Why Free-Trade Economists Fail to Persuade

Why Free-Trade Economists Fail to Persuade

Free Trade Today
by Jagdish Bhagwati
Princeton University Press, 2002 128 pp $24.95

Free Trade Under Fire
by Douglas Irwin
Princeton University Press, 2002 248 pp $27.95

In 1985, the first few environmental organizations were beginning to look critically at the World Bank’s road and dam projects. They had little interest in trade policy. Human rights and women’s organizations likewise ignored trade agreements, focusing on authoritarian regimes and death squads. Organizations concerned with equitable development in the “Third World” tended to support trade liberalization, though most argued that this would be far from adequate for genuine economic development. The AFL-CIO had been opposing further trade liberalization since 1969, but it was the exception among labor federations in the global North. West European and Canadian trade unions supported the Tokyo Round of the General Agreement on Tariffs and Trade (GATT), signed in 1979 and implemented over the next seven years. They did not begin to challenge the GATT until the Uruguay Round that created the World Trade Organization (WTO) in 1994.

The first hint that something fundamentally new was afoot in trade politics was the unprecedented coalition of Canadian social movement organizations that mobilized to force a national election on the Canada-U.S. Free Trade Agreement in 1988. The coalition was re-activated to challenge efforts to extend CUSFTA to Mexico under the North American Free Trade Agreement of 1993. NAFTA stimulated the formation of a similar coalition in the United States. A parallel network also formed in Mexico. In Western Europe, similar coalitions first emerged in resistance to some features of the European Union’s Maastricht Treaty of 1992. These coalitions were re-energized and expanded when the Organization for Economic Cooperation and Development sought to negotiate a Multilateral Agreement on Investment that would extend the essential features of NAFTA’s investment chapter to the organization’s thirty member countries and beyond. The multinational social movement mobilization against the MAI was one important reason why it was shelved in 1998. Thereafter, the effort to build an enforceable international regime of investor property rights shifted to the next round of WTO negotiations, scheduled to begin in Seattle in late November 1999.

The protests at the 1999 World Trade Organization meeting in Seattle marked a turning point in trade politics. The size and depth of the international coalition that came together to protest the WTO was striking. And then there were the television images and the stunning dénouement: Teamsters marching with “turtles,” tear gas and police charges in the darkness, the collapse of the negotiations. The author of one of the books reviewed here, Jagdish Bhagwati, was in Seattle as an adviser to the WTO’s director. While trying t...