August 05, 2005

In praise of WTO

Juan Freire comments my previous post on subsidies and regulations. There I argued that we would be better off, in terms of environmental quality, without any subsidies (eliminating both "green" subsidies and the much larger "dirty" subsidies) and without any regulations (eliminating both environmental regulations and the more influential "dirty" regulations). Juan asks how we can make a non-traumatic transition to a policy of no subsidies and no regulations.

I have, of course, no answer to that question. But I think that the World Trade Organization represents one of our best hopes. Each subsidy and each regulation caters to a specific interest group. The rules, many of which explicitly forbid subsidies and regulations, of the WTO are one of the best defenses we citizens have against the pressure of interest groups. Based on WTO rules governments can just say "no" to the requests of lobbies.

Environmental
groups frequently complain about the fact that the WTO "considers trade liberalisation to be its main objective, which is often at odds with environmental concerns." This is true, but it is also true that trade liberalization is even more "often at odds" with environmental destruction. We have to look at the whole picture and consider the net effect of policies. It is unrealistic to aim at a world where the only effective lobby groups are the environmental lobby groups. But with the help of the WTO we can aim at a world with less powerful lobby groups. And I believe that a world with less powerful mining, farm, fishing, forestry and electrical power businesses would be a more beautiful world.

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