Just before the London G-20 Meeting in April, Andy Stoler and I wrote a paper for a booklet published by the Center for Economic Policy Research in which we suggested that the best way to make G-20 governments live up to their promises was to expose their misdeeds on trade policy—including those that nominally complied with their WTO obligation—using a public website.
Specifically, we recommended that the site should not be run by one of the global institutions (WTO, World Bank) that are owned by governments, but should be a private venture open to contributions from individuals around the world. Why? Well, as the FT notes, in an editorial today, sovereigns are not likely to put much pressure on themselves:
“The problem with naming and shaming wrongdoers is that, all too often, they turn out to be shameless.” Extract from Financial Times
I am delighted to learn that the co-editor of the booklet (Simon Evenett) and the publishers (CEPR) have created just such a website: Global Trade Alert. It has been launched in the past couple of weeks with the backing of institutional sponsors (government funds, mostly) and an advisory board of distinguished analysts. GTA already lists a couple of dozen measures with useful details including the trading partners and tariff lines affected (for goods measures).
A nicely implemented and potentially intriguing experiment in global transparency. Please visit and contribute.
Democracy ensures we get the governments we deserve.
Gideon Rachman seems to think we deserve only to be consoled for the political dilemma of G20 leaders rather than offered real solutions to the frailties of the global trade framework. He agrees the problem is the threat of ‘wiggle room’ protection:
“[I]f the world’s political leaders start deliberately increasing barriers to trade, they will deepen and worsen the economic crisis – and risk making the process of deglobalisation a permanent shift. Most political leaders know this – and so they are still a little embarrassed about direct measures to increase tariffs. So a new wave of protectionism will take indirect forms.” Extract from Gideon Rachman in the Financial Times
But he’s satisfied with the appearance of collaboration to expose and prohibit protection, being convinced there’s no resolve to take real action.
“It will be tempting to laugh, if and when the communiqué from the London summit contains the familiar pledges to avoid protectionism and to complete the Doha round. But it is probably important that world leaders at least promise to follow the path of virtue – even if they know that they may sin.”
That’s too sophisticated a dish for me, GR. If you say that you’re happy to eat smoke, then smoke is what you’ll be served.
This is the worst market recession since the global trading framework was created sixty years ago. We know what the threats are, we know what it means to avoid them. Don’t we deserve more than ‘empty words’ from governments?
In our paper for the Evenett and Baldwin book on ‘murky protectionism’, Andrew Stoler and I outline a surveillance mechanism for the G20 that we think will dissuade governments from making regulations that would harm world trade (further, see the graph at left.)
The mechanism we propose has not been used previously to expose protectionism but it is certainly in use in other contexts to bring policies under the spotlight of public scrutiny.
For example, I referred a couple of weeks ago to recovery.gov which the Obama administration is using to report on ‘stimulus’ spending. Now there’s an open surveillance website that is tracking and examining projects that are candidates for some of the ‘pork’
“StimulusWatch.org was built to help the new administration keep its pledge to invest stimulus money smartly, and to hold public officials to account for the taxpayer money they spend. We do this by allowing you, citizens around the country with local knowledge about the proposed ‘shovel-ready’ projects in your city, to find, discuss and rate those projects.” Extract from Stimulus Watch: Keeping an Eye on Economic Recovery Spending
What should the G20 do, when they meet in London next month, to put an end to the growing use of what I’ve been calling ‘wiggle-room’ protection? Is ‘murky’ protectionism causing the coming collapse in trade volumes? Or will protectionism rise as a result? Supposing that they wanted to, could the G20 really crack-down on actions that close markets or discriminate against imports but are not clearly prohibited by WTO?
Richard Baldwin and Simon Evenett’s book, now available for download (free) at the VoxEU site, comprises brief essays by trade Ministers (notably, Australia’s Trade Minister, Simon Crean), high profile analysts and a number of leading trade experts.
“This ebook presents concrete steps that G20 leaders should take to avoid a negative protection-recession spiral and the threat it would pose to a global recovery.” Extract from The collapse of global trade, murky protectionism, and the crisis: Recommendations for the G20”
Andrew Stoler (former Deputy Director General of WTO) and I have a paper in the collection: “G20 surveillance of harmful trade measures” that proposes a novel but potentially highly effective ‘crowd-sourcing’ approach to the exposure of harmful ‘wiggle-room’ measures.
We propose an open, public surveillance system whose components already exist—some of them in this website among thousands of others. Unlike the WTO surveillance mechanisms of the past, it allows those who have most at stake in a prosperous global economy—firms and households in rich countries and poor—to help safeguard the global recovery. Please check it out and let me know what you think.
In this earlier post, I looked at three of the ‘old standbys’ that are likely to provide governments with all the ‘wiggle-room’ they need to increase protection while remaining nominally compliant with their WTO obligations.
This time, two more oldies but goodies that are still more likely, in my view, to figure in the coming round of trade protection. These two threaten high levels of ‘tailor-made’ protection for firms that are struggling through the recession, but they do so at the cost of lower levels of demand at home (so much for ‘stimulus’!), increased pressure on competitors in other countries and a further cut in world trade volumes. Bad for almost everyone.
At the end of this post I start to look at some defenses against the coming round of protection.
Will there be one? You bet! The only questions are: how soon and how big?
With employment numbers in both industrialized and industrializing countries falling, world markets seizing up as a consequence of the credit squeeze, icons of globalization like Dubai bleeding debt (and emigrants) and governments rushing out ‘stimulus’ packages to prop up domestic demand, the scene is set for some un-neighborly action at every international border. Never mind that some of these “negatives” are likely to be part of the creative destruction that brings new ideas, new market entrants and, eventually, new growth.
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It’s often open to question whether the G7—represented by their Finance Ministers in this case—mean what they say when it comes to trade policies. But it’s a real puzzle that, despite the general skepticism of which they must be aware, they continue to think that they can get away with this by never saying what they mean.
“An open system of global trade and investment is indispensable for global prosperity. The G7 remains committed to avoiding protectionist measures, which would only exacerbate the downturn, to refraining from raising new barriers and to working towards a quick and ambitious conclusion of the Doha round.” Extract from Financial Times
“Avoiding protectionist measures” simply isn’t good enough as a commitment to ensure that the recovery of world trade is not prejudiced by sly devices such as subsidies, ‘buy-local’ restrictions, standards barriers and ‘safeguards’ (not forgetting capital account protection via competitive exchange rate management).
If the G7 really did intend to foreswear “protectionism” they’d spell out what precisely they meant they would not do.