Crisis or Opportunity?
Edited by Peter Draper, Philip Alves and Razeen Sally
The evidence of liberalization of trade in goods, services and investment is quite clear. Since the late 1940s, countries have moved mostly in the direction of greater openness, particularly in the non-agricultural sectors, as well as services and investment. In most developing countries liberalization began in the decade of the 1980s. The economics is straightforward: under most scenarios trade liberalization is of benefit to the economy undertaking it. It is therefore not surprising that most of the liberalization, particularly in developing countries, has been unilateral and not a product of negotiations, whether bilateral or multilateral. Ultimately, liberalization through negotiations, bilateral or multilateral, is achieved because the parties see benefits and not because it is an imposition; any such arrangements are based on mutual consent. However, the process of liberalization becomes more difficult as it gets closer to free trade, and as behind-the-border barriers are tackled. In most cases, this is due to the resistance of individuals who don’t want to lose their protection rents and who perceive that it is cost-effective to spend time and money to oppose liberalization. ‘Strategic industries’, ‘multifunctionality’, ‘policy space’, ‘level playing field’, ‘fair trade’, ‘infant industry’, are some labels used by protectionists to mask their interests. While it is true that some of these concepts have some sound foundations in the economic literature, it is more often the case that their use is reflective of special interests who seek to appropriate them for uses far removed from the underlying economic rationale. A sector that has...