organization. The same rules should apply equally to all, they proclaim.

Or as Anatole France once said, "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."

But how much will the world’s poor really benefit from increased access to the markets of the rich countries? And is this really the best way to level the playing field — "free trade" for everyone?

As often happens with debates about economic policy, few of the people writing and chattering about the subject bother to look at the numbers. For example: imagine that the rich countries of the world open all of their markets for merchandise trade– agriculture, textiles, steel, everything. This would be phased in by 2015. How much more annual income would the low- and middle-income countries have in 2015 as a result of this increased access to the markets of rich countries?

According to the World Bank, the answer is about 0.6 percent. The poorer countries would not get their fair share, but imagine that they did: a country in Sub-Saharan Africa whose income per person would otherwise be $500 a year would, as a result of this trade liberalization, have $503. Not much to write home about.

In fact, according to other widely-used economic models, many developing countries will actually wind up with a net loss from the liberalization of agriculture and textile trade that was agreed upon at the WTO’s creation in 1994.

But it gets worse. The WTO doesn’t just make and enforce trade rules. It has a seamier underside — the highly protectionist agreement known as "TRIPS" (Trade-Related Aspects of Intellectual Property Rights). The goal of these rules is to get the low and middle-income countries to obey patent and copyright laws that are made in the USA and Europe.

Economists haven’t spent too much time looking at what this will cost developing countries. But preliminary estimates (again from the World Bank) indicate that this one form of protectionism could easily exceed the gains from trade liberalization.

And there are other serious concerns that people in developing countries have about implementing the rules of "free trade," as it is commonly and inaccurately labeled. In many countries a large part of the labor force, sometimes the majority, is still employed in agriculture. In the United States we went from 53 percent of our labor force in agriculture in 1870 to 4.6 percent in 1970, and yet the displacement of people from the countryside still generated much pain and serious social unrest. Imagine what would happen if this century-long process were collapsed into a couple of decades, as advocated by the WTO (along with the IMF and World Bank) for much of the world. This is a recipe for social explosion.

The truth is that equalizing the enforcement of bad rules will not make the world better off, any more than spreading street crime from poor to middle-class neighborhoods would. If we look at the few countries that have made it out of poverty in the last half-century — for example South Korea or Taiwan — they didn’t get there by adhering to the "Washington Consensus" of free trade and unrestricted foreign investment flows. Quite the contrary: their governments protected, subsidized, and even created key industries, and intervened heavily to move their economies into higher technology, higher value-added production.

Of course we did similar things when the United States was a developing country, with an average tariff of 44 percent on manufactured goods as late as 1913. Not to mention "borrowing" technology from wherever it existed in more advanced form, ignoring foreign intellectual property rights. "Do as we say, not as we did."

Mark Weisbrot is co-Director of the Center for Economic and Policy Research in Washington, D.C. He is co-author (with Dean Baker) of Social Security: The Phony Crisis (University of Chicago Press).

Weekend Edition
October 9-11, 2015
David Price – Roberto J. González
The Use and Abuse of Culture (and Children): The Human Terrain System’s Rationalization of Pedophilia in Afghanistan
Gary Leupp
The Six Most Disastrous Interventions of the 21st  Century
Mike Whitney
Putin’s “Endgame” in Syria
Jason Hribal
The Tilikum Effect and the Downfall of SeaWorld
Paul Street
Hope in Abandonment: Cuba, Detroit, and Earth-Scientific Socialism
Andrew Levine
In Syria, Obama is Playing a Losing Game
Louis Proyect
The End of Academic Freedom in America: the Case of Steven Salaita
John Feffer
Mouths Wide Shut: Obama’s War on Whistleblowers
Conn Hallinan
Portugal: Europe’s Left Batting 1000
Brian Cloughley
Hospital Slaughter and the US/NATO Propaganda Machine
John Walsh
For Vietnam: Artemisinin From China, Agent Orange From America
Robert Fantina
Canadian Universities vs. Israeli Apartheid
Paul Craig Roberts
The Impulsiveness of US Power
Philippe Marlière
Class Struggle at Air France
Binoy Kampmark
Waiting in Vain for Moderation: Syria, Russia and Washington’s Problem
Paul Edwards
Empire of Disaster
Margaret Knapke
These Salvadoran Women Went to Prison for Suffering Miscarriages
Cesar Chelala
The Perverse Rise of Killer Robots
Halyna Mokrushyna
On Ukraine’s ‘Incorrect’ Past
Walter Brasch
Mass Murders are Good for Business
William Hadfield
Sophistry Rising: the Refugee Debate in Germany
Christopher Brauchli
Why the NRA Profits From Mass Shootings
Pete Dolack
There is Still Time to Defeat the Trans-Pacific Partnership
Andre Vltchek
Stop Millions of Western Immigrants!
Dave Lindorff
America’s Latest War Crime
Ann Garrison
Sankarist Spirit Resurges in Burkina Faso
Cesar Chelala
The Perverse Rise of Killer Robots
Franklin Lamb
Official Investigation Needed After Afghan Hospital Bombing
Linn Washington Jr.
Wrongs In Wine-Land
Charles R. Larson
Prelude to the Spanish Civil War: Eduard Mendoza’s “An Englishman in Madrid”
October 08, 2015
Michael Horton
Why is the US Aiding and Enabling Saudi Arabia’s Genocidal War in Yemen?
Ben Debney
Guns, Trump and Mental Illness
Pepe Escobar
The NATO-Russia Face Off in Syria
Yoav Litvin
Israeli Occupation for Dummies
Lawrence Davidson
Deep Poverty in America: the On-Going Tradition of Not Caring
Thomas Knapp
War Party’s New Line: Vladimir Putin is Why We Can’t Have Nice Things
Brandon Jordan
Sowing the Seeds of War in Uruguay
Binoy Kampmark
Imperilled by Unfree Trade: the TPP on Environment and Labor
John McMurtry
The Canadian Elections: Cover-Up and Steal (Again)
Anthony Papa
Coming Home: an Open Letter to 6,000 Soon-to-be-Released Drug War Prisoners From an Ex-Con
Ramzy Baroud
Listen to Syrians: The Media Jackals and the People’s Narrative
Norman Pollack
Heart of Darkness: A Two-Way Street
Gilbert Mercier
Will Russia, Iran, Hezbollah and Iraqi Shiite Militias Defeat ISIS in Syria and Iraq?
John Stanton
Vietnam 2.0 and California Dreamin’ in Ukraine
William John Cox
The Pornography of Hatred