Heeding the Free-Trade Calls of the WTO

I'll admit that I'm usually skeptical of any type of cross-border organization claiming to speak for what's right for the world. Actually, I'll take that back -- I'm always skeptical of such organizations. Groups like the UN have been nothing short of a disaster when it comes to representing a high return for all of the time and dollars its members put into it (not to mention the rampant procurement fraud throughout the organization). But sometimes, even uber NGOs like the World Trade Organization (WTO), have something useful to say when it comes to promoting overall economic growth, stability and trade. That's why we should all pay attention to a recent warning from the head of the WTO that suggests the 'worst social and political effects of the economic crisis are still to come" in the form of a "threatening surge in trade protectionism" that could hurt all parties involved over the long term at the expense of benefiting special interests (e.g, companies, unions, etc.) in the short term.

The problem is that "As unemployment soars, there are fears that countries may move to protect local jobs and industries to prevent social unrest". Already, there's evidence that "In the past three months, there has been further slippage towards more trade restricting and distorting policies ... [including] 'Buy American' provisions in the US stimulus package and likewise, China's 'Buy Chinese' provisions," both of which we've been covering for months on Spend Matters and MetalMiner. But the ultimate problem is not just the petty protectionist stimulus wrestling between China's communist leaders and our socialist ones (I challenge anyone to tell me that the new policies in Washington are anything but socialist in aim and intended execution).

No, the problem, is that both developing and Western countries will begin to copy the aims of the protectionist stimulus packages in regular border-raising legislation. And I believe there's little we can do to stop it. That's because of how deep special interests are entrenched in policy at the moment (e.g., US Steel and the steel unions can single-handedly work together to put congressional candidates in office through combined lobbying efforts).

Ultimately, overcoming this type of protectionist lobbying will come down to consumers of raw material and commodities -- and ultimately end-consumers facing higher prices -- standing up for their own rights and getting as involved in the discussion as the producers and trade unions. And that's why procurement must get political when it comes to trade. Because if we don't, we will end up paying more thanks to the producer/union coalitions and the support they're building while trying to hide behind the "protect jobs" argument. Which we all know is completely bunk given how many jobs further up the supply chain are lost when prices rise.

Jason Busch

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