Trading Up

They'll never receive a badge of courage for it, but European Union leaders and President Bush have stuck their necks out lately to expand global free trade.

On a campaign swing through key Midwestern states, Mr. Bush tried to convince voters - many of them government-supported farmers or workers laid off after their jobs went overseas - that Americans can retool themselves or their businesses to compete in a more globalized economy.

And he's told his chief trade negotiator that he wants a new global trade pact by July, despite the coming election.

Then last week, European Trade Commissioner Pascal Lamy made a dramatic concession by proposing to eliminate export subsidies to farmers in the 25-member EU. That agricultural aid, costing taxpayers more than $3.6 billion a year, was a main reason that talks to create a new global pact collapsed last September in Cancún, Mexico. Developing nations said they wouldn't even begin to make trade concessions if their farmers had to compete unfairly with subsidized rich farmers in the West who can flood world markets with their products.

Now the EU has followed a US move made last January and laid a critical portion of its agricultural aid on the table as another trade barrier to be cut down. The move has given new life to the so-called Doha round of multilateral negotiations. Those talks are meant to further open up markets in agriculture, services, and other sectors that the 1994 creation of the World Trade Organization failed to address.

While the EU offer comes with some conditions and faces the ire of French farmers, the EU's current leaders nonetheless decided they couldn't take the blame for Doha's failure on their watch (the talks faced a December deadline). And with the global economy growing again, making trade concessions is easier. Most of all, freer trade is seen as uplifting poor nations to make them less susceptible to worldwide problems such as AIDS and terrorism.

The main burden in the negotiations now falls on poor nations. They must propose cuts in tariffs. It's not easy to show the future benefits of expanded trade while facing the transitional costs of helping farmers or workers adjust. It takes courage to stand up for open markets and people's ability to be globally competitive.

You've read  of  free articles. Subscribe to continue.
QR Code to Trading Up
Read this article in
QR Code to Subscription page
Start your subscription today