In Box

Irrelevant WTO

Protesters headed to Cancún in September for the World Trade Organization (WTO) meeting are wasting their time. But, then again, so are all the delegates. Why? Because the WTO doesn’t actually do anything to liberalize trade, according to recent research by Andrew Rose, an economist and free trade advocate at the University of California, Berkeley. ...

Protesters headed to Cancún in September for the World Trade Organization (WTO) meeting are wasting their time. But, then again, so are all the delegates. Why? Because the WTO doesn’t actually do anything to liberalize trade, according to recent research by Andrew Rose, an economist and free trade advocate at the University of California, Berkeley.

After accounting for other factors affecting trade, including geography and historical ties between particular nations, Rose finds that countries belonging to the WTO to do not display different trade patterns from nonmembers. Rose also reviews more than 60 measures of trade openness (such as tariffs and other trade barriers) and discovers that countries don’t move toward more liberal and open trade policies after joining the global body.

The WTO doesn’t liberalize trade, Rose contends, because member countries refuse to cede sovereignty to the organization. Unlike the International Monetary Fund, the WTO has few carrots and even fewer sticks. As Rose told FOREIGN POLICY, "the WTO is a relatively small and impotent institution by design." Indeed, Rose finds that the less visible Organisation for Economic Co-operation and Development (OECD) is the most effective global institution at promoting trade. Rose estimates that "[m]embership in the OECD boosts trade by over 50 percent holding other things constant."

Rose is not the only free trader to question the WTO. Carnegie Mellon University economist Allan Meltzer suggested in a February 2003 speech that the WTO has achieved all it can and that the cost of future agreements might well exceed the benefits.

Ironically enough, these criticisms come as some of the left’s WTO bashers are repenting. George Monbiot, a columnist for the Guardian and the darling of Britain’s radical left, recently wrote a spirited defense of the WTO titled "I Was Wrong About Trade." His argument: The WTO is all that stands between the world and an imperial trading system dominated by the United States.

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