Carnegie Endowment for Peace | August 14, 2003 As the World Trade Organization meets in September to kickstart the stalled "development round" of trade talks, the Carnegie Endowment for International Peace identifies the real challenges negotiators face, debunks facile free trade slogans, and offers recommendations for the negotiation tables. A new policy brief from the Endowment_fs Trade, Equity, and Development Project, Decoding Cancun: Hard Decisions for a Development Round, is now available online at www.ceip.org/pubs.
Authors John Audley, George Perkovich, Sandra Polaski, and Scott Vaughan write that in theory, free trade helps everyone, but in practice the "invisible hand" of the market does not equitably distribute benefits,Yunless the "visible hands" of governments and trade negotiators correct distortions of the global marketplace. Moreover, catch phrases of international trade,Y "comparative advantage," "trade not aid," "level playing field" ,Yobscure complex issues and tough choices for both developing and developed countries. For example, an emphasis on "trade not aid" sounds appealing, but data show the move away from development assistance is not matched by commensurate increases in trade. The authors outline several negotiating imperatives, among them:
Rich countries should open markets to poor countries_f goods and services and remove subsidies that create unfair advantages for domestic producers. Developing countries should do the same but more slowly to account for their relative economic weakness.
Developing countries need to strengthen institutions, safety nets, and infrastructure. From building roads and ports to respecting workers_f rights, protecting environments from trade-related degradation, and helping those who trade displaces to adjust, rich countries and other global institutions need to offer financing and advice.
Developing countries also need to take responsibility for their welfare by adopting and enforcing policies that support the efforts above and root out corruption. "The WTO must meet its commitment on development or risk a collapse of the negotiations," said Audley. "Free trade will only work if it is a win-win situation for people in all parts of the world."
John Audley, Sandra Polaski, and Scott Vaughan are senior policy researchers at the Carnegie Endowment_fs Trade, Equity and Development Project. George Perkovich is vice president for studies. The team offers a range of domestic and international trade-related expertise in labor negotiation, environmental advocacy, and policy.
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