Friday, October 10, 2008

Wired: Jagdish Bhagwati - Keep Free Trade Free

I wrote a review here of Mr. Parag Khana's letter to the next President of the USA. Below are some of my thoughts on a similar letter to the next President of the USA from Dr. Jagdish Bhagwati, see here.

In one word "brilliant". Or is it because he shares or states insights that are similar to how I look at the global market place? Here is an excerpt:

"... China may never be as innovative as the US, which has a stable venture-capital model and an entrepreneurial culture that promotes creativity. Globalization helps nations discover their unique strengths."

[Portrait on right of Dr. Bhagwati by Mario Hugo]

Dr. Bhagwati discusses IP in his article in context of constrained free trade, NAFTA being his example where he states:

"Agreements like Nafta are for free trade among members but increased protection against nonmembers."

Economic constraints (or sometimes protectionism) have an interesting quality that for a short period of time they benefit the ones within the boundary(s). If such continues, different models of conducting business emerge outside the boundary(s) that directly compete with the constrained model.

An extreme example of this would be the difficulties Israel faces in bringing its IP and ideas to the global market place, due to the reasons that are. As the US is one of the most open and international business friendly places for new ventures, at times trumping politics when the economic will is stronger, the US has benefited from a plethora of Israeli breakthroughs using it as the global launch pad. I wonder of the economic impacts if this IP had Asian launch pads for success?

I believe "Political will" to be perception and "Economic will" to be reality - both must be leveraged and managed with a balance. An unfortunate example of the imbalance is the Kyoto Protocol (details here).

[Click the figure above to maximize]

Further emphasizing my thoughts on this subject is a current example of yet another unsuccessful attempt to drive towards free trade and economic models of conducting business on agriculture, industry and services - the Doha Round (details here). An excerpt on the Doha Development Round from Wikipedia:

"As of 2008, talks have stalled over a divide on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies.[1] The most significant differences are between developed nations led by the European Union (EU), the United States (USA) and Japan and the major developing countries led and represented mainly by India, Brazil, China and South Africa. There is also considerable contention against and between the EU and the U.S. over their maintenance of agricultural subsidies—seen to operate effectively as trade barriers."

Dr. Jagdish Bhagwati brings to the forefront the key driver for all decisions that politicians face... economic will. It drives global trade and its leverage can help create better conditions for humanity and development of sustainable products and services.

See Dr. Bhagwati's website here.

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