Free Trade, Free Labor, Free Growth

ADELAIDE – Protectionist sentiment and fear of globalization are on the rise. In the United States, presidential candidates appeal to anxious voters by blaming the North American Free Trade Agreement (NAFTA) for the erosion of the country’s manufacturing base. Liberal trade initiatives have run into trouble in Congress, while new trade barriers have been mooted for products flooding in from China.

Things are no better in Europe. France has dealt the Doha round of World Trade Organization (WTO) negotiations a blow by rejecting the outline deal on agriculture. European Commission President José Manuel Barroso believes that protectionist pressures are increasing. 

When the Doha trade round was launched shortly after September 11, 2001, there was plenty of international goodwill. But disenchantment with globalization – and, in some regions, fear of immigration– has since set in. A recent Financial Times/Harris poll in the US, Germany, France, the United Kingdom, Italy, and Spain found people nearly three times more likely to say that globalization is negative than positive.

Free trade would lead to an overwhelming boost to welfare everywhere, but especially in the developing world. Grasping these benefits is potentially one of this generation’s greatest challenges. Increased negative sentiment could have the worst possible result: not just Doha’s failure, but also the raising of trade and immigration barriers.