Free Trade Fact of the Day
Conn Carroll /
Like the new Democratic party under Barack Obama, Venezuela’s socialist government believes that free trade is the cause of, not the solution to poverty. Venezuelan embassy spokesman Gladys Urbaneja Duran, told the UN food summit in Rome that the current food crisis “is the biggest demonstration of the historical failure of the capitalist model. The main reason for the rise in food prices isn’t growing demand from the Indian and Chinese markets, or the rise in petroleum prices. The main reason is that food has been turned into yet another object of market speculation.”
Liberals in Congress and socialists in Venzuela could not be more wrong. Free trade is the engine for economic development. Center for International Trade and Economics (CITE) Director Ambassador Terry Miller explains:
International trade is fulfilling its promise as the most significant source of external financing for development, surpassing all other external sources combined. In the first five years following the adoption of the Monterrey Consensus, exports from emerging markets and developing countries have grown, according to the International Monetary Fund, at an average annual rate of almost 11 percent. Current account balances for those countries have grown from $78.4 billion in 2002 to $596 billion in 2006.
African developing countries had a current account surplus in 2006 of almost $29 billion; Western Hemisphere developing countries gained $44.9 billion from exports; developing Asia had a surplus of an astounding $278 billion. The opportunities to export are there.
An environment open to imports also drives down the price of intermediate goods used by developing country manufacturers, improving their competitive position. An environment open to imports promotes productivity gains, the single most important factor in sustainable growth. So powerful are these welfare gains from openness to imports, that trade liberalization is good for the country doing the liberalizing, irrespective of the actions of other countries.
Let me repeat that: Trade liberalization is good for the country doing the liberalizing, irrespective of the actions of other countries.