Tue, Jul 06, 2004 - Page 8 News List

A few more cheers for free trade

By Chao Wen-heng 趙文衡

Western Economics regards free trade as an important facilitator of both human welfare and the improvement of society. Free trade promotes more efficient application of resources, and information and technology can be broadcast and disseminated anywhere on the globe.

Free trade also encourages competition in terms of both quality and price, not only allowing cheaper and better products to be made, but also the continual advancement of society. Globalization has meant that the idea of free trade is no longer just accepted in the West: it is gradually being adopted throughout the world.

Unfortunately, despite the fact that the value of free trade is universally recognized, the actual realization of the idea is proving to be more problematic. The failure of the WTO meeting in Cancun showed that nations were sacrificing the long-term benefits of free trade for what they could milk out of each other in the short term. This was somewhat frustrating to advocates of the concept. It was this state of affairs that induced some to place their hopes for free trade in the establishment of free trade areas (FTAs). If an FTA is open to other states and can retain the conventions of the WTO, it can attain the ideal of free trade -- albeit with a few side effects.

With the stagnation of access to the WTO, even countries such as the US and Japan, which have consistently advocated the freeing of trade with a multilateral trade network, are rethinking their positions and beginning to join in free trade area agreements.

Another problem is that the majority of decisions to join in free trade agreements are in the hands of the various nations' strategists and financial experts, resulting in a process that is rife with schemes and calculations. As each FTA has relatively few signatories, there are a correspondingly large number of items to agree on. The countries involved start calculating which free trade partner will give them maximum benefit, and rank them accordingly.

What nations don't seem to realize is that their calculations are based on short-term benefits. In fact, the real benefits of free trade only become apparent only in the longer term. With this perspective, any ranking according to per-ceived benefit becomes irrelevant. Any country that applies itself to the practice of free trade will reap the overall benefit in the long term.

In practice, the process of signing free trade agreements has already descended into a kind of game in which players scramble for maximum gain. Strategists have begun to wield free trade as something with which to barter for what they want, be it securing peace at national boundaries, procuring material resources, buying friendly relations or even obtaining weapons. The ideal of free trade -- which can be a universal benefit to the human race -- is repeatedly being sold off below its worth.

What's more, during the course of this bartering process free trade's worth is being consistently devaluated. If this attitude of "if you want us to reduce tariffs, you'll have to pay the price" becomes the norm, how can we expect the WTO to make any progress?

So what of those who truly want to practice free trade: those extremely rare countries which really believe that free trade is an end in itself and not just a bargaining chip? In their attempts to achieve trade without barriers they have to deal with other countries which want something else in exchange. Is Taiwan among this small group of countries? The answer is yes, but unfortunately Taiwan, like many other nations, has found itself at the wrong end of this "exchange culture."

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