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Antidote to World Trade Center Bombings: Open Markets, Open Trade It has rightly been said that the WTC terrorists carefully selected their target to strike at the heart of American life and liberty. It is no coincidence their target was the very nerve center for our global system of free trade, and that many of the victims died practicing a way of life characterized by open markets and open competition. It is also no coincidence that people around the world rushed to identify with America in its tragedy, demonstrating a common sense of vulnerability based on a shared system of values. Almost overnight, post-attack plunges in stocks, consumer confidence and entire economic sectors have revealed just how fragile that system actually is. Before the bombings, many of us had assumed that the tremendous gains of the US economy in the nineties would continue forever, that incremental growth in international trade would invest the "peace dividend," ensuring growth for developed and developing worlds alike. Today we follow a new imperative to actively extend the benefits of our system to sections of the world where huge majorities remain dominated by anti-competitive elites, trapped in the kind of poverty and resentment where terror breeds. Our forebears emerging from the rubble of World War II realized that trade was the driver for rebuilding the world and keeping it at peace. They supported an international trade system now encapsulated in the rules that underpin the World Trade Organization (WTO). Today, in an environment of heightened global conflict, it has become necessary to restrict selected human and capital flows to combat terrorism. Let us not be prevented from simultaneously unleashing the single most powerful engine the global economy has for creating wealth and increasing prosperity for the great mass of people in rich and poor nations alike: free trade. Extending free trade is our world's best hope for generating the kind of shared prosperity that permanently undermines terrorism. Every attempt to close borders in history has led to anguish and resentment among those trapped behind those borders and the buttressing of an unpopular, uncompetitive elite that controls the country. It is time to stand up to those who peddle the myth that open trade somehow takes from the poor and gives to the rich. It's time to unite behind the realization that only through free trade, open markets and fair competition can the lot of all people be lifted. All people, everywhere in the world, deserve open access to new ideas, goods and services. There is an undeniable unity of interest between the industrial exporter and the consumer newly empowered by improved local competition on product and price. Those who would cordon off poor countries from this kind of consumer empowerment and choice are, in the words of former President Zedillo of Mexico, "strangely determined to save the developing world from development." As we respond to the newly demonstrated vulnerability in our open system, America and its global trading partners must fight the urge to close borders and retrench. These are the steps we can and must take to open up new markets and expand access to existing ones: 1. The US Congress must enact trade promotion authority (TPA) for the president. House Ways and Means Chairman Bill Thomas has proposed a bipartisan solution to get long-delayed TPA legislation moving. The mark-up process this week should ensure that TPA does not unduly restrict our trade negotiators or antagonize our trading partners. 2. The World Trade Organization needs to launch another round to broaden the free trade community and remove trade barriers. The need to launch a new WTO round has taken on greater urgency as a result of the terrorist attacks and the global recession looming before us. In this round, both the major trading regions, the EU and US, need to demonstrate a willingness to negotiate on all points, and not take anything off the table, including agricultural subsidies and anti-dumping laws. The EU's particular difficulty is its Common Agricultural Policy. Commentators have noted that an economy equivalent to the size of Spain is frittered away each year from the EU's gross domestic product simply because of agricultural trade barriers. However, internal pressures against the CAP will only increase as more farm-based states from Central and Eastern Europe are added to the Union. Additionally, EU consumers are starting to voice their concerns over the costs of the CAP. In a climate in which developed countries are looking to bring developing countries on board with the idea of a new round, the EU should expect to give up something in agricultural negotiations, particularly to Latin American agricultural exporters, who face a CAP double whammy. First, they can't get their products into the EU, and second, because of export subsidies given to EU farmers, commodity prices globally have crashed. Fair market access and a market-based commodity price for its agricultural exports would certainly be a powerful shot in the arm for Argentina in its current economic crisis, and so the pressure will certainly be on the EU to reform, starting with its network of agricultural export subsidies. 4. The new WTO round must be sufficiently broad to allow negotiators to make the necessary trade-offs to appease domestic constituencies. However, this broader round is not just necessary to allow the EU and US to make trade-offs. Some of the broader agenda items like competition and investment are also critical to the well-being of developing countries. Some form of multilateral discipline in the area of competition (especially regarding public sector anticompetitive practices) will help those countries move to more market-based economies. The WTC bombings heralded a war that will be fought by all those who believe that competition in all its forms makes us better, against all those who raise barriers to trade, impeding competition and harming the very people they claim such barriers protect. To win the war and combat terrorism, it is not sufficient to freeze the funds already in the system. We must stop the future flow of funds and we must help the marginalized majorities in developing countries who hear only the voice of bin Laden and others like him to hear a different voice. We can do this by helping the leaders of developing nations deliver to their people the gains-and not just the risks-of free enterprise by giving them free and fair access to world markets. With the prosperity produced by free trade, we can extend the borders of our global community to include many millions of new voices in support of an open society and open markets. It is these voices who will free the minds of those enslaved by the terrorists' message, breaking the chains of poverty and fear that are the terrorists' strongest weapons. Shanker Singham leads the International Trade and Competition Group at Steel, Hector & Davis LLP in Miami. |