Tag: doha

Frederic Bastiat Makes the Case for Trade Facilitation

Earlier this month in Bali, WTO ministers reached agreement on a set of negotiating issues known as “trade facilitation,” which deal mostly with customs reform and related measures to reduce the time and cost of transporting goods and services across borders. If removing tariffs is akin to turning on a water spigot full blast, trade facilitation is the act of untangling and straightening out the attached hose. A kinked hose impedes the flow as an administratively “thick” border impedes trade.
 
This paper, which I wrote a few years ago, describes the importance of trade facilitation reforms to economic growth, and explains why subjecting such self-help reforms to negotiation – instead of just undertaking them as a matter of surviving in a competitive global economy – would only delay the process of removing inefficiencies. Five years after the paper was written and 12 years after multilateral negotiations were launched in Doha, a deal was reached obligating governments to reform and streamline their customs procedures, with technical and financial assistance provided by the wealthy to the developing countries.
 
As I wrote yesterday, this is small relative to the overall Doha Round agenda and relative to what might have been accomplished over these past 12 years in the absence of Doha (i.e., without adhering to the pretensions that our own domestic barriers to foreign commerce are assets to be dispensed with only if foreigners dispense of theirs). 
 
But perhaps nobody has been more gifted at exposing the absurdity of administrative trade barriers with pithy wit and grace than the 19th century French classical liberal business and economics writer Frederic Bastiat. Around 1850, Bastiat made a case for trade facilitation that can scarcely be improved:
Between Paris and Brussels obstacles of many kinds exist. First of all, there is distance, which entails loss of time, and we must either submit to this ourselves, or pay another to submit to it. Then come rivers, marshes, accidents, bad roads, which are so many difficulties to be surmounted. We succeed in building bridges, in forming roads, and making them smoother by pavements, iron rails, etc. But all this is costly, and the commodity must be made to bear the cost. Then there are robbers who infest the roads, and a body of police must be kept up, etc.
 
Now, among these obstacles there is one which we have ourselves set up, and at no little cost, too, between Brussels and Paris. There are men who lie in ambuscade along the frontier, armed to the teeth, and whose business it is to throw difficulties in the way of transporting merchandise from the one country to the other. They are called Customhouse officers, and they act in precisely the same way as ruts and bad roads.
 Congratulations, negotiators, for agreeing to remove the kinks from your hoses. 

Political Bloviation in Doha, Qatar

The 13th Doha Forum has convened, with your loyal correspondent in attendance. It is an impressive gathering, filling the luxurious Ritz-Carlton. Cars are checked for bombs before approaching the hotel. Guests have to go through a metal detector both entering the hotel and inside heading to the conference. The meeting room was full, with just about every citizen of Qatar (who only make up something like 15 percent of the population) seeming to line the hallway before the Emir arrived.

There are few more tragic figures than onetime national leaders who have fallen away from the centers of power. For instance, after the Qatar royals, who still do matter, opened the gathering, to the stage strode a frustrated former British prime minister trying to remain relevant. The Right Honorable Gordon Brown, who finally grabbed the premiership from his frenemy Tony Blair only to lose it in the 2010 election, twice quoted John F. Kennedy while chattering on about the importance of interdependence.

Brown also urged the creation of a North African-Middle Eastern development bank to promote economic growth in such nations as Egypt—which, he failed to note, has been buried in foreign aid for years without generating economic growth. The former PM was introduced as preventing a new Great Depression (who knew!) and later lauded for his “profound” ideas (apparently defined as previously advanced by his hosts in Qatar).

Francois Fillon, a former prime minister of France, followed, telling us that we needed to solve the Syrian conflict, create a Middle Eastern financial institution, and “defend European civilization,” whatever that means. The moderator declared his ideas to be “fascinating” and his mention of Europe to be an example of “self-reflection.”

Amadou Bondou, the vice president of Argentina—which has made a practice of looting the productive and stealing people’s retirement savings—denounced austerity. These policies are having “negative repercussions” on poor people, he complained. No doubt, they are. However, if you have a wild party, you can’t very well expect everyone else to pay the clean-up costs. Next time countries, especially his own, should think before blowing their budgets to enrich favored interests and win votes.

Wolfgang Ischinger, chairman of the Munich Security Conference, concluded the first session with a discussion about the importance of solving the Syrian conflict. He suggested a comprehensive conference to end the fighting and conduct of proxy wars in the region. Alas, what evidence is there that the parties are prepared to settle or that their backers are prepared to stay out? He also urged more humanitarian assistance for Syrians. He worried that if the Europeans fail to give more aid they may be left with no friends at all in Syria. Given the way that conflict is going, why would that be such a bad thing? Trying to make friends is about the dumbest reason one can imagine for getting involved in such a war.

Well, that’s the start here in Doha. I just can’t wait for additional “fascinating” observations from more “profound” thinkers like Messrs. Brown, Fillon, Bondou, and Ischinger!