Perspectives: No. 476, July 2011

A Beacon For US Trade Policy

By Daniel J. Ikenson
18 July 2011

With the Doha Round dead and the United States no longer capable of global trade leadership, Australia should be exporting a commodity it produces and other countries lack: enlightened trade policy thinking. While a paucity of understanding about trade and its benefits afflicts policy in most countries, some fundamentally sound, intellectually coherent ideas have gained traction in Australia. Sixteenth-century mercantilist dogma may still dominate trade policymaking in Washington, but in Canberra the government has set a 21st-century course by espousing and embracing the real benefits of trade. Of course, it helps that Australia's Trade Minister is an economist with a PhD in international trade (and not a back-slapping former mayor who favours the path of least resistance).

The Gillard government published a paper in April conveying its view of trade policy as a tool to increase national prosperity. The document is striking in its contrast to the zero-sum world view permeating the Obama administration's plan to double US exports by 2014 and "win the future". In rejecting the "exports good, imports bad" mantra, the document is a refreshingly novel exposition of the manifestation of trade's benefits.

Indeed, the ideas embodied in three of the document's guiding principles — unilateralism, transparency and the indivisibility of trade policy from broader economic policy — are as close to universal truths as one will find outside the realm of the physical sciences. But those truths contradict the favoured sports metaphors and the "us versus them" characterisations of trade to which policymakers and much of the public have grown accustomed.

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This article was published by The Australian Financial Review on 18 July 2011.

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