As the world moves toward a truly global trading system, a frustrating stalemate has emerged in the United States, replacing what was until recently an important national discussion on the benefits of open markets.
The ensuing silence is unfortunate on an issue so fundamental to economic progress for rich and poor countries alike. There is too much at stake - jobs, the environment, worker standards - for debate on free trade to be left to the spin of vocal interest groups.This development is especially troubling in a world in which technology and global economic forces continually challenge old assumptions. It is also ironic because free trade is at its heart a question of democracy.
The corrosive effects of closed-door decision making on Asian economies over the past year illustrate the value of disclosure and debate. Free trade and democracy share much in common. Most important, each provides rules and procedures for revealing and balancing conflicting aspirations.
First, the economics. Free trade is a key stimulant to economic growth in poor countries. Private- sector-led growth is the sine-qua-non of poverty reduction. ''Trade, not aid,'' though an over-simplification, conveys much of the story of successful development.
Moreover, particularly when accompanied by privatization, trade liberalization reduces debilitating corruption and bribery. Open borders increase competition, forcing firms to become more efficient and governments more transparent. In developing countries especially, trade has created jobs, raised incomes and reduced poverty.
In the United States as well, anxiety over job losses from trade agreements with developing countries is misplaced. Indeed, data indicate the opposite: trade creates jobs that pay more and are more secure. From 1987 to 1997, U.S. exports to developing countries increased from $91 billion to more than $211 billion. These numbers translate into well-paying, stable jobs for thousands of American workers.
To be sure, democracy can on occasion become skewed by powerful interests, resulting in misguided policies. But because these decisions, and decision makers, are subject to popular scrutiny, and to institutional checks and balances, the democratic process generally avoids the ''big'' mistakes by reining-in powerful interests.
One of the main requirements for economic growth is stability. Investors must have confidence in the integrity of the market and believe that they can earn reasonable rewards. Political stability is crucial to this confidence. But economic security, defined in part by freedom from arbitrary and unforeseen policy changes, is equally important.
Open markets allow each country the opportunity to sell whatever it can best produce, subject only to the demand in other countries, and to buy what it most needs.
Public opinion is thus manifested through consumer choice. With effective market structures within countries, such as antitrust laws and security market regulations, free trade transmits freedom of opportunity to the individual firm and individual workers within a firm, unlocking choice and innovation at every level.
Moreover, free trade is given structure by a guiding set of rules, and it provides an institutional counter-balance to powerful interests - similar to that performed by democratic government. While unleashing the power of hard work and creativity, these rules restrain potentially arbitrary and damaging actions by all members.
The World Trade Organization, as the mechanism responsible for the most prominent set of rules, plays a crucial role in this regard.
Ultimately, the WTO cannot force nations to change their laws. It can't prevent a determined government from raising a single trade barrier. Rather, it is limited to insisting that barriers in one area be negotiated with those trading partners most affected, and be compensated by reductions in barriers elsewhere.
In reality, however, its influence is much greater. By providing a public forum for other countries to debate such a defection and argue a legal case for retaliation, the WTO's disclosure mechanisms and institutional dynamics impose important political costs that help shape policies.
Just as with democracy, however, free trade does not satisfy all interests all of the time. Individuals, firms and sometimes entire industries will suffer from increased competition, and social welfare and environmental concerns are real. The response to these concerns, however, is not to blame all economic, social and ecological ills on international trade.
The effects of trade on unskilled workers can be significant, but should be addressed by educating people. Reckless use of natural resources for any reason should be stopped. The solution, however, requires better environmental management and informed discussion, not cutting off trade.
Democratic societies can and must tackle these problems. More than 50 years ago Winston Churchill observed that democracy is the worst form of government, except for all the others. It is now time to recognize that the same is true for free trade.