Vinod Aggarwal: 'ANYTHING GOES' IN TRADE AGREEMENTS WILL UNDERMINE FREE TRADE

Date: 02-22-2001

HONOLULU -- The Business Roundtable's recent call for U.S. leadership in international trade is welcome. But the notion that the United States should pursue more sector-by-sector trade agreements such as those in telecommunications and information technology is a "recipe for disaster," says Vinod K. Aggarwal, a recent visiting fellow at the East-West Center.

"Indeed, such 'open sectoral' agreements are undermining the coalition in support of free trade," said Aggarwal, director of the Berkeley Asia Pacific Economic Cooperation (APEC) Study Center and professor at the University of California at Berkeley. "The new administration needs to develop a strategic vision that goes beyond tit-for-tat bilateralism and sectoralism. It should build a coalition that supports general liberalization through the WTO, not follow a strategy of 'anything goes.' Otherwise our long-term interests in a multilateral and stable international trading system will be damaged."

Aggarwal and John Ravenhill, chair of politics at the University of Edinburgh, co-authored a newly released report entitled "Undermining the WTO: The Case Against Open Sectoralism." The report is part of the East-West Center's "AsiaPacific Issues" series.

Aggarwal says the enthusiasm of the Business Roundtable for increased trade liberalization through the use of any means can be counterproductive to global trade. For example, reducing trade barriers through open-sectoral agreements -- what the Business Roundtable report refers to as "the last great successes of the Uruguay Round" -- is fraught with political and economic hazards. As Aggarwal and Ravenhill write: "By giving a few economically successful sectors the trade liberalization that they demand, the administration has undermined the broad coalition for free trade. Moreover, from an economic perspective, such agreements may also reduce economic efficiency."

Vinod K. Aggarwal can be reached at 510-642-2817 or vinod@socrates.berkeley.edu
John Ravenhill can be reached at 44-131-650-4266 or j.ravenhill@ed.ac.uk

This is an East-West Wire, copyright East-West Center