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Fri. February 23, 2024
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IAF Editorials
Defeat Terror With Trade
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Five years on from the Sept. 11, 2001, terrorist attacks, the West has made progress and suffered setbacks in combating global terror. Yet it has failed to deploy the liberating power of free trade to defeat terrorist barbarism. Why?

The U.S. proclaims the virtues of economic freedom in combating terror and promotes free-trade deals with individual Middle Eastern nations, but never elevates it on the anti-terror agenda. Preventing terror is least of all a military operation. It requires embedding the rule of law, open political participation and economic virtue in at-risk nations. This is vitally important to combat the social isolation that feeds the terror network. As Robert Klemmensen of the University of South Denmark demonstrated in a study, openness to trade is closely associated with national resistance to being a breeding-ground for, or indeed victim of, terrorism.

We keep hearing of "windows" in which the near-collapse of Doha round of trade talks can be jump-started. But those windows keep opening--and closing--with no real progress.

Is it time for a new approach? Even a "Doha breakthrough" would bring but modest economic returns on a huge investment of political capital in the World Trade Organization. The WTO is not the only game in town. Neither are the kinds of bilateral trade deals the U.S. keeps pushing as an alternative.

When we confront a global matrix of resistance to breaking trade barriers, hopes for global economic freedom can't ride on the cumbersome WTO bureaucracy. Daniel Ikenson of the Cato Institute observes that "increased trade, and the economic growth it spurs, does not require new trade agreements," arguing for unilateral trade liberalization.

It's hard to disagree--especially when global merchandise exports grew 50% between 2000 and 2004 without any new WTO accords.

Free-trade unilateralism is slowly gaining a foothold among serious observers of the global economy. Guy de Jonquieres, Asia editor for the Financial Times (and former FT world trade editor), argues that bilateral deals exhaust the political capital needed for broader agreements, concluding, "Unilateral market opening works, partly because it requires governments to commit themselves from the outset to a clear strategy ... in every case where it has delivered the economic goods, it has been buttressed by purposeful, concurrent domestic reforms."

Opening markets enhances domestic economic freedom--unleashing the kind of egalitarian wealth creation that drains the fevered ideological swamps that breed terror. Freedom also reinforces political virtue, making "free trade" a top diplomatic priority, both to advance economic opportunity and fight terror.

While the WTO matters, it's a deeply flawed instrument, damned by free-marketeers for timidity and lambasted by left-leaning critics for uprooting traditions and destabilizing domestic markets. With their own protectionist interests (agricultural subsidies and tariffs, for the U.S. and the EU), plenty of WTO member states (especially in the Third World) complain against trade barriers exploiting the rhetoric of free trade, but uphold it only to leverage self-serving deals.

Unilateral free trade is vital when the WTO is becoming the lowest common denominator of economic openness. Big trade deals are costly. The WTO is conflicted by being a global regulator, subsidizer of Third World cash demands and forum for a veritable nongovernmental organization bazaar of "free" (but costly) protectionist advice peddled to developing nations anywhere negotiators meet.

Even reinventing the WTO, restoring open markets as its first principle, wouldn't stop a "new" WTO from circling right back to where it is now. Unilateral free trade, however, can open markets now and benchmark the WTO and other global institutions for future trade-promoting initiatives.

America must lead. President George W. Bush's most controversial post-9/11 policies, especially the prolonged war in Iraq, have cost him much political capital at home and abroad. The Bush administration, short of diplomatic assets to marshal in favor of free trade, can reassume the mantle of economic leadership by pushing unilateral free trade, with its faster economic gains (especially in the developing nations).

It exposes protectionist hypocrisies, too. Sub-Saharan Africa, aggressively resistant to free trade, should drop internal trade barriers. Leaders who use free-trade rhetoric while blocking the "evils" of competition at home impoverish the African people. We must say so. Likewise, the success of unilateral trade-opening in Australia, New Zealand and Chile, to name a few, should be the model for fighting short-sighted economic nationalism.

Ultimately, economic self-interest--not bargained-for exchange--is the key to opening markets worldwide. International norms will respond to unilateral trade-opening as the bar of economic freedom is raised ever higher. Only aggressive, credible, moral leadership from the free world can make this happen.

The United States, by challenging its trading partners to action, can burnish its credentials as "exemplar of freedom" in the world by explaining that economic freedom as exemplified by free trade is the first, possibly best "weapon" against terror. Understanding that will enable us truly to transcend the status quo in trade and drive terror back into the dark shadows whence it arose.

George A. Pieler is senior fellow with the Institute for Policy Innovation and former economic adviser to Sen. Bob Dole. Jens F. Laurson is editor in chief of the International Affairs Forum, Arlington, VA

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