Summary of Remarks by Dr. Moísés Naím
at Symposium on Trade, Assessing
the Impact or Liberalized Trade on Developing Countries, June 11, 2001
Event, LWVUS Council 2001, Washington, D.C]
The speaker, Dr. Moísés Naím, currently is the Editor of Foreign
Policy. Dr. Naím has written extensively on the political economy of
international trade and investment, multilateral organizations, economic
reforms, and globalization. As Minister of Industry and Trade, Dr. Naím
played a central role in launching Venezuela's economic reforms in 1989.
This report is made possible by having a transcript of his full remarks
(prepared by D. C. Leaguer, Kathleen Shea, with assistance by others);
it is available at the LWVDC office. Dr. Naím kindly reviewed the draft
of this summary for accuracy.
Dr. Naím's presentation provided an overarching view of how to look at
trade in the context of globalization. While trade may be the cutting
edge of globalization, globalization goes beyond trade to embrace other
financial matters, such as investment flows or even non-economic aspects
like the international spread of culture, political rules, and
He began with what he called a preamble with four paradoxes (the titles
Paradox # 1, Reality/Action vs. No Action:
A ministerial meeting of the World Trade Organization appears in the
media to be full of action, judging by the events in Seattle. But the
action is on the part of protesters in the streets. From the point of
view of those inside, that meeting was a failure because countries could
not agree on launching a new round of measures that will induce
countries to pursue free trade.
The next ministerial meeting is to be held in Doha, capital of Qatar,
one of the Arabian Gulf States. There is criticism because Qatar is very
hard to access, and measures are being taken to limit protests. However,
according to an informed view by a friend of Dr. Naím's, this is going to
a very boring meeting for those wanting to see results. It will be even
more of a failure in trying to provide a new round of free trade.
In a similar vein, a few months back there was a meeting of all Heads of State
of the Western hemisphere in Quebec. One of the purposes of the meeting was to try and
see if they could follow up on the promise of a prior summit in Miami, namely, to have a free
trading hemisphere at 2005. In Quebec, inside the building where the summit was held nothing
substantive happened; outside the building there were major street protests again, but about a meeting
where nothing happened.
Paradox #2, Impact of Protected, rather than Free, Trade:
The impact of free trade on developing countries is often mentioned as
an issue of grave concern. Yet to assess the consequences of limiting
international trade one can also look at what happens when developed
countries curb trade. The best laboratory in the world for this is
Europe, in agriculture. It is very hard to export agricultural goods to
Europe. As a result, Europeans have to pay 260% more for their sugar
than the average world price, 200% more for rice, 180% more for bananas,
150% more for corn, and 100 % more for citrus. Just imagine the vested
interests and political forces that are forcing European consumers to
pay so much more for these basic goods. Now think about how much more
vulnerable a government in a poor country is to the influence of those
that will benefit from limiting trade. Of course, they will call it "protect local producers"
and wrap themselves in the national flag.
Paradox #3, Free Trade Talk vs. Political Realities:
As part of his platform, President Bush characterized himself as an
unabashed free trader. Nonetheless, he has recently promoted measures to
protect U. S. Steel (by governmental action to limit imports of foreign
steel). For the rest of world, including developing countries, it is
going to be hard to export steel to the United States. Note, however,
that the market capitalization of the total steel industry in the United
States is about one billion dollars, which is very small. Even so, steel
interests are powerful enough to encourage a freetrader President to
adopt protectionist measures at the expense of U. S. consumers of steel.
This is like the industry capable of having all Europeans pay 260% more
Paradox #4, Popular Imagery of the WTO: All-Powerful vs. Wimp:
To hear people talk, one would imagine that the World Trade Organization
is quite powerful. In fact it is an organization that ought to be
capable of taking on powerful interests, such as steel, sugar, bananas,
etc. However, the WTO is very small, new, underfunded, and understaffed.
By definition all new organizations have great difficulties performing
at high levels quickly. It also is clumsy, as with all international
organizations wherein decisions have to be made by reaching agreement
among sovereign states. It is not that the WTO cannot reach important
decisions, that it is incapable of mustering and mobilizing ideas and
political support for initiatives that are of global importance. It may
eventually get to that point, but we are very far from it. It is
important to appreciate the WTO's limitations.
With the above contrasts to set the scene, Dr. Naím then discussed an
organizing framework for how to think about trade, how to read about
trade. He suggested that it was useful to divide people into three
categories or themes.
He identified them as the three "P's" of international trade: Trade
as "panacea," "poison" and `platform"
Dr. Naím suggested that we examine what we read and hear in the media in
light of the paradoxes and the categories of interests behind
information. He cautioned that it is very easy to see that the trade
debate is being dominated by confusion. The reality about trade is very
diverse, and there is great variety of issues, of data, of statistics, of interests, of countries, a
variety of (you name it). Trade comprises a very diverse problem and, therefore, it will almost always
elude broad generalizations.
- Panacea: The
free traders, and some are quite fundamentalist in their approach, see
free trade as the be all and end all. Free trade can solve many of the
world's international poverty problems and domestic problems. Free trade
is good, period.
