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May 22, 2007
Needed -- a new trade policy - part 5
In a bipartisan statement -- Changing the Global Architecture - WSJ.com -- Stu Eizenstat and Grant Aldonas make an important point about the future of our trade system:
Regardless of whether the Doha Round succeeds or fails, the era of traditional global trade rounds that require a consensus of some 150 nations is over. The world economy is changing too rapidly to wait five to seven years only to agree on the lowest common denominator.
After Doha, it will be time for a new approach, one that brings together like-minded countries to develop a range of different agreements, in the form of a "variable geometry" within the WTO. This will allow those governments willing to move forward, and with the most at stake, to take responsibility for reducing barriers rather than forcing them to wait until consensus is achieved among all.
As a start, the EU and U.S. should give developing countries greater access to the trans-Atlantic marketplace. The current arbitrary and often conflicting rules the U.S. and EU impose on their preference programs should be replaced by a single set of rules that assures consistency and the greatest degree of market access.
The EU and the U.S. should also rally like-minded countries to eliminate barriers to trade in products and services over the next 10 years. As reductions are agreed, the benefits would be extended to all WTO members using the existing "most favored nation" principle. If countries stay on the sidelines as free riders, products crucial to their economies should be excluded from the benefits of liberalization. Moreover, the EU and the U.S. should recruit other WTO members to liberalize market access in specific sectors, especially those dominated by new technologies such as nanotechnology. These sectoral accords should be premised on strict adherence to WTO rules.
I have long advocated shifting to a more sectoral approach (see After Doha: What The WTO Is Not Talking About). The trick here, as they warn, is not settling for the lowest common denominator. Trade policy has moved beyond trade. It is harmonization of economic regulation. That calls for harmonizing upward (see Tom Palley's comments on that -- Globalization Lock-in: What Should Be Done?).
But, what is upward? As Dani Rodrik has commented:
For one thing, where does harmonization start and stop? If it is OK to harmonize on labor, does that also make it OK to harmonize patent laws, and vice versa? And what exactly in labor do we harmonize? And for another, what if other countries do not want to harmonize their policy regimes with the U.S., because they feel this would hurt their own development prospects?
It seems to me that a robust international economic regime has got to leave enough room for different countries doing their own things. The push for economic globalization is narrowing that space--both from the left (labor harmonization) and the right (patents). So maybe the solution is to reconfigure the balance between international obligations and domestic policy space--and not to build more railroad tracks until we do so.
Rodrik is right to use patents as a good example. For a good discussion of how this is working with respect to patents, see James Surowiecki's New Yorker piece Exporting I.P.. We are attempting to export our patent system at the same time we are trying to reform it here at home.
That is a very difficult trick to pull off. And, just as the addition of labor rights to trade deals has highlighted our own lack of complete compliance with ILO standards, our trade offs on patents will set the tone for future negotiations. Yes, everyone needs some room to do there own thing. But standards are standards. We need to make sure we have our own standards right before we start exporting them -- realizing that changes will be made in the process. The last thing we need is to come back in a few years and tell our trading partners - "oops we changed our minds."
Posted by Ken Jarboe at May 22, 2007 12:30 PM
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