Protectionist sentiment and fear of globalization are on the rise. In the US, presidential candidates appeal to anxious voters by blaming the North American Free Trade Agreement (NAFTA) for the erosion of the country's manufacturing base. Liberal trade initiatives have run into trouble in Congress, while new trade barriers have been mooted for products flooding in from China.
Things are no better in Europe. France has dealt the Doha round of WTO negotiations a blow by rejecting the outline deal on agriculture. European Commission President Josi Manuel Barroso believes that protectionist pressures are increasing.
When the Doha trade round was launched shortly after Sept. 11, 2001, there was plenty of international goodwill. But disenchantment with globalization -- and, in some regions, fear of immigration -- has since set in.
A recent Financial Times/Harris poll in the US, Germany, France, the UK, Italy and Spain found people nearly three times more likely to say that globalization is negative than positive.
Free trade would lead to an overwhelming boost to welfare everywhere, but especially in the developing world.
Grasping these benefits is potentially one of this generation's greatest challenges. Increased negative sentiment could have the worst possible result: not just Doha's failure, but also the raising of trade and immigration barriers.
These barriers remain largely because further liberalization would redistribute jobs, income, and wealth in ways that governments fear would reduce their chances of remaining in power -- and their own wealth in countries where corruption is rife.
The greatest hope is thus getting the Doha round back on track.
But there is a big difference between a low-quality result and one that is more comprehensive.
If little more is achieved than phasing out farm export subsidies and a modest reduction in agricultural domestic support, our analysis shows that developing countries as a group would gain nothing, while high-income countries would gain just US$18 billion per year by 2015.
By contrast, if developing countries cut their tariffs by the same proportion as high-income countries, and services and investment were also liberalized, the global annual gains could climb as high as US$120 billion, with US$17 billion going to the world's poorest countries. Moreover, the long-term impact of free trade is huge.
Recast as after calculating the net present value of the stream of future benefits, a realistic Doha outcome could increase global income by more than US$3 trillion per year, US$2.5 trillion of which would go to the developing world.
In addition, the experiences of successful reformers like South Korea, China, India, and Chile suggest that trade liberalization immediately boosts annual economic growth rates by several percentage points for many years.
Eliminating subsidies and trade barriers would mean that resources could be used more efficiently, so there would be more scope to reduce inequality and poverty, social tensions, environmental degradation, malnutrition, and disease.
There would, of course, be costs.
Firms and workers would need to adjust as reform forces some industries to downsize or close and allows others to expand.
In addition, there are social costs to consider. Yet the benefits of a successful Doha round are between 45 and 440 times higher than these costs. This is clearly an extremely sound investment.
An "alternative" to Doha, whereby other high-income countries would follow the EU's offer of duty-free access to products from least-developed countries and small African, Caribbean and Pacific countries, would involve only a tiny fraction of global gains from trade reform.
Moreover, it may well hurt other poor countries -- thereby worsening inequality -- by encouraging resources to be allocated to activities that become uncompetitive following the next WTO agreement.
If trade liberalization in goods and services proves too politically difficult to achieve in this decade, the benefits of liberalizing international labor flows is worth contemplating ? not least because otherwise illegal migration is likely to increase.
Historical experience shows that migration is the fastest way to bring about a convergence in living standards.
We examined the costs and benefits of an expansion in international migration over a 25-year period, amounting to a 3 percent boost in host countries' labor forces by 2025.
The costs would include one-off expenses to migrants: transport, obtaining visas and permits, and finding housing, schooling and employment, as well as the emotional cost of separation from family.
There are also one-off costs to host-country governments, such as processing applications and providing initial help with housing and welfare.
These costs have been estimated at between US$14,000 and US$42,000 per worker and family (shared equally by migrants and host governments). The global net benefit of the increased flow of migrants for 25 years is between US$13 trillion and US$39 trillion -- close to the median estimated gains from the Doha round.
The benefits are between 28 and 220 times higher than the costs.
Even if freeing up immigration multilaterally seems too difficult to include as part of a Doha round agreement, individual countries could do so unilaterally with the stroke of a pen.
The economic logic is compelling: removing trade and migration barriers would be an exceptionally wise investment. The real hurdle is getting this message across to politicians and voters.
Kym Anderson is professor of economics and foundation executive director of the Centre for International Economic Studies at the University of Adelaide in Australia while on leave from his job as lead economist from the World Bank. Bjorn Lomborg is the organizer of Copenhagen Consensus and adjunct professor at the Copenhagen Business School.
Copyright: Project Syndicate
For millennia, stratagem and deception have been baked into Chinese strategic culture and statecraft. So it is imperative to consider the risks of Chinese deception regarding theater or tactical nuclear weapons of under 5,000 kilometer range. Centuries before the birth of Christ, Chinese military experts who contributed to the eventual Sunzi Bingfa (孫子兵法), or The Art of War, attributed to Master Sun, had concluded that “All warfare is based on deception.” Often referenced in the West as if reduced to cliche, Sunzi Bingfa is of paramount importance to the Chinese Communist Party (CCP) and its People’s Liberation Army (PLA). This fact goes far to
At a time when economic globalization has been pronounced dead by economists and industry insiders, Taiwanese semiconductor companies have once again expanded internationally to enhance supply chain resilience, minimizing risks from geopolitical tensions and pandemics. Taiwan Semiconductor Manufacturing Co’s (TSMC) expansion caught the world’s eye. It launched its first Japanese chip manufacturing facilities in Kumamoto, Japan, on Feb. 24, through Japan Advanced Semiconductor Manufacturing Inc (JASM), in which TSMC owns a majority stake. When the fab begins mass production at the end of this year, the construction of a second Japanese fab, in Kumamoto as well, is also planned. Together
An online petition started by a doctor in Taichung called on lawmakers to halt an amendment that would shorten the time needed for Chinese spouses of Taiwanese to gain citizenship in Taiwan. The amendment could put a strain on Taiwan’s already burdened National Health Insurance (NHI) system, Cheng Ching Hospital thoracic surgery division doctor Tu Cheng-che (杜承哲) said. Doctors have seen many Chinese spouses bring their relatives to hospital emergency rooms, asking for full checkups, he added. “They [Chinese spouses] even tell their relatives that healthcare in Taiwan is free and is easily accessible, and that healthcare providers in Taiwan
Taiwan Semiconductor Manufacturing Co (TSMC) held an opening ceremony for its first chip manufacturing fab in Kumamoto, Japan. It is owned by a joint venture, Japan Advanced Semiconductor Manufacturing Inc (JASM), of which TSMC is the controlling shareholder. TSMC founder Morris Chang (張忠謀) attended the ceremony, saying that the JASM fab would “improve the resilience of the chip supply for Japan and for the world” and “start a renaissance of semiconductor manufacturing in Japan.” Former Japanese prime minister Shinzo Abe once said: “A Taiwan emergency is a Japanese emergency, and therefore an emergency for the Japan-US alliance.” The statement assured the
RSS