The Wall Street Journal’s L. Gordon Crovitx makes the case for unilateral free trade by comparing the continued success of Hong Kong to the technology industry:
“Unilateral free trade is never an issue,” reports Yeung Wai Hong, publisher of the popular Chinese-language weekly Next Magazine. Unilateral free trade remains policy here under Chinese rule, as it was under Britain. Mr. Yeung noted that one of the few tariffs that did exist, on wine, was recently abolished, and in typically speedy fashion Hong Kong is already hosting some of the world’s biggest wine exhibitions and auctions.
Few places practice unilateral free trade, but one reason the failure of the recent trade negotiations hasn’t been bigger news is the less well-understood point that some of the most important industries in the world live in their own version of a free-trading Hong Kong.
For many newer, knowledge-based industries, the U.S. has not relied on multiparty or bilateral agreements. Instead, Information Age industries have usually not sought trade protections and have thrived by being left alone. “Such ultramodern industries as telecommunications and financial services gained their momentum largely from unilateral openness and deregulation in the U.S.,” economist Jagdish Bhagwati has explained. “A Brussels bureaucrat can argue with a Washington bureaucrat, but he cannot argue with the markets.”
As Mr. Bhagwati puts it, “If we refuse to reduce our trade barriers just because others do not reduce theirs, we lose from our trading partners’ barriers and then lose again from our own.” So a proper response to the failure of multilateral trade talks would be to extend the benefits granted to lucky industries such as technology — by granting all industries the same unilateral free trade.