Managed Trade and Other Terrifying Alternatives

Olaf Brostowski via flickr || Creative Commons

At the beginning, it seemed that CETA (Free Trade Agreement with Canada) will be only a formality in the form of ratification. Then it looked like an almost complete failure in Wallonia, to subsequently get the stuck contract finally signed.

Let’s put aside for this analysis the considerations about the national competences and subsidiarity in the EU (although it is a highly interesting topic indeed) and rather take a look at the actual contract itself. The majority of European Union citizens (especially the Eastern part) perceive Canada as a Switzerland-like country of lumberjacks (everything works there, people are happy, and if one could buy Slovak sheep cheese there, half of Slovakia would emigrate there tomorrow). CETA would irritate only a few citizens, if any at all. The problem is that the agreement is recognized as a beachhead, or Trojan horse of the TTIP agreement – the Free Trade Agreement between the EU and the US.

Economists disagree about almost everything. But if we want to find something that is closest to the general economic truth, it is the effect of free trade. Less barriers for trade equal more prosperity for everyone. Division of labor and the trade resulting from it (mutual exchange of the fruits of our varying skills) enabled the humanity to unbind from the society of hunters and gatherers.

However, I cannot simply finish my commentary here. There is one fundamental problem with CETA and TTIP. Treaties about free trade are not about free trade, but about managed trade. They are the result of thinking in the frames of the 300-years old mercantilist philosophy, which considers export to be the source of wealth and import to be the price paid for that wealth. However, it is quite the opposite – the wealth of our tables, refrigerators and living rooms is increased by the import and it is the export that is the inevitable price to be paid.

Speaking of free trade, the agreements should not take the form of a 1,600-page-document. Free trade could easily be achieved by a simple declaration. Countries would give up barriers and allow citizens to buy what they want from whom they want. Although not many countries did this in the past, Hong Kong, Singapore of mid-19th century and Britain came pretty close.

But back to the reality, where policies are forged by various organized interest groups of different sizes and result in a mix of protectionist policies. Do CETA and TTIP represent an improved mix of protectionism? Some of the pronounced doubts of anti-TTIP folk are exaggerated and unfounded. For example, the dreaded ISDS Act (clauses about investment protection) works in bilateral contracts as a protection against sticky fingers of national politicians for years. Slovakia has already signed 55 of these agreements, including the one with the U.S. (since 1991). Neither TTIP nor CETA affect the possibility of Brussels and Bratislava to micro-manage our daily lives by determining the power of our vacuum cleaners or by banning steak tartar in restaurants. The “social standards” of the Swiss people have not decreased by signing Free Trade Agreement with China (2013) and since then, they do not have to slave 12 hours daily in windowless sweatshops. However, there are some concerns that I personally have – trade agreements are the building bricks of a new global regulatory superstructure, which has the potential to affect our daily lives.

However, global society is currently experiencing an open ideological fight for the future development of human society. Fight between the global convergence of nations versus an economic autarky (or autism). For those who prefer a society built on freedom, private property and voluntary interaction of people, it is hard to find allies in the current global political affairs. Trade Agreements are such allies, even if they are allies with both legs limp and smelly breath. Accepting them uncritically and without notice would be a mistake, but not to accept them would be even a greater error. Because other alternatives are even more terrifying.

Translated by Natália Hlaváčová, member of Slovak Students for Liberty