Fair Trade for All: How Trade Can Promote Development available in Hardcover
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- Oxford University Press, USA
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Joseph Stiglitz, the Nobel Prize-winning economist, and Andrew Charlton, a Research Officer at the London School of Economics, argue for an international trade regime designed to support countries' national interests, especially the interests of the poorest countries. They show how previous trade agreements have harmed the poorer countries. The OECD forecast that they would gain $90 billion a year from the Uruguay agreement, but in fact the 48 poorest countries lose $600 million a year from it. The OECD countries' tariffs on imports from developing countries are still four times those on imports from the OECD countries. Stiglitz and Charlton warn, "Prescriptive multilateral agreements must not be allowed to run roughshod over national strategies to deal with idiosyncratic development problems." Stiglitz and Charlton propose instead a model for managing trade between the richest and the poorest countries in the interests of all, to ensure that trade serves development. They point out that the poorest countries need social safety nets, retraining programmes, technical aid and development banks. As they note, "To date, not one successful developing country has pursued a purely free market approach to development." The richer countries all used industrial policies to develop. Nor is free trade the answer. As they write, "the issue facing most countries is not a binary choice of autarky (no trade) or free trade, but rather a choice among a spectrum of trade regimes with varying degrees of liberalisation." Latin America's open capital markets not its relatively closed trade policy caused its 1990s crash. "Latin America's reliance on foreign capital flows and foreign direct investment . made it particularly vulnerable to global economic shocks." Latin America's countries have now created the Bolivarian Alternative for the Americas (ALBA), independent of the USA, the IMF and the World Bank, based on the principles of respect for national sovereignty and solidarity. The US and EU states will never sign a fair international trade agreement because they are driven by the furies of private profit not by principles of social justice.