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Nader Demands Banning, Pulping of Harry Potter
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(WTO bans organic labeling, seeks action against fair trade coffee (a response to Delong on Nader and Harry Potter)
I consider myself lucky to be a regular subscriber to Brad Delong's weekly thought-pieces. There can't be that many people in the world with the good sense to pay attention (and good luck to have access) to Brad's insightful and articulate ruminations.
The satirical dream-sequence on Ralph Nader, Harry Potter and the winners and losers from trade, however, left a bad taste in my mouth. Brad and I have on several occasions discussed what we consider Nader's poor understanding of certain global issues, so his perspective was not new to me. But I saw in Brad's piece a too-sanguine view of world trade, that very same view most economists seem satisfied with holding: the gains from trade are enormous, and protectionists just don't pay enough attention to the consumers and producers that _win_ when countries exchange goods freely -- and the other issues tha arise when rich and poor countries trade will just take care of themselves.
Gee, I thought, as I lay down for an afternoon nap to ponder this strange view. That view of trade is somewhat akin to using the number of daily safe plane flights as evidence that the FAA really has no work to do.
I was awakened from this reflection by a CNN International news special, blaring from the bedroom television. "The World Trade Organization today declared organic food labeling an illegal restraint of trade," said the stern announcer. "Multilateral action is underway in Europe and North America to enforce this ruling and end the labeling of so-called 'organic' food. Cindy Weksel has more from WTO headquarters in Geneva."
The satellite feed from Switzerland hiccoughed, then a slightly less stern reporter appeared on a plaza before a tall gray office building. "The World Trade Organization has taken yet another brave action in its on-going battle to open world markets," she said. "The WTO has declared illegal all member country laws that seek to label certain agricultural products as 'organically grown'. Here to speak with me is the WTO Under-secretary for Agricultural Trade, Jean-Philippe Degoutant."
She turned to her left and the camera angle widened to include a sour gallic face atop an Armani suit. "Monsieur Degoutant, could you explain the ruling?"
"Yes, Cindy," he began, "zeez organeek rules are very dangerous, and eet eez very important to neep zem een zee bud. Zey represent a barrier to trade in such goods as low-grade American beef, genetically modified potato chips from Frito-Lay, and toxic chemical fertilizers and pesticides."
"Some groups have complained that such rulings won't allow consumers enough choice," Cindy pressed. "Isn't the ruling therefore somewhat undemocratic?"
"Exactement!" the under-secretary hastened to respond. "Zeez labels have led consumers to ignore the products of international agribusiness firms, in favor of local goods, such as regional fruits and vegetables produced in their own countries!" He paused to wipe his brow, momentarily overwhelmed by the outrageous imposition represented by local agriculture. "Such local self-reliance destroys ALL gains from trade," he continued, "so eet had to be outlawed." He added offhandedly, "As for democracy, zat eez an issue for countries to decide zemselves. Zee WTO's responsibility eez limited to trade."
"But couldn't there be trade in organic goods?"
Deboutant frowned. "C'est dommage, but eet eez too beeg a reesk to allow eet. No foreign eenputs, no foreign goods, no trade -- no gains from trade! That eez the threat of zee local agricultural production. Zee information was allowing consumers to damage zee global economy by avoiding goods from far away!" Degoutant elaborated the WTO's longer-term strategy of declaring _all_ labels as unfair restraints of trade. "So, wiz no labeling, consumers must choose based only on price -- so, zey are better off zan before, and zere eez no way for non-economic factors to prevent gains from trade!"
"So does the ruling have broader significance?"
"Absolument, Cindy," said Degoutant, smiling. "With zees precedent, eet weel be possible to prevent more trade-reducing labeling in zee future. For example, already we are trying to end zee labeling of so-called sustainable wood products. Can you imagine? How would we ever gain from zee trade in tropical hardwood wiz such laws?" He laughed derisively at the thought of consumer-led rainforest preservation standing in the way of global-welfare-enhancing trade.
That's funny, I thought, as the piece ended. I don't have a TV in the bedroom...
Contributed by Joshua Skov (WTO bans organic labeling, seeks action against fair trade coffee) on August 16, 2000.
Dear Professor deLong, Dear fellow Readers
I fully accept the point that one can not assess the consequences of free trade by just looking at those who loose. But it is also impossible to assess it by just looking at those who gain. I think that trade unionists and trade economists would be less in conflict about free trade if economist always told the full story they get from their theory, not only in Textbooks but also in newspaper commentaries. Free Trade, according to standard trade theory (Heckscher Ohlin) is potentially Pareto- improving. This means it makes no one worse off if there is a mechanism of redistributing parts of the gains from winners to losers. Dani Rodrik ("Has globalisation gone to far", Institute for international Economics March 1997) gives interesting arguments on this and related points which also help to understand why many people, we economist assume to be so rational, are against something as beneficial as free trade.
:-) Sepp Zuckerstdtter
PS: I know that new trade theory can give different results but I also want to mention that welfare implications of this models might also cut both ways. (I dont want to comment on the Potter books case)
Contributed by Sepp.Zuckerstaetter (Sepp.Zuckerstaetter@akwien.or.at) on August 14, 2000.
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