- Poison: These
see free trade as bad It forces small, poor countries to compete with
global behemoths and multinationals. Free trade
hurts the environment, women, children, and the poor. It increases
inequality, both inside countries and between countries.
- Platform: These
say we know that trade is what it is, neither poison nor panacea; but we
are going to use trade to advance other goals. We will use it as a
lever. There is no other way in which we can introduce our issues, our
agendas in conversations unless we tie them to trade. Therefore, we are
going to use a variety of tools to inject our issues into the
negotiations of trade: trade and environment, trade and labor; trade and
women, trade and political development .... Imagine a problem, and there
is a group that promotes the linkage of the solution or eradication of
that problem with trade negotiations.
Additionally, Dr. Naím stressed how long trade has been with us but also
how it has accelerated recently. The number of the people now in the
world being touched by trade is bigger than ever. The rules of the game
- - the actors, the technology, the problems, the institutions, the
frameworks, the laws - - are new. In the late 1980's, early 1990's the
negotiations were about trade. Now the debate includes, for example,
intellectual property and new agricultural products (genetically
modified organisms) present in much of the food we eat every day.
Cultural attitudes impinge on economics and pose difficult issues to
resolve for which we do not have precedents.
So the message is one of confusion, of diversity of issues, of speed and
of proliferation of new actors. No longer are trade negotiations among
the experts who understand the arcane acronyms. In the U. S., for
example, there is the U. S. Trade Representative (the unit in the
Administration that deals with trade issues) but also involved are the
Departments of Agriculture, Justice, State, and Defense as well as state
and local governments. There also is a proliferation of non-governmental
actors, both organizations and media.
Furthermore, the debates about trade very often are not about trade.
They are about investment, corporate control, politics, and cultural
attitudes, including anxiety about rapid change and related outcomes.
Even though countries are already trading, they want to sign trade
to share a common macroeconomic framework, harmonize regulations, and
address migration (which is a big issue that is beginning to touch
trade). Since such an array of concerns gets dumped under the moniker
"globalization," Dr. Naím asked if LWVUS were going to extend
the mandate of the League Trade Task Force to address the matters
entailed in globalization that clearly transcend trade.
Dr. Naím concluded by noting that international trade is the essence
of peacetime international relations. From his brief introduction
Dr. Naím illustrated that such essence is being influenced by a full set
of issues that are not going to go away. He thinks that it is going to
be hard to avoid them, even if one thinks that trade should be about
trade and even if one thinks it is not fair to burden trade with
discussion of other issues, because the hidden forces of protectionism
could use such other issues to limit trade.
Addendum/Key Comments in Closing Q&A Period: This provides
perspectives offered by Dr. Naím on some significant matters (the
transcript in the office covers his final remarks as well as his
institutions like the IMF and the World Bank are headed by
representatives of governments, elected governments for the most part.
It is appropriate for an elected government to send representatives to
meetings to represent its country's interests. What is the
alternative? NGOs? There may be a "deficit of democracy" in multilateral
organizations; but there is an even bigger democratic
deficit in accountability in NGOs. They were not elected (typically). We do not know who they report to, who appointed the representatives,
who exactly they represent.
- In response to concerns about poor working conditions (especially for
women in export processing zones in developing countries), Dr. Naím pointed out that the International Labor Organization has a new Director
General, Juan Somavía, from Chile. He has been in office for three years
and is turning around the ILO. He is a great thinker; he has a personal
history of political persecution. Sweat-shop conditions may still be
around but they won't be much longer. But be careful when assigning
major problems of humanity to poor institutions that may look big but
are bureaucracies and thus limited (e.g., the WTO for trade and the UN
- Further, when examining concerns about issues, such as exploitation
of workers in export processing zones and the effects of the mobility of
capital, the logic of arguments made by some would require endorsing
policy prescriptions that may be counter-productive.
- For the zones,
establishing governmental conditions and standards would wipe out the
zones in most of the areas. For improvements, however, there may be
alternatives. Soon consumers will be able to go to the Internet and,
through cameras on site, watch products being made and the conditions of
- Concerning ideas to limit mobility of capital, this
would call for controlling foreign currency. All transactions in foreign
currency have to be negotiated by a bureaucrat. Nothing does more to
stimulate corruption than having to depend upon a government employee to
decide at what rate and how much currency to buy.
- We are in a time of hyper-competition, never has there been as much
competition. Choices are not narrowed but greater. Another speaker had
given an example related to Uruguay, implying restrictions, and under
the economic rules of competitive advantage Uruguay would have only
cowboys and herders. But Dr. Naím has a friend who, with new technology,
can export handicrafts through the Internet.
- Concern had been expressed about endless, infinite concentration of
corporations, including the control offered though patents. According to
Dr. Naím, while mergers and concentration exist, this is not endless
according to empirical reality and history. When companies get very,
very large they eventually enter into risky stages of declining
competitiveness, where their competitors displace then, or they are
broken up by governments. As to patents, although patents are sought to
prevent copying by others, these days inventions are protected by other
inventions, a situation about which a government has little it can do.
[Prepared by B. Yeomans]