The limits of free trade

Published on Guardian Unlimited, November 14, 2006, by William Keegan – Excerpt: … Older readers will no doubt rub their eyes at the thought that communist/capitalist Vietnam is now a member of the World Trade Organisation (as well as the International Monetary Fund) and hosting a trade talks meeting at which an American president will be present. So many memories of the Vietnam war have recently been evoked, not least because of the more obvious parallels with Iraq.

The concern of US senators from textile states is obvious: the benefits of free trade may be a kind of religious mantra among economists and trade officials, but the wonders to economists of comparative advantage, where sectors specialise in areas of respective strength, do not seem so obvious to people whose jobs are threatened by a reduction in trade barriers.

A couple of years ago at the Davos World Economic Forum I was particularly struck when someone who had been a senior international official promoting free trade and open markets for many years told me he had had experienced what he called an epiphany at a college reunion.

He had met an old friend whose previously successful US furniture business had collapsed in the face of the kind of international competition that he (the former official) had been busily promoting.

Yes, even the most hard-bitten theoretician or practitioner can be moved by the kind of evidence he or she normally dismisses as anecdotal – until they witness it first hand … (Read the whole article on The Guardian).

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