Last month we examined the disconnect between U.S. trade deficits and domestic employment, as flavored by the philosophic dispositions of House and Senate Members regarding free trade juxtaposed the twin evils of industrial protectionism and subsidies. This month it is appropriate to evaluate the corollary problem of how the U.S. economy fits into the regime of World Trade Organization, its rules and regulations to which the last two Administrations subscribe, and relate to U.S. trade policies covering protection and subsidy. It seems nobody's view of WTO portends a bright future, and the reasons are quite simple. Regardless of country, industry and government connive to favor their own and all are blatantly dishonest about adherence to rules of the game. Unfortunately, our American team is one of the most egregious violators of rules, their spirit and actuality.
A new round of trade talks began in January 2003, called the Doha Round due to its location in Qatar. According to Razeen Sally of the London School of Economics and Political Science, the look ahead could follow three probable scenarios. The first is a return to principles of GATT (General Agreement on Tariff and Trade) that enhanced trade processes over the past several decades. This trend is led by globalizers, about two dozen nations, such as Hong Kong, Singapore, Chile and New Zealand, that have grown and whose survival depends on trade; they require the progressive reduction of barriers, often spurred by unilateral liberalizations. A cross current lies in the trend to create regional trade agreements (RTAs) that have proliferated since the early 1980s; 170 are now in force and 250 are expected by 2005. NAFTA is an example, and while there is no evidence that RTAs retard trade or distort foreign investment, the worry is that if they coalesce into defensive blocs, they could bring harmful effects to developing national economies.