Yale Bulletin and Calendar

November 15, 2002|Volume 31, Number 11

Carla Hills, who has served as the nation's trade representative under former President George H. Bush, delivered the George Herbert Walker Jr. Lecture in International Studies.

Former trade representative
champions open markets

Growing skepticism about globalization and an increasing demand for protectionist trade policies in the United States could threaten the current round of multinational trade negotiations, former U.S. trade representative Carla Hills '58 LAW said in a Nov. 7 talk on campus.

Hills, who served as the nation's trade representative under former President George H. Bush, warned that the world's economic and political stability will be at stake should the negotiations fail.

The alumna delivered the George Herbert Walker Jr. Lecture in International Studies on the topic "Reflections on Trade Liberalization: The Promise and the Peril" in Luce Hall.

In her talk, she said the current round of negotiations by the 144 member states of the World Trade Organization (WTO) -- called the Doha round, after the city in Qatar where the talks were launched last November -- "are by far the most important" ever held, adding, "The success or failure of these negotiations could well determine the economic pace of the global economy for the first half of this century."

Hills noted that the 1999 global trade negotiations held in Seattle, Washington, failed due to waning public support in the United States and other industrialized nations for free trade. In fact, since the mid-1990s, she said, there has been a "sharp disagreement" in the United States over trade policy.

"On the one side are those who believe that the United States must lead the world in opening global markets and in supporting the World Trade Organization, convinced that open markets raise standards of living and create the will to deal with important social issues, and that trade and investment provide a framework and incentive to the rule of law," she said.

"On the other side are labor unions, some environmentalists, advocates for religious freedom, human rights and a variety of other social causes -- some real, some not -- as well as major industries such as steel and textiles, that insist that trade negotiations deal with their specific interests and believe that attacks on the WTO and globalization are a good way to publicize their interests," Hills continued.

Despite detractors, there is evidence that open markets have brought economic and political gains to much of the world, Hills commented.

For example, a recent study published by the Institute for International Economics showed that world poverty fell from 44% of the global population in 1980 to 13% in the year 2000 -- "the fastest decline in history," Hills said. She attributed this decline to open trade, which, she asserted, not only spurs economic growth that results in greater prosperity for more of the world's population, but also encourages political stability.

The former U.S. trade representative maintained that multinational agreements of the past two decades that have promoted open markets -- including the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Alliance (NAFTA), as well as the establishment of the WTO -- have benefited diverse countries around the world. They have created an "explosion of new opportunities in Asia, Latin America, Eastern Europe and the former Soviet Union that had been for years closed off to foreign entrepreneurs," she said.

In fact, all of the countries whose economies have prospered most in the past several decades, she stated, "opened their markets to international trade and investment, causing them to grow, on average, five times faster than those that maintained closed regimes."

Furthermore, she said, an interdependent economic global system has also spurred widespread political reform as countries liberalized their political regimes in conjunction with their more liberalized trade policies.

Unlike trade negotiations of the past, the Doha round marks the first time that WTO member nations have acknowledged that more needs to be done to integrate poorer nations into the global trading system, said Hills. Their pledge to make this a focus of the negotiations has helped previously skeptical developing nations to support the launch of the negotiations, which are expected to be completed in 2005, she added.

Hills told her audience that it is "well past time" for rich countries to take steps to integrate poor countries into the world economy. In particular, she said it is essential that attention be paid to Muslim countries, which have seen declines in their citizens' incomes.

"This is not a good omen as we seek to rid the world of terrorism," Hills stated. "Economic growth and opportunity may be the very best weapons we have. ... We know that poverty and despair swell the ranks of those who would support terrorism."

In the United States, Hills said one of the biggest issues is whether Congress will support pledges outlined in the Doha talks. She noted that President George W. Bush has already made a number of "protectionist" concessions as a result of pressure from Congress or labor unions. These include a 30% tariff on the import of steel and a 20% tariff on imported Canadian lumber. Likewise, she said, the nation's Farm Bill of 2002, passed by a substantial majority in Congress, "raised agricultural supports by a staggering 80%, setting off alarms worldwide." Other nations have protested these moves in the WTO, Hills noted.

However, the Bush administration "is moving forward" on a number of regional and bilateral trade negotiations that can only benefit the future of the global economy, said Hills, adding that these too are important in fighting off protectionist urges in the country.

"The big question is whether we as a nation can muster the political will necessary to lead the world to a successful conclusion of the Doha round of global trade talks," Hills told her audience.

"Every citizen needs to understand what is stake and stand up bravely to protect open markets," she added.

-- By Susan Gonzalez

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