WTO processes must begin with domestic decisions to secure the gains from liberalising domestic markets, and culminate in international negotiations, not the other way around.
Multilateral trade negotiations continue to be, unfortunately, the accidental result of a balancing act between the requests of foreigners and domestic pressure groups, rather than instruments of change that will bring benefits for all participants.
Without more focus on domestic reform, and greater recognition that a domestic policy response is needed, they will remain this way
My full article can be found here(pdf).
—
See also:
East Asia Forum has hosted related articles by Bill Carmichael and others. They can be found here.
and What should world leaders do to halt protectionism from spreading? by Hadi Soesastro
I found the Vox eBook to be disappointing because of the failure of most contributors to address the questions of why protectionism is a greater threat in the current international economic environment and what can be done about the causes of this problem.
It might obvious to the contributors to the eBook that in the present environment an increasing number of people view jobs as being more important than international trade. It might also be obvious to most of them that the idea that trade is opposed to jobs is sophistry. However, their failure to discuss these problems means that their recommendations amount to little more than an exhortation to governements to “repent for the end of the world is nigh”.
There is a prior problem with the G-20 commitment. Recall that it was heads of government who made the commitment: within a short time, at least 5 of the 20 countries (Russia, India, Brazil, Argentina, and the U.S.) had already taken new protectionist measures. If they won’t keep a commitment for even a month, how credible is the G 20? Anne Krueger
The basic point is valid — protection is an endogenous policy choice, so changing the choice requires a change in the factors affecting the decision-making. Or, better institutions and decision making rules lead to better policy.
By way of defence of the Ebook, it was written to address a specific situation and raise awareness about a rapidly changing situation. If it had consisted of 15 essays on how to reform nations’ trade policy making machinery, it would not have been read since it would fall between the chairs of policy advice on one side and solid policy research on the other — e.g. a careful cross-country empirical study of policy and policy making institutions. Plainly the world needs lots of both, but on 4 December 2008, the world needed the advice much more than it needed policy research.
By the way, much of the Ebook concerns Doha, but with that in a deep sleep, it is time for Plan B. Simon Evenett and I have put forth some ideas on VoxEU.org (http://voxeu.org/index.php?q=node/2692).
It would be great to get reactions.
Anne Krueger is right. There was a prior problem that rendered ineffectual the G20 leaders’ commitment to resist protectionism. The domestic transparency response proposed by Australian and New Zealand business and industry organisations, via the Tasman Transparency Group (TTG), deals directly with it. Recent protectionism has arisen, as it always does, from the adjustment-averting pressures all governments face from uncompetitive domestic interests. It is the unchecked influence of those pressures, in the domestic policy environments of G20 leaders, that has caused a number to renege on their collective commitment. The domestic transparency response recognises that these pressures (the causes of protectionism) operate in the domestic political arena, focus on domestic policy issues, and exercise power over domestic decision-making. That response is grounded in the reality that international commitments to resist protectionism, including the commitment made by G20 leaders, will remain just that— commitments–unless the domestic causes of protectionism are addressed squarely. This response to protectionism is relevant now, and will be just as relevant when the present crisis passes. I know that Anne doesn’t need to be told this. But it needs to be said, because others may see her comment as a reason for throwing up their hands and deciding that it is all too difficult. That seems to be the collective response of Australia’s trade officials, and may well be the response of their colleagues in other countries.’