Quotation of the Day…

by Don Boudreaux on March 13, 2017

in Crony Capitalism, Myths and Fallacies, Trade

… is from page 123 of my Mercatus Center colleague Dan Griswold’s splendid 2009 book, Mad About Trade (footnote deleted):

UnknownEven when the U.S. government loses a case brought against it in the WTO, the American people usually win.  That’s because the questionable trade barriers our own government is trying to defend often benefit the protected industry but at the expense of other U.S. companies and millions of American households….  WTO cases have resulted in the reduction or removal of U.S. barriers against imported underwear from Costa Rica, wool shirts from India, shrimp from Asia, computer chips from Korea, steel from a host of countries, lamb meat from Australia and New Zealand, and lumber from Canada.  Those “losses” in the WTO brought the U.S. government into closer compliance with its international commitments and delivered lower prices to domestic consumers and producers.  When it comes to trade policy, the U.S. government is not always on the side of American consumers and families, so when it “loses” as a defendant in the WTO, we often win.

DBx: What Dan says.

Uncle Sam’s agreement (along with that of the many other WTO member governments) to abide by WTO rules – and to abide by the results of WTO dispute-resolution procedures when disputes within these rules arise – no more violates Uncle Sam’s sovereignty than does, say, your agreement to repay the money you borrow to buy a house – and to abide by the results of whatever mortgage-dispute-resolution procedure you agree to at the time you sign your mortgage agreement – violate your sovereignty as an individual.  And as Dan explains, in trade-dispute cases, it’s typically true that when a government loses a WTO cases as a defendant, the sovereignty of the consumers of that government’s country is protected from that government’s officious suppression.

I close with yet another reminder that in defending the WTO, I do not thereby imply that it is ideal.  In my ideal world, there’d be no need for a WTO (or any other trade agreement) because no government would restrict in any way its citizens’ rights to trade, either domestically or internationally.  In my second-best world, the government that asserts authority over me – the U.S. government – would follow an unconditional policy of unilateral free trade (that is, a policy of free trade regardless of the trade policies followed by other governments).  But neither my ideal world nor my second-best world is politically feasible.  Therefore, trade agreements – including that which gives rise to and sustains the WTO – are better than the less-free trade that I judge would reign in their absence.

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