Customer Reviews

Fair Trade for All: How Trade Can Promote Development (Initiative for Policy Dialogue Series C)

5 star:		(3)
4 star:		(4)
3 star:		(2)
2 star:		(0)
1 star:		(0)

 

 

Generally I think it is another great book from Stiglitz. The MakePovertyHistory campaign, Bono, Bob Geldof and their Live8 concerts has shined a bright light on trade justice.

The World Trade organisation literally has the livelihoods of billions of people in its hands. This book shows how the trading relationships between rich and poor countries have become so unfair that the rich countries are creating more poverty. Free trade does not automatically lead to poverty eradication or environmental sustainability. In fact, if done wrong, it can increase poverty and cause harm to countries at different stages of development.

If you want to understand the issues behind fair trade and the problems facing people in poor countries, this is an excellent place to start.

The authors state rightly that trade policies should be designed to raise living standards and to integrate developing countries into the world trading system. Global poverty (more than 2 billion people live on less than a dollar a day) is the world's most pressing problem.
They say rightly that the developed countries have to date received the lion's share of the benefits from previous trade negotiations. Those ought to do more for the developing countries. The adage should be `help-my-neighbor', nor `beggar-my neighbor'. Right should persevere over might.

Therefore they want to put a radical new trade model on the table of the Doha Round: the Market Access Proposal (MAP). Their model is simple and straight:
All developing countries can have free access to all markets with (1) a larger GDP (Gross Domestic Product) and (2) a larger GDP per capita.

Besides MAP, they give also recommendations for the upcoming trade negotiations, of which many will be extremely difficult to realize, even partly: liberation of labor markets and unskilled services, promotion of labor mobility (immigration), elimination of agricultural subsidies, no technical provisions (like rules of origin), no export subsidies, no tariffs, no non-tariff barriers (dumping duties), no currency exchange manipulations, no arms sales, no briberies, pro-generic drug policies, elimination of secret bank accounts.

They also want better access to financial means for developing countries, institutional reforms (a less costly accession mechanism) and a new international trade tribunal.
By the way, trade negotiations should be about trade, not about intellectual property rights.
Generally, they ask for more democratic media, which are actually controlled by a few rich conglomerates.

Any trade agreement that differentially hurts developing countries more or benefits the developed countries more should be considered as unfair.

J. Stiglitz and A. Charlton have written a most necessary book. The implementation of their simple and radical proposition should constitute a big leap forward for the developing countries and concomitantly for global international trade.

This book is a must read for all participants of trade negotiations and for all those interested in the future of mankind.

N.B. For a viewpoint of the South I recommend Walden Bello's `Dilemmas of Domination'.

Stiglitz is certainly a critic of the free trade ideology but his arguments are much more intellectually robust than I see from either the economic nationalists like Lou Dobbs or the anti-globalization movement (and those two are distinct among themselves). He doesn't favor developed world protectionism, and actually makes a few strong points against it. However his proposals do respond to some of the claims of the anti-globalization movement even if he doesn't accept their quasi-Marxist outlook in total.

Stiglitz favors global trade agreements and infrastructure but he would change the rules. Basically he suggests a regimen where wealthier countries (measured either by GDP in the aggregate or per capita) would give preferential access (i.e. little or no trade barriers) to poorer nations. Thus India would get access to the U.S. market without reciprocating on American products but India would have to give access to Uganda without getting equal treatment in return. The poorer nations would have more leeway to employ subsidies and tariffs and have longer transition periods to liberalization but the long run goal would still be fewer barriers to trade.

Stiglitz makes a very strong case that even if one accepts that trade barriers are a bad idea, the developed and less developed nations aren't on a level playing field when it comes to arbitrating trade disputes, simply because of size.

He also suggests intellectual property issues and a common set of investment rules should not be part of global trade governance. Those are interesting points of view, certainly intellectual property enforcement is spotty in the third world already. He suggests that if investment agreements are wise for developing countries they will implement them on their own. He gets a little vague on this point because he suggests that labor and environmental standards should be WTO functions if investment rules are, which makes one wonder if really believes investment rules should be in or out. On the flip side, he also thinks allegations of currency manipulation should not be part of the agenda.

The dogmatic free traders like Milton Friedman contend there is never any net benefit to protectionism; Stiglitz obviously departs from this point of view in that he selectively endorses it for developing countries. It is hard to argue with much of his logic, I just wonder if the developed world would act as altruistically as he suggests they should. The reluctance of the larger economies to part with farm subsidies is an obvious obstacle, on the other hand what he suggests is already the case in manufactured goods.

Stiglitz deserves credit for moving beyond the simplistic and often disingenuous claims from the developed world who are just engaging in rent-seeking behavior. His proposals would involve governments in aiding people who are genuinely less well off rather than coddling inefficient industries in the developed world.

You don't have to be an economist to realise that the World Trade Organisation is failing the poorest countries. But this book is a compelling explanation of what is going wrong, and the best case yet for change.

Stiglitz is a Nobel Laureate in Economics who served in Clinton's White House and was Chief Economist of the World Bank. He was there when much of the current trade policy architecture was being built and he has a lot of insights to impart to readers. This book does not disappoint.

The chapters on the role of neoliberal economic policies in the growth process are especially interesting. Stiglitz takes a nuanced view, arguing that the introduction of market forces is important, but that, in the presence of other distortions, countries will face important challenges to make sure that globalisation does more harm than good.

This book is full gems of economic reasoning and a great introduction to some of the big questions of global economics and development.

Read it. It did taught me a lot about economic premises discussed in class. Prof Stiglitz is great. The book addresses topics I was supposed to hear in other business courses but this book really nailed it

Stiglitz continues to push, but not too far, the boundaries of the dominant policy straightjacket.

So worth a read. particularly, if you want to push the policy framework even further.

I did not read the entire book, but the sections I read where very helpful in writing my paper. The authors do a great job in being clear and concise and using terminology that is easy to understand.

Joseph Stiglitz, the Nobel Prize-winning economist, and Andrew Charlton, a Research Officer at the London School of Economics, argue for an international trade regime designed to support countries' national interests, especially the interests of the poorest countries.

They show how previous trade agreements have harmed the poorer countries. The OECD forecast that they would gain $90 billion a year from the Uruguay agreement, but in fact the 48 poorest countries lose $600 million a year from it.

The OECD countries' tariffs on imports from developing countries are still four times those on imports from the OECD countries. Stiglitz and Charlton warn, "Prescriptive multilateral agreements must not be allowed to run roughshod over national strategies to deal with idiosyncratic development problems."

Stiglitz and Charlton propose instead a model for managing trade between the richest and the poorest countries in the interests of all, to ensure that trade serves development. They point out that the poorest countries need social safety nets, retraining programmes, technical aid and development banks. As they note, "To date, not one successful developing country has pursued a purely free market approach to development." The richer countries all used industrial policies to develop.

Nor is free trade the answer. As they write, "the issue facing most countries is not a binary choice of autarky (no trade) or free trade, but rather a choice among a spectrum of trade regimes with varying degrees of liberalisation." Latin America's open capital markets not its relatively closed trade policy caused its 1990s crash. "Latin America's reliance on foreign capital flows and foreign direct investment ... made it particularly vulnerable to global economic shocks."

Latin America's countries have now created the Bolivarian Alternative for the Americas (ALBA), independent of the USA, the IMF and the World Bank, based on the principles of respect for national sovereignty and solidarity.

The US and EU states will never sign a fair international trade agreement because they are driven by the furies of private profit not by principles of social justice.

Though I think that Stiglitz is very smart and seems to make good points, do not let this be your first read on Fair Trade. Meant for experts. It is all over the place, and sometimes you do not know what ideology he is endorsing, what is neo-liberal and what is not, or what he is talking about. He needs to learn how to write so that common man can understand it. There are parts of the book where I was stumped, and I consider myself to be very informed on global issues.