07/20/05
Dear Sir:
In his commentary “World Trade Organization: Waning Expectations (July 18, 2005),” Alan Beattie accurately details the dilemma which stymies progress in the Doha round of trade negotiations. Each nation is afraid to dispatch with protective tariffs and subsidies for fear other nations will not reciprocate. Discomfort with unilateral trade liberalization is grounded in the classic prisoner’s dilemma such that each nation believes it will gain only when other nations liberalize. Fortunately, in 1817, one of Britain’s great sons, David Ricardo, dispelled this trade myth. He showed in his theory of comparative advantage that benefits which come from unilateral trade liberalization far exceed costs. Folks, this is economics 101. As the Doha round nears an end, trade representatives must discard the politics and accept the economics. Embracing the benefits of unilateral trade liberalizing is the only way to spring us from our prisoner’s dilemma.
Marshall L. Stocker, CFA
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