Is free trade a myth?

Do free trade and globalization have a positive impact on growth, wages and employment? Or do they adversely impact jobs, growth and local employment? I came across a blogpost in NYT's Economix that addressed this issue.

 The blogpost summarizes the views on the negative impact of globalization and free trade on wages and unemployment.

"For decades, economists resisted the conclusion that trade – for all of its many benefits — has also played a significant role in job loss and the stagnation of middle-class incomes in the United States. As recently as 2008, for instance, Robert Lawrence of Harvard, one of the country’s most respected trade experts, concluded that trade explained only a small share of growing income inequality and labor market displacement in the United States.

... 

One reason that economists may be uncomfortable talking about trade’s impact on jobs and wages may be concern that it could set off protectionist responses. And economists are right that expanded trade has certainly been good for the United States. It has brought us better and cheaper consumer goods, opened new export markets, lifted up many poor countries and strengthened American alliances around the world."

Citing studies that confirmed that growth in the U.S. was not taking place in sectors that were involved in trade, regions that faced competition from Chinese competition had higher unemployment and companies that were headquartered in the U.S. provided more jobs abroad than in the U.S. the post concludes that with growing markets in other countries trade should provide a boost to increasing opportunities and wages back in the U.S. A more critical analysis of free trade is found here which argues that the realities of trade in the renewable energy sector, especially solar, should necessitate protection in terms of increased State intervention.

Can we afford to ignore the principles of reduced barriers to trade in today's multilateral trade world? Though it may have a benefit, does it not have a huge cost too? What should the attitudes of countries be in the context of growing domestic pressures to increase trade barriers? While globalizing and reducing barriers may not be politically feasible, is it also economically unfeasible? 

Seal trade ban - Some issues

I have earlier blogged about the Seal dispute here. Canada and Norway requested for consultations in 2009 regarding EU regulations that ban the importation and marketing of seal products into the EU. The dispute panel in these cases has still not been set up. News of Canada agreeing to the appointment of panelists in these cases is trickling in now. 

This piece highlights the different stakeholders and interests that surround this dispute. The importation and marketing of seal products are banned. Communities and industries related to seal hunting are naturally impacted. Their economies and livelihood are at stake. 

My thoughts on the quagmire of interests, issues and impact this dispute has:

1. Trading communities involved in seal trade are impacted by this ban.

2. The "animal welfare" concerns of people in the EU translated into EU legislation by expression of democratic will is an exercise of domestic, regulatory policy space. Moral choice has been exercised by the EU.

3. The EU measure undoubtedly impacts seal trade. Whether it is discriminatory or unreasonably restrictive of international trade is another issue. Does the exercise of EU's domestic regulatory space have a discriminatory impact on Canada?

4. Does the opinion of the Canadian people regarding seal trade have any bearing not he dispute? Should Canada's position in the WTO reflect the interest of those adversely effected by seal trade or public opinion in Canada which may be against seal trade? What is Canada's "national interest" in this case?

5. It is reported that the value of seal trade is minimal compared to the benefits that Canada will gain by a trade agreements with the EU. Should there be a trade off and Canada drop this dispute to gain in trade with the EU?

6. It is often said that there are winners and losers in the globalization game. In this case, "trade barriers" are impacting livelihoods of certain people in Canada. Is the answer fixing alternative employment avenues and compensatory packages for them rather than challenging EU's domestic policy space? Can this analogy of providing compensation packages extended to other "losers" in the globalization arena. Industries and sectors often lose out to international competition. Should national strategies increasingly look at cushioning such losses? Is it feasible at all or should market forces be allowed to take its course.

7. It is "animal welfare" today. Can it be extended to labour rights, democratic values, social norms and environmental standards tomorrow? Can domestic regulatory policy space be a weapon of protectionism?

And finally on the delay in the dispute being proceeding at the WTO. The request for consultation was made in 2009. It is 2012 and the panelist have still not been chosen. Does not augur well for the dispute settlement mechanism of the WTO as commented by Robert Howse here. The only consolation perhaps is that the complainant, Canada, is itself the cause for the delay in the establishment of the panel. Trying times for the dispute settlement system.