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World Trade Disorganization

© Carey Goodman

It was supposed to be the meeting where the WTO proved to its critics that the group actually could accomplish something of substance at its annual conference. It was supposed to be the meeting where the WTO proved it could comply with its self-imposed deadline to end the Doha Round by 2005. Instead it was the meeting where the WTO proved none of these things.

What happened to the trade ministers in Cancun? The Mexican hosts generally managed to keep the throng of protesters at a respectable distance. There was no "S-12" event to replace the continuing annual "N-30" rallies, but the final reports from the WTO meeting in Cancun leave one to wonder: Would the ministers have accomplished more if an "S-12" event had occurred? Surely they could not have accomplished less.

Taken at its logical basis, global free trade should be very easy: Good-bye, regulations; hello, laissez-faire. This simplicity rapidly collapses in the realm of reality for three reasons: (1) States need revenue that they can only collect through taxation, and taxation begets regulation. (2) No pure laissez-faire system has ever existed because of the explanation in reason (1). (3) If a pure laissez-faire system were to emerge, the Malthusian principle would be validated very quickly, and states would impose regulations to halt that crisis; those regulations would replace the "invisible hand" which otherwise would guide market forces.

Before we dash to publish the obituary for free trade, a few other acknowledgements are in order. The main cause of the chaos in Cancun can be summarized succinctly by one word: "greed". That greed emanated from the so-called G21.

The G21 is a newly created group of the most advanced developing states such as China, India, and Brazil. The G21s main purpose of existence is to force the developed states to make numerous concessions - particularly in relation to agricultural issues - without reciprocal concessions by the G21 states. Coincidentally (or perhaps not so coincidentally), all the G21 states have governments that are either officially communist or staunchly socialist. In other words, the G21 dislikes pure capitalism.

This leads to the question of whether it is hypocritical for states to undertake the task of creating a global free trade system. States have too much self-interest in the process of negotiating trade issues - which is why most trade agreements read more like a list of preferences and fantastical wishes than a reflection of actual conditions.

Then emerges the particularly messy matter of regional trade blocks. The discussion is no longer of whether a state supports or opposes free trade. The main issue now is how many and which trade groups has that state joined. These regional trade blocks have created a situation which is the equivalent of exclusion or inclusion in "the right" clubs. "You are not one of us, so our group will do all we can to get all we can from your group" is the general attitude. Regional trade blocks harm the process of globalization much more than they aid it.