Trade Justice and Slavery

Christian Aid does itself no favours by talking of "the slavery of free trade". To compare free trade with slavery is a grotesque mischaracterisation. A more rational position would be:

  • trade liberalisation will, on average, increase incomes and well-being across the world;
  • the challenge for globalisation is to determine how those gains are shared;
  • because of the imbalance of economic power between rich and poor nations, determined efforts will be needed to ensure that poor countries secure their fair share – or more – of the benefits of the liberalisation
  • while there are benefits in the long run from trade liberalisation, there may be some short run costs – for example, in reskilling populations for new jobs – which poor countries can ill afford and which must be properly managed and paid for

Despite the hyperbole, four of the five requests of the Trade Justice movement are entirely reasonable:

2. An end to the IMF and World Bank setting poor countries’ trade policies 3. Special treatment for poor countries at the WTO 4. Cut the massive export subsidies used in rich countries 5. Debt cancellation and aid increases must not be used to further impose free trade

Only the first demand is questionable:

1. Stop the EU’s free-trade agreements with former colonies

Whether these should be agreed depends on what they will say. There is a danger that the so-called partnership agreements will be a distraction from real progress towards multilateral trade liberalisation, and will create a byzantine set of rules – for example on rules of origin – that make trade more expensive. But done well – such as by extending Everything But Arms, the EU’s free trade policy for least developed countries – an extension of trade access to the EU would be of enormous benefit to the poor. We should be calling for more trade liberalisation, not less.

3 thoughts on “Trade Justice and Slavery”

  1. I agree that it’s wrong to equate free trade with slavery, but there doesn’t seem to be enough evidence to support a blanket call for more trade liberalisation. While rich countries should definitely open their markets more, poor countries should only do so at their own pace, just as happened in every past example of succesful development except Hong Kong. If trade liberalisation was the panacea some (not you) say it is, Sub-Saharan Africa would surely be thriving given that its trade barriers are lower on average than every other developing region.

  2. You are absolutely right that free trade is not a panacea; but trade liberalisation would, on average, be a significant driver of economic growth.

    While I agree that, in theory, it is advantageous to manage the sequencing of liberalisation, and to take steps to manage the transition, my worry is that the best becomes the enemy of the good. The main priority should be to open markets as rapidly as possible. If this can be done with appropriate safety net measures, all well and good. But if not, it is better to get on with it than to wait until measures are possible.

    Sadly there are no panaceas in development. We need more trade, more and better aid, less corruption, better governance, a stronger voice for developing countries in international institutions, less support for conflict, more investment in global public goods, a reversal of global warming and desertification …

  3. Why does everyone want to open free markets so quickly? It would be better if we took the time to test our economic theories before implementing them. If, for example, corn is an commodity traded around almost like money in a third-world country for other resources such as clothes and food. If corn can be imported to said country more cheaply than the domestic farmer can grow it, that trading will put the domestic farmer out of business and force him to seek out work from an employing corporation in the area or even immigrate elsewhere looking for work. It steals the ability of every human to fend for themselves and makes them more depenedent on global organisations for funding. This is modern slavery.

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