The End of Global Free Trade? Not Quite

In the past, globalized "free-trade" has generated enormous hostility and intense social protests between the poor and the intergovernmental organizations who they perceive as primarily serving the interests of elites and multinational corporations. These protests have only increased during the current economic crisis. But is the global free-trade regime in any significant danger? The masters of the free-trade universe are already in panic-mode.

In the name of "ensuring that trade flows as smoothly and freely as possible" among countries, organizations like the WTO and OECD seek to prevent governments from implementing policies that regulate trade to promote national interests or benefit vulnerable citizens (workers, farmers, etc). The OECD has recently released a report called, Trade-Separating Fact from Fiction, in which the organization warns against widespread questioning of the benefits of trade and free markets during the current crisis.

Freer flows of trade are part of the solution to the current economic crisis... Still, there are calls from some to protect industries and workers against imports by raising tariffs, imposing quotas or resorting to various non-tariff barriers. We would all pay a high price for heeding such calls.

The WTO is making a similar case for continued faith in globalized free-trade, warning governments not to make "protectionist" trade policy changes in response to greater unemployment. Governments risk catastrophic social unrest if they fail to offer some relief to constituents who are most vulnerable to shocks in the global trading system. In the so called BRIC countries such as India, China, and Brazil popular outrage about increasing pauperization, unemployment, and social service cuts are challenging the stability of their societies. Over 50,000 Indian farmers for example have mobilized in recent days against the WTO and demanded that the Indian government offer more defense against the organization's dictates.

For now, many developing countries are locked in a delicate balancing act between meeting the immediate needs of their citizens, and opening new markets for their exports in wealthier nations. The contradiction between dependency on external markets for exports and meeting domestic needs suggests that there is a significant trade-off under the current economic development strategy pursued by emerging economies. A structural shift among the largest emerging economies would appear to be highly unlikely in the near future.

I predict that ultimately, the BRIC nations will side with their pocket-books and seek to continue the path toward high-speed economic growth under the status-quo in the "Doha Round" WTO deliberations. So far, it appears that BRIC governments are merely paying lip-service to the aspirations of the poor---many of whom have asked for a complete break with the WTO altogether. However, we can expect to see some coordinated push-back against future rulings that explicitly limit freedom of action on trade policy by Brazil, India et al. and while this is not the complete reorganization of the global trading system the poor need, it is a long overdue step in the right direction.

Can Latin America's "ALBA" Deliver?

The Bolivarian Alliance for the People of Our America, or ALBA according to its Spanish acronym, is a little known secret to many citizens of the United States. But throughout our hemisphere the Venezuelan-led project is gaining momentum and raising new questions about the future of trade and development in Latin America.

ALBA began in 2004 between Venezuela and Cuba when the two countries began exchanging petroleum for medical assistance. Cuba has sent more than 14,000 physicians free of charge to poorest sectors of Venezuela. In return, Venezuela at one time was sending ships to Cuba with 90,000 barrels of oil a day. In the last five years, the alliance has grown to include a total of nine members spanning South America and the Caribbean. Wednesday, ALBA made regional headlines adding Ecuador, Saint Vincent and the Grenadines, and Antigua and Barbuda as its newest member countries.


The major difference between traditional US- led free trade agreements, and ALBA is that the later explicitly works toward a version of regional economic integration that is based on a vision of social development and mutual economic aid. ALBA has a stated mission of "solidarity, cooperation, complementation, and justice." US trade initiatives are primarily concerned with market access and liberalization.

The alliance functions as a counter-weight to the free-trade negotiations initiated by the US in Latin America. The final declaration of the last ALBA summit makes no secret of the member's mistrust toward the US influence in the region.

"[We recognize] the strengthening of the ALBA and its consolidation as a political, economic, and social alliance in defense of the independence, sovereignty, self-determination, and identity of member countries and the interests and aspirations of the peoples of the South, in the face of attempts at political and economic domination,"

While the political position of ALBA has been well defined, there is very little information about the success or failure of specific projects within the alliance on delivering basic needs and creating economic opportunities for people within member countries. Ultimately, the impact on poor people in one of the vastly unequal regions of the world should be the most important aspect of any trade agreement here. Otherwise, ALBA would essentially be no different from the US agreements it seeks to replace. There will most certainly be political costs for nations who join ALBA in their relationship with the United States. Is membership in the new alliance worth those costs or is ALBA nothing more than an example of inflamed rhetoric?

There have been some positive developments, most notably Cuba's "Operation Miracle Program" which, has provided eye care to hundreds of thousands of poor people throughout Latin America. If the alliance does measurably improve the lives of people within membership countries, ALBA should no longer remain in the shadows of political debate and the development community in the United States should take notice.