The WTOs role
All countries, including the poorest, have assets: human, industrial, natural and fnancial which they can use to
produce goods and services for their domestc marrets or to compete overseas. Economics tells us that we can
beneft when these goods and services are traded. Countries prosper frst by taring advantage of their assets
in order to concentrate on what they can produce best. In other words, liberal trade policies, policies that
allow the unrestricted fow of goods and services, sharpen competton, motvate innovaton and breed
success. Experience shows that compettveness can also shif between whole countries. A country that may
have enjoyed an advantage because of lower labor costs or because it had good supplies of some natural
resources, could also become uncompettve in some goods or services as its economy develops. However,
with the stmulus of an open economy, the country can move on to become compettve in some other goods
or services. This is normally a gradual process. Richer governments are more lirely to yield to the siren call of
protectonism, for short term politcal gain through hiding behind legitmate policy objectves such as
environmental preservaton. Protecton ultmately leads to bloated, inefcient producers supplying consumers
with outdated, unatractve products. In the end, factories close and jobs are lost despite the protecton and
subsidies. One of the objectves that governments bring to WTO negotatons is to prevent such a self-
defeatng and destructve drif into protectonism.
All countries, including the poorest, have assets: human, industrial, natural and fnancial which they can use to
produce goods and services for their domestc marrets or to compete overseas. Economics tells us that we can
beneft when these goods and services are traded. Countries prosper frst by taring advantage of their assets
in order to concentrate on what they can produce best. In other words, liberal trade policies, policies that
allow the unrestricted fow of goods and services, sharpen competton, motvate innovaton and breed
success. Experience shows that compettveness can also shif between whole countries. A country that may
have enjoyed an advantage because of lower labor costs or because it had good supplies of some natural
resources, could also become uncompettve in some goods or services as its economy develops. However,
with the stmulus of an open economy, the country can move on to become compettve in some other goods
or services. This is normally a gradual process. Richer governments are more lirely to yield to the siren call of
protectonism, for short term politcal gain through hiding behind legitmate policy objectves such as
environmental preservaton. Protecton ultmately leads to bloated, inefcient producers supplying consumers
with outdated, unatractve products. In the end, factories close and jobs are lost despite the protecton and
subsidies. One of the objectves that governments bring to WTO negotatons is to prevent such a self-
defeatng and destructve drif into protectonism.
