I opined over the weekend that the recent summit in Argentina could signal the end of so-called “free trade.” Which would be a good thing since, then, we could cast off the unhelpful dichotomy of “free trade” versus “protectionism” and get down to a real discussion about rules of the road when it comes to trade.
Over at The Wall Street Journal, it’s a hard day for the advocates for so-called “free trade” who give us a front-page story, “Failed Summit Casts Shadow
On Global Trade Talks:
In Blow to U.S., Chavez Taps
Latin America’s Discontent
To Fight Opening of Markets” (subscription required).
You can get the flavor of the story from the first few paragraphs:
A failed summit of leaders of the Western Hemisphere dealt a blow to global trade liberalization and strengthened the influence of Venezuelan President Hugo Chavez, a critic of the U.S. who favors protectionism and old-style socialism.
The Bush administration had hoped to use the meeting of 34 heads of state to breathe new life into negotiations on a long-stalled Free Trade Area of the Americas, a free-trade zone reaching from Alaska to Tierra del Fuego, Argentina. Instead, the meeting was so wracked by division that diplomats drafting the final communiqué failed to reach agreement even on when to resume talks on the free-trade zone.
In handing Washington an embarrassing defeat, Venezuela was joined by the four countries of the Mercosur trading bloc, a customs union led by Brazil and Argentina and also including Paraguay and Uruguay. “We were five musketeers, kneeling, sword in hand,” to oppose the FTAA, Mr. Chavez said afterward. He condemned the U.S. free-trade model as a “perversion” that would unduly benefit the U.S., and instead pushed for closer trade ties among Latin American nations.
Mr. Chavez’s success at playing the spoiler role here reflects a harsh fact for the Bush administration: Washington can no longer have its way in setting the economic agenda in its own backyard or in a large part of the developing world. The rise of Mr. Chavez, and of other more moderate leftist leaders in Latin America, reflects the disappointing results of the so-called Washington Consensus, a set of market-oriented policies like trade liberalization and privatization that the region and parts of Asia embraced during the 1990s. The disillusionment with free-market growth formulas also has spread to other parts of the developing world, such as Africa.
The Journal may view Chavez’ stance as “old-style socialism.” But, the truth is that many countries are rejecting trade that has nothing to do with so-called “free trade” and far more to do with setting terms and conditions and lots of rules to protect investment and capital. Once the discussion gets back to emphasize rules that benefit the vast majority of workers, we could see the dawning of a new framework for trade.
