The Foreign Service Journal, April 2007

A P R I L 2 0 0 7 / F O R E I G N S E R V I C E J O U R N A L 49 he Doha Round and the economic lib- eralization it symbolizes are under increasing attack, even though eco- nomic data show that cross-border trade boosts incomes worldwide, par- ticularly in developing countries. Instead of being seen as an opportunity for economic growth, trade liberalization is often portrayed as an agent of imperialism in developing countries and a dri- ver of the “race to the bottom” in the rich countries. This is evident in the rising protectionist pressures in the rich countries and increasing trade skepticism from devel- oping countries. In France and Japan, trade is seen as a threat to the rural way of life. In Latin America, the “Washington Consensus” that includes open markets is under attack in Venezuela, Bolivia and Argentina. And in the United States, longstanding support for open trade has been undermined by complaints about “unfair” policies by China, concerns about outsourcing, and the fear of “hollow- ing out” and layoffs. Although economic theory and recent history over- whelmingly support free trade and globalization, little atten- tion has been given to the high human costs created by the “creative destruction” of people’s lives. As Gene Sperling, former economic adviser to President Bill Clinton, ruefully observes, “While the benefits of open trade are broadly shared, the costs are heavily concentrated.” To move forward with the Doha Round and economic liberalization generally, these very real concerns must be addressed, and a new, more comprehensive view of the globalization process embraced. Free Trade Helps Growth Systematic studies of economic performance since the late 1940s show a strong relationship between economic openness and growth. For example, a study of 117 countries by Jeffrey Sachs and Andrew Warner found that developing countries with open economies grew at 4.5 percent per year during the 1970s and 1980s, compared with 0.7 percent in closed economies. In a 1998 study, the Organization for Economic Cooperation and Development concluded that nations relatively open to trade grew twice as fast as those closed to it. A 2004 World Bank study by David Dollar showed that trade raised 375 million people out of extreme poverty over 20 years. Studies by McKinsey & Company and the OECD estimate that full liberalization could boost global welfare by nearly $300 billion annually by 2015 and add almost a billion new customers to the global market. For a regional perspective, consider the experience of East Asia. In Taiwan, South Korea, Malaysia, Japan and Singapore, the gains in wealth have been spectacular. The vast majority of families in the region have climbed from poverty 30 years ago into the middle class. S AVING G LOBALIZATION FROM I TSELF T HERE ARE CONCRETE WAYS TO COUNTER THE FEARS OF CHANGE AND INCREASING INEQUALITY THAT ARE FUELING THE CURRENT BACKLASH AGAINST TRADE LIBERALIZATION . T B Y E RIC T RACHTENBERG Eric Trachtenberg joined the Foreign Agricultural Service as a Civil Service employee in 1995, becoming a Foreign Service officer in 1997. He has served in Taipei and Moscow, and as a U.S. delegate on the World Trade Organization accession working parties for Russia, Jordan and Saudi Arabia. He is currently a special assistant to the FAS deputy administrator. The views expressed in this article are solely those of the author and do not reflect the official positions of the Foreign Agricultural Service or the U.S. Department of Agriculture.