By Adrian Wooldridge
Washington Correspondent, The Economist
New America Foundation
July 20, 2000


NEW AMERICA FOUNDATION GLOBAL ECONOMIC POLICY PROJECT
presents

AMERICA'S TRADE AGENDA AFTER THE BATTLE IN SEATTLE:
A FORUM ON WTO AND U.S. TRADE LAW REFORM


MR. WOOLDRIDGE: I think it's absolutely no doubt that there is
a very widespread conception that the WTO is not only in
conflict with America's interests but increasingly in conflict
with America's interests. You only have to look at what
happened in Seattle or in Washington, and I think you are
going to see similar sorts of protests at the conventions next
month.

It is odd that this is a protest that unites people on the far
left with people on the far right, and it's a case that is
made with extraordinary vehemence. I have just been going
around the country trying to promote this book that I have
written on the case of globalization, and I have been quite
surprised by the vehemence, particularly in radio interviews,
of opposition to it. And the only thing that surprises me more
than the vehemence is the lunacy of it.

And it's not only that people are arguing that this is a vast
conspiracy to destroy American jobs. I have heard people
saying this is a vast conspiracy to legalize drugs, to impose
permissive European attitudes on moralistic Americans. All
sorts of strange claims have been made.

But I will say in the last week, being back in Britain again,
trying to promote this same global product, and you have
exactly the opposite set of complaints being made about the
WTO. The argument there is the WTO is a tool of American
interests, it's a tool of American companies, it's a way of
American culture dominating the world, it's something that is
going to force all these poor Europeans so you eat hamburgers
and watch appalling American films.

I think that these two sets of complaints, there is almost the
sense that the WTO must be doing something right. The sense
that the WTO is about pooling sovereignty, is about putting
certain constraints on the freedom of countries to act in
order to act for the common good. It's about creating rules,
it's about creating multilateral rather than unilateral
solutions to problems.

So the fact that you have complaints both here and in Britain
and in Europe suggests that perhaps the balance hasn't been
completely wrong. This strikes me as very strange to be
sitting in this room and for people to be arguing against a
liberal and rules-based system and to argue that it's somehow
not going to be in America's interest.

I can't see how it can't be in America's interest in the broad
sense. I know you have the most powerful economy in the world,
you have an economy that's ahead in all of the most innovative
areas with the exception of wireless. It's heading the
information economy, it's heading the media economy. You have
a disproportionate number of the world's biggest and best
companies all the way from old, long-established companies
like General Electric to newcomers like Microsoft.

But you also have in this country a culture which is
incredibly well adapted to the new economy which is flexible
and which is future oriented. So, it ought to be a liberal
economic system which would be something that you would be
looking forward to rather than being worried about and
resisting.

But underneath it all I think there is a problem with some of
the terms of the debate that's being used here. There seems to
be a mercantilist notion here that we are talking about
America's interests, that America's interests are somehow
definable in themselves, that America's interests are
different and separate from the interests of people in the
rest of the world.

There also seems to be a preoccupation with producers rather
than consumers. I think it's not enough just to look at
America. We need to look at the health of the entire global
economy. We don't need to just look at a few isolated
producers. We need to look at general consumers.

And I think that's the case with the WTO. It doesn't rest on
the interests of any particular nation. It rests on the health
of the world economy. And if that world economy is doing well
then America, obviously, is doing well.

But it seems that the case is that from the point of view of
the consumers, you get cheaper, better products. From the
point of view of producers you get a freedom to mix and match
skills from all around the world, and you get a constant
pressure to innovate from competition which must be good.
Also, from the point of view of the poor, who have often
seemed to be the losers from this, the World Bank's recent
studies of what happens to the poor in the last decade, you
will say 800 million, near a billion people, coming out of
absolute poverty. Obviously, it's been a difficult period,
obviously there have been setbacks. There has been the Haitian
crisis, there has been a whole series of problems. But,
nevertheless, you are seeing a general break in the standard
of living and a reduction in the number of people in the world
living in absolute poverty. So, the system over which WTO and
the GATT has presided has not by any means been disastrous.
We have heard a lot of talk about the WTO being skewed towards
big companies, towards multinationals. And the idea is I think
that what we do then is to give more weight to NGOs as a sort
of counterbalance of that, which I think is curing one eveil
with another sort of evil.

In my view you should have rules that are simple as possible
and are not written by any form of trade representatives or
lobbyists. We should get the lobbyists out of the rule-writing
process. But to the extent that we have seen objective rules
being created over the last few years I don't think they have
massively favored multinationals.

A free trading system doesn't necessarily, and I know in these
cases, it doesn't benefit a small number of incumbent
companies. The average size companies over the last decade,
over the last 20 years, has actually been going down. What a
free trading rules-based system does is, in general, I think,
benefits challengers rather than benefiting incumbents. If you
have got capital getting cheaper, if you have got technology
getting cheaper, which we have, the single most important
source of advantage becomes ideas, and there is no reason why
those ideas, those great world-transforming ideas should be
enhanced on the minds of multinational companies.
I think we should be looking forward to a system which
actually creates clear rules and which allows challengers from
wherever they are in the world to take on multinational
companies.

I think we will see in the long term people moving from big
multinational companies to small and more innovative companies
just as we are seeing in the more innovative parts of the
American economy at the moment. So, I don't see it as an
instrument or part of a conspiracy of multinationals.
Now, I don't want to sound as though I am completely pan
glotting about this process because I am not. Trade is
necessarily a disruptive process as the resources are
allocated to areas where they are more efficiently used.
People who are less educated in rich countries are very, very
often the losers from this process.

And I think it's incumbent upon the social system, the
political system, to do something about that, part of the
social contract involved in creating a free trading system.
The national governments have an obligation to help the losers
who tend to be less educated people in general in rich
countries, I think, in this process.

And in general I think that the way forward
is -- (Tape malfunction) -- working as hard and have more
money. It's a system which might look very much like the world
of the 1920s and the 1930s when free trading ideas lost their
resonance and you got a revolt against free trade which,
maybe, got a detraction of the world economy, you got a rise
of xenophobia, and ultimately the rise of Nazism and
communism.

I am not saying exactly that we will get that. I think the
reaction would come much more in terms of mutually hostile
trading blocs and NAFTA versus the EU, for example. But the
alternative to a WTO basis is very, very likely to be much
worse than the system we have got at the moment.