Economics, Ethics and Public Policy
Chapter 6: Trade: the outputs
Trade was war in the Depression years of the 1930s. Beggar-thy-neighbour tariffs and competitive devaluations made the world economy red in tooth and claw. The bombs and the battlefields of the Second World War reinforced the message that life as well as livelihood would forever be at risk so long as myopic nations refused the plus-sum alternative of compromise and cooperation. The result was a post-war determination to convert swords into ploughshares that manifested itself at Dumbarton Oaks in the creation of the United Nations and at Bretton Woods in the International Monetary Fund and the World Bank. Then, in 1947, there was Havana. Recognising that interdependent nations must first sell in order to buy, and persuaded that the international division of labour would universalise their comparative advantage, 23 industrial countries that had been spared the worst vicissitudes of the war met at Havana to discuss the formation of an International Trade Organization (ITO). It was not to be. Manufactures lent themselves to liberalisation but the United States Congress refused to phase out the US subsidies to agriculture. Havana had to settle not for an ITO but simply a GATT. The General Agreement on Tariffs and Trade only became the World Trade Organization (WTO) in the ëUruguay Roundí in 1995.
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