Junto Boys

TOWARD RELENTLESSLY FREE TRADE

As the previous posts have pointed out, the Web enables the ultimate free trade of ideas and the market decides. And the Web also enables the ultimate free trade of goods and services, although governments will always try to find a way to hinder and regulate and control and tax it.

I read this article this morning but didn’t have any pithy comments to make it blogworthy. But now I post it in the context of remarks already posted. Critics lament that new markets are opening up and that other countries are partnering with each other, which will hurt the US. It won’t hurt the US. Good old American capitalists will always find a way to make money wherever there is money to be made. Nobody does that better than us. Critics see developing markets as a threat. Bush sees them as fertile ground for US investment and eventually US exports.

Tectonic Trends in Trade

Two political tremors in recent days reveal that the global trading system may be creaking and groaning into isolated blocs of countries - without the United States.

South America's leaders met last week to declare the founding of a "South American Community of Nations," modeled on the European Union. They pledged to wrap the continent's 12 nations and 360 million people into a free-trade area (known generically as an FTA).

Just days before, China and a 10-member bloc of Southeast nations promised to set up the world's largest common market by 2010, with 1.9 billion people in the Far East.

The US helped set up the latest set of talks to expand global free trade, known as the Doha Round. But the Bush administration, whose free-trade credentials have been suspect, met with so much resistance in Europe and developing countries that it began to use a dubious tactic. It aggressively pursued FTAs of its own, sending a signal to recalcitrant nations that they would miss out on greater access to the giant US market if they didn't concede points in the Doha talks. After four years in office, Mr. Bush proudly declares he has set up FTAs with 12 nations, and is pursuing agreements with 10 others.

Cutting global trade into a patchwork quilt of too many bilateral agreements can create confusion and barriers to expanding global trade, and might make for regional protectionism. They also can create political blocs that divide the world. The US, for instance, might eventually find itself on the sidelines as China and the EU each becomes the center of a giant hub of economic activity and political partnerships.

In his second term, Bush needs to commit the US to finishing the Doha talks, either by making further concessions or pressing other nations to acknowledge the better path of further opening global trade. The game of dividing up the world in order to unite it just doesn't make sense anymore.