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The Earth Times | Posted November 13, 2001

WORLD TRADE ORGANIZATION, FOURTH MINISTERIAL MEETING
Analysis: Controversy on mixed benefits of free trade
> BY JACK FREEMAN
Copyright © 2002 by The Earth Times. All rights reserved
DOHA, Qatar-They say that every analogy limps, but consider this: Huge numbers of children who suffer from what is called "attention deficit hyperactivity disorder" (ADHD) are given prescriptions for stimulant drugs (such as Ritalin), which have the paradoxical effect of calming them down.

That allows them to stop fidgeting and to sit still at their school desks and pay attention to their teachers. Although this treatment remains controversial, any number of studies have shown that it really does have this calming and "settling" effect on these children and enables them to concentrate on what their teachers are trying to teach them.

One might think that this would make a dramatic difference in the performance of these children in school. Certainly that is what their parents hope for. But again, paradoxically, scientific studies have been unable to show any significant improvement in their school grades. Could one say the same thing about the effect of trade on development?

That is, logic suggests that trade should have a most positive effect, but in many places the record fails to show that happening. It stands to reason that trade is an important way of generating wealth. And, as UN Secretary General Kofi A. Annan has said on several occasions, what developing countries need is not less globalization-that is, trade liberalization-but more of it.

And the World Bank puts an even sharper point on the argument, saying that if the remaining obstacles to free trade were removed, it would increase the income of developing countries by as much as $500 billion a year. (And, to paraphrase the late Senator Everett Dirksen: $500 billion here and $500 billion there, and pretty soon you're talking real money!) If that kind of money started rolling in to the developing countries, or even a fraction as much, they would soon find poverty a thing of the past-wouldn't they? Well, the evidence suggests that, in many countries, the effects of freer trade range from mixed to worse.

In several poor countries, including Kenya, Mexico and Bangladesh among others, efforts to liberalize trade have impacted harshly on food security, on environmental protection and on the livelihoods of poor farm families. Perhaps the most highly publicized case is that of the corn (maize) farmers in the southern Mexico state of Chiapas after Mexico became part of the North American Free Trade Agreement (NAFTA).

Because these smallhold farmers suddenly found themselves selling their output in competition with the corn produced on more efficient factory-farms in the Midwest US-and subsidized by the US government-they found themselves unable to maintain themselves. Many were forced off the land, while others took part in a bloody revolt. The country suffered a disastrous financial crisis, even though the number of its millionaires grew significantly.

Similar, if less dramatic, reports have come from countries from Uganda to the Philippines, from Thailand to Jamaica. A good case can still be made that, on balance, trade liberalization does more good than harm. But, based on evidence like this, it's clear that its benefits are not always as advertised. Like the pills taken by those schoolchildren, it doesn't always do as much good as some people say it will.

 
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