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The Truth about Trade

The Truth about Trade

Clive George

(2010)

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Abstract

Is it really true that the trade agreements pursued in the World Trade Organisation and through regional negotiations are vital for eliminating world poverty and achieving a sustainable future? Or is trade liberalization the villain of the piece? Clive George's provocative book examines the evidence, exposes the myths, and presents challenging new proposals for comprehensive reform of the global trading system. Based on ten years of in-depth research into the impacts of trade agreements on sustainable development, it reveals that few of the claims made by the major players stand up to scrutiny, while many of the counter-claims lack rigour in their analysis of key issues. It cuts through the rhetoric with illuminating anecdotes from the author's experience of working with trade negotiators, to present a more realistic view of their motives and the outcomes they achieve. Each of the components of the negotiation agenda is examined in turn, to identify the most likely economic, social and environmental impacts of liberalising trade in manufactured goods, agriculture, services, investment, intellectual property rights and the other rules by which trade is governed. In some cases the rhetoric approximates to reality while in many others the negotiated outcomes do more harm than good to both development and its environmental sustainability. From its analysis of the relationships between trade, social transformation, economic growth and environmental integrity, the book concludes with proposals for how the world trade regime might be reformed to help tackle the world's most pressing problems instead of making them worse.
Clive George followed a career in industrial management before joining the University of Manchester to undertake research and consultancy on the use of impact assessment techniques in international development. As a Senior Research Fellow in the University's School of Environment and Development he was principal advisor to the World Bank on the evaluation and development of impact assessment systems in the Middle East and North Africa and has acted as a consultant to the OECD, UNEP and other international agencies. Through his work for UNEP and the European Commission he has become one of the world's leading experts on assessing the interacting economic, social and environmental impacts of international trade agreements. His books include Environment and the City (2008) with Peter Roberts and Joe Ravetz, Impact Assessment and Sustainable Development (2007) with Colin Kirkpatrick, and Environmental Assessment in Developing and Transitional Countries (2000) with Norman Lee. He has published numerous articles on sustainable development, impact assessment, global governance and international trade.
'Trade and trade liberalization on its own and as practiced today will not necessarily result in a more sustainable future. This is what the arguements and in-depth analysis in this interesting and thought provoking publication provide. It is a recommended reading for practitioners, trade negotiators, and policy makers concerned about making trade an effective tool for facilitating the transition to more green and sustainable economies.' Hussein Abaza, Economics and Trade Branch 'Clive George was at the centre of the EU's ten-year research programme into the impacts of trade liberalization. Now he is able to reveal the true findings of that research. This careful assessment of the evidence shows how trade liberalization threatens economic development, anti-poverty programmes and environmental sustainability in the vast majority of developing countries, with potentially catastrophic results. This book is an important corrective to the myth that free trade will lift millions out of poverty. It should become required reading for all people seeking to understand the truth about trade.' John Hilary, War on Want 'Finally, an empirically-based assessment of the trade and globalization process that does not veer left or right, but moves the debate forward!' Kevin P. Gallagher, Boston University 'George also discusses harms from intellectual-property agreements, competition and investment policies, and regional trade agreements, before suggesting some reforms to make policy in "the global interest", and to mitigate "biodiversity loss" and global warming. "Scientific rigour tends to be unpopular with decision-makers, who generally use the studies to support their own proposals and may prefer not to know how far from the truth the results might be." Perhaps they have somewhat less of an excuse now.' Stephen Poole, The Guardian '...a tour de force from a practitioner in the field, which is likely to shock, and rightly so, all those wedded to the ideology of neo-liberalism.' P. Pacheco-Lopez, University of Kent

Table of Contents

Section Title Page Action Price
About the author\r i
Boxes\r v
Preface vii
Note\r x
Acknowledgements xi
Abbreviations xiii
Part one | Agendas 1
Introduction 2
1 | From the Corn Laws to Seattle 3
The battle in Seattle 3
Sustainable development 5
Trade liberalization 7
Trade, environment and poverty 9
2 | A matter for negotiation 11
A question for the Trade Commissioner 11
The negotiation process 13
The role of sustainability impact assessment 15
3 | Claims and counter-claims 18
Impact assessment 18
Decision-based evidence-making 20
The SIA methodology 21
Box 3.1 The Doha agenda 22
Box 4.1 The evolution of Korea’s development strategy 48
Assessing the impacts 24
Interpreting the evidence 26
Part two | Impacts 29
Introduction 30
4 | Climbing the development ladder 31
Trade in manufactured goods 31
Traditional economic gains from liberalizing trade in manufactures 32
Loss of government revenues 35
Production effects 36
Employment 38
Wage levels, working conditions and gender effects 40
Environmental impacts 42
Dynamic effects 44
Box 4.1 The evolution of Korea’s development strategy 48
Overall impact on sustainable development 49
5 | Food for thought 51
Trade in agricultural products 51
Traditional economic gains from liberalizing agricultural trade 52
Prices and production 53
Food security 55
Energy security and biofuels 56
Employment, incomes and working conditions 57
Environmental impacts 60
Box 5.1 Agriculture and forestry in Brazil 62
Dynamic effects 64
Overall impact on sustainable development 66
6 | Invisible earnings 68
Trade in services 68
Services negotiations 70
Traditional economic gains 71
Varieties of service industry 71
Financial services 73
Communications services 76
Environmental services 76
Box 6.1 Public sector initiatives in water supply and sanitation 78
Transport services 80
Distribution services 84
Box 6.2 Liberalization of distribution services in Brazil, Kenya and Malaysia 82
Overall impact on sustainable development 84
7 | TRIPs abroad 86
Intellectual property 86
TRIPs and public health 89
Geographical product names 90
TRIPs and industrial development 91
TRIPs and biological diversity 92
Overall impact on sustainable development 95
8 | Filling the gaps 97
Trade facilitation 97
Box 8.1 Perceived technical barriers to trade for importing into the EU 99
Government procurement 100
Competition 102
Investment 105
Overall impact on sustainable development 107
9 | The rules of the game 108
WTO rules 108
Dispute settlement 110
Subsidies, countervailing measures and anti-dumping 111
Technical and health standards 113
Special and differential treatment 113
Regional trade agreements 115
Trade and environment 117
Overall impact on sustainable development 119
The missing element 119
Part three | Responses 123
Introduction 124
10 | Outflanking measures 125
A selection of answers 125
Indirect influences 127
Aid for trade 129
11 | Rewriting the rules 133
The global interest and the national interest 134
A new kind of agreement 136
The single undertaking 137
Trade in manufactured goods 139
Agricultural trade 141
Services trade 143
The Singapore issues and intellectual property 144
Beyond Rio and Bretton Woods 145
12 | An end and a beginning 148
The impacts 148
A new beginning 150
Notes 154
Bibliography 157
Index 172