WTO Protesters: Chastise Cuba, Not Nike
Starbucks and NikeTown may make irresistible targets for the anti-WTO
protesters who have been tying up, and tearing up, Seattle. But the real
engines behind the WTO's hesitancy to take up environmental and labor standards
are not Nike and Boeing. They're the developing countries to which those
standards would be applied.
This point seems either incredibly naive (since we all know that
multinational U.S. corporations really rule the world) or incredibly banal
(since the WTO can't really do anything if three-quarters of its
membership--the developing countries--disapproves). Perhaps the point is both
naive and banal. But it's still true, and imagining that low wages and poor
working conditions are realities imposed upon developing countries by the
United States is a delusion that makes understanding the actual operations of
the WTO impossible.
It was a Cuban minister, after all, who said yesterday that
developing nations needed to stick together, because "we produce goods and
services with comparative advantages that they [that is, the United States and
Europe] are trying to take away under the pretext of so-called labor
standards." And it's Mexico, Thailand, and Indonesia who are insisting that
those standards stay off the table, precisely because they fear that their
inclusion in trade talks will eliminate any incentives for foreign (or even
domestic) investment.
Now, just because the Indonesian government is against higher labor
standards doesn't mean either that the Indonesian people are against them
or that we in the United States should simply defer to the wishes of
other countries. There are powerful indigenous movements in almost every
developing country in favor of better working conditions and higher wages, and
in any case the fear of engaging in cultural imperialism is a poor guide to
making policy. But there is still something in the absence of developing-nation
support for new standards that should give us pause.
From a Buchananite perspective, of course, developing-nation hostility to
WTO intervention is irrelevant, because in Buchanan's ideal world, the United
States wouldn't be trading with those nations at all. From what you might call
the internationalist anti-WTO perspective, though, there's a real paradox here,
since the WTO is simultaneously excoriated for being a kind of supranational
government smashing down local regulations and excoriated for not being enough
of a supranational government to create global living and working
standards.
The paradox exists, though, because opposition to free trade depends upon
two antithetical ideas, both of which, interestingly enough, are wrong. The
first is that free trade is lowering the standard of living in developed
countries by encouraging the migration of jobs and the creation of trade
deficits. The second is that free trade is widening the economic gap between
rich and poor countries. (A common corollary to this is that trade is widening
the gap between rich and poor in all countries.) For both these to be true,
rich countries would have to be losing jobs and productive capacity and
getting richer at the same time, even as developing countries would be taking
away jobs, growing faster, and yet getting poorer.
That's not happening, of course. It's almost certainly true that certain
sectors of developed economies (textiles, steel) are hurt by free trade, but
it's equally true that other sectors (computer software and hardware, financial
services) are helped. More to the point, the fundamental truth of free trade is
that when countries produce those goods in which they have a comparative
advantage, both sides benefit, because capital ends up being allocated to its
most productive uses, which is the only way real wealth can be created.
I don't know whether that Cuban minister has suddenly started reading David
Ricardo, but his invocation of "comparative advantage" was right on target. For
developing countries, the one meaningful road to economic development, which is
to say the only way they can narrow the gap between themselves and the United
States, Europe, and Japan, is via free trade. It's a mistake for these
countries to argue that having minimum-wage laws or regulations keeping
corporations from running toxic dumps will wreck their chances of competing in
the world market, just like it's a mistake for small businesses to argue that
having a minimum-wage law in the United States does irreparable harm to them.
But it's not a mistake for these countries to believe that the fewer barriers
to trade--of whatever sort--there are, the better. The really interesting
thing, of course, is that it's not a mistake for the United States to believe
that, either.
