The World Trading System
1994; Columbia University; Volume: 48; Issue: 1 Linguagem: Inglês
ISSN
0022-197X
Autores Tópico(s)World Trade Organization Law
ResumoThe Uruguay Round is closing this week after a marathon of negotiations stretching well over seven years; so the timing of this panel is exquisite, from my viewpoint. The ceremony, besides, is in Marrakech, an exotic place that sets our minds racing with thoughts of Casablanca, Humphrey Bogart and Ingrid Bergman. Indeed, one can imagine a movie being made of this historic occasion that will transform the General Agreement on Tariffs and Trade (GATT) into the World Trade Organization (WTO), with Peter Ustinov cast as Peter Sutherland, the brilliant and portly new director general of the GATT who finally brought the round to successful conclusion, Dustin Hoffman playing our own inimitable Mickey Kantor, and perhaps Al Pacino as the elegant and suave Sir Leon Brittan of the European Union (E.U.): the three principal players in the closing days of the round. In any event, the closure of the round puts the GATT, or its new version, WTO, right at the center of the world trading system. This is a triumph that should not be underestimated. It was only a few years ago that my good friend Lester Thurow, reading the mood around him, had pronounced at Davos that the GATT was dead. His colleague at the Massachusetts Institute of Technology, Rudiger Dornbusch, had urged that the GATT be killed. And their brilliant MIT colleague, Paul Krugman, before his celebrated return to the fold of free trade and multilateralism, had flirted with both thoughts. Evidently, you are affected by the company you keep. Fortunately, this anti-GATT school (christened by me the Drive School, since MIT's famous economics department is located at Memorial Drive in Cambridge, while the phrase also evokes aptly the funereal view of the GATT that the school epitomized) seems to be more obviously silly than when some of us pronounced its demerits some years ago.(1) That school's demise and the GATT's success are a cause for celebration. So is President Bill Clinton's belated but strong support for the Round, though we must still see him take the agreement skillfully through Congress in the coming year. All this is on the positive side of the ledger. But there are also problems that lie ahead that threaten the world trading system in varying degrees and warrant careful examination. I will touch on just two of the central problems confronting us today. A first danger point we currently see is the increasing preoccupation in the European Union and in the United States with the distributional effects of freer trade with the developing countries. In consequence, a new North-South divide is opening up. Traditionally, economists have had to fight the argument against free trade by the North with the South. This argument falsely asserts that trading with cheaper-labor countries will harm a country's overall economic welfare; in reality, the case for free trade is proof against this charge. But the new fear is not that trading with countries with paupers will harm oneself; rather it is that such trade will produce more paupers in one's own midst. In other words, the fear is that our proletariat, the unskilled, will be immiserized by freer trade with the poor countries of the South. This fear comes from the experience of the 1980s when, in the E.U., unemployment increased and, in the United States, the real wages of the unskilled fell. While nearly all careful studies show that the causes were an overwhelmingly technical change that saved unskilled labor, and that North-South trade had very little to do with this distressing reality, the fear that trade was the culprit has become widespread.(2) In fact, you will recall that the debate over NAFTA was particularly acrimonious precisely because the unions were petrified that it would lead to job losses and decline in the real wages of U.S. workers. In fact, one could plausibly argue that just because many Americans had this stark image of Mexico as a source of pauper labor that was illegally coming across in large numbers and depressing the wages of our unskilled workers, and because they intuitively felt that free trade with Mexico would simply be an indirect way in which this would happen via imports of goods made with cheap labor, a most unfortunate effect of NAFTA was to exacerbate these fears and to undermine the political case for free trade - an outcome that would not have happened with the Uruguay Round because freer trade with the developing countries would have been swamped by the many other issues negotiated at the round. …
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