Wednesday, October 29, 2008

"finishing the Doha Round WTO negotiations would both provide a boost to the world economy "

Matt Yglesias downplays the importance of free trade and Doha:

"Trade is an interesting subject, but it just not a policy area likely to shift a great deal over the next few years no matter who wins. The most important trade-related thing we could do at this point has to do with agriculture, but structural issues in American politics that have nothing to do with the identity of the President make it very unlikely that anything will change. If you really care about moving the ball forward, trade-wise, what’s needed is some smart ideas about practical approaches to farm policy reform."

This clearly seemed a mistake, and so I commented:

  1. Don the libertarian Democrat Says:

    The trade issue will be important because of, for example, the current currency crisis, collapse of commodity prices, and credit drying up in the smaller countries.

Today on Vox I found this:

"The effects of the global slowdown will be particularly felt by the developing countries who benefited greatly from high global growth and falling trade barriers. Asian and Latin American exporters of manufactures were the great winners of previous rounds of trade liberalisation and commodity exporters in Africa and Latin America greatly benefited from the recent boom in commodity prices that is now coming to an end. Conversely, these countries stand to lose particularly if there is no progress and maybe set-backs in global free trade. A successful Doha round should focus particularly on removing remaining barriers to trade in manufacturing in rich and emerging markets, and on removing trade barriers and distorting agricultural policies such as direct subsidies to producers or export subsidies in industrialised countries. If, additionally, poor developing countries will be given the opportunity of preferential access to markets in rich and emerging nations, support to promote their trade and export infrastructure and institutions, and time-limited transfers to deal with the adjustment costs of rising food prices for food importers, all countries of the world would benefit from a successful conclusion of the Doha round.

The revival of the Doha Round will not be the magic pill to end global recession. However, monetary policy alone cannot bring back confidence to investors. The effectiveness of fiscal stimuli, while needed, might also be limited. A quick success of the Doha Round could thus be an important integral part of fostering investor confidence. Confidence in the real sector of the economy will emerge; but particularly confidence that spirals of regulations, spreading from the financial to the real sector will not occur. At the same time, government action would also instill confidence in the ability of political actors to work together in reducing the impact of a global slowdown and in demonstrating the ability of the world political community to see this crisis as an opportunity to look beyond short-sighted interests to lock in long-lasting benefits to the world economy."

I couldn't agree more. Please read it.

Free Exchange earlier endorsed this as well:

"World leaders should seize the moment and "buy" these options now by finishing the Doha Round negotiations. This would send a great positive signal that they are aware that coordinated action is needed on the current account as well as the capital account."

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