It seems unlikely that the bureaucrats of the World Trade Organisation deliberately scheduled their meeting to run alongside the TUC. It may have been mere coincidence, but it is an especially useful one.

The WTO gathering, which begins today in Cancun, is designed to broker a deal on