Dismantling trade barriers unilaterally

Successful trade negotiations involving trade-offs between nations have their benefits and advantages. But unilaterally lowering trade barriers – without having to obtain the consent of other nations – is a much swifter and less complex means of benefiting the interests of consumers in the acting country, analysts say.

Unilateral trade declarations have historically achieved stunning results:

The classic case is Britain, which in the mid-19th Century repealed the protectionist Corn Laws – leading other countries to follow its lead and ushering in a golden age of trade and economic growth that lasted until World War I.

In the 1980s, Chile and Mexico unilaterally lowered trade and economic restraints and achieved economic growth – growth not shared by protectionist Brazil and Argentina.

By abolishing import licences and cutting tariffs in 1991, India achieved stupendous growth, huge numbers of poor people moved into the middle class and manufacturing productivity roared ahead.

The record shows that economic growth is best during periods when world trade is increasing at a faster pace than world output.

So it's not a good sign that last year the growth in world trade slowed sharply to 2 percent from 12 percent in 2000.

Trade specialists urge U.S. policymakers to take a first step by unilaterally lifting agricultural tariffs. Next, they say, should come the lifting of tariffs on textiles. Protectionist interests are strong politically. But so are the forces pledged to economic growth domestically and globally.

Source: Editorial, A Free Trade Revival, Wall Street Journal, August 15, 2002.

For text (WSJ subscribers) http://online.wsj.com/article/0,,SB1029370403117078195,00.htm
For more on Case Against Protectionism http://www.ncpa.org/iss/tra

FMF Policy Bulletin\20 August 2002