Tag: Alan Blinder

Globalization, Trade And NAFTA: A Defense of Trade Agreements

Free trade is good. Does anyone disagree? Even “fair traders” agree today. We do not hear about nakedly protectionist domestic content legislation anymore. The “fair traders” argue instead for the need for a “fair playing field” on issues like environmental and labor standards.

But is this new emphasis on equal labor and environmental standards really about anything but protectionism? Is there really an expectation of that countries like Peru, Mexico and the Central American countries (not to mention China and India) will meet US labor and environmental standards? the irony is of course that this would be a form of erstwhile globalization – an attempt to impost US standards on the Thrid World – if it were sincere. It is not. It is just a new way of defending an old idea – protectionism.

I think the evidence of this is obvious – in no other context do we see a drive for higher labor and environmental standards in the Third World. Consider the issue of climate change:

. . . George Bush pulled the US out of the Kyoto treaty, which requires 36 industrial nations to cut greenhouse emissions by at least 5 per cent from 1990 levels by 2012. The US president says Kyoto unfairly burdens rich countries while exempting developing ones such as China and India.

Developing nations say rich states built up their economies without emissions restraints and argue that less-developed countries should have the same opportunity to establish their economies now.

But as emissions from places such as China and India grow, environmentalists say action by the developed world alone will not be enough to stop the warming trend.

Does anyone think George Bush shares the concern of environmentalists on this? Or is it an excuse? And does anyone really think Mexico, Peru and the Central American countries are comparable to China and India on this? Of course not. This is pretext for protextionism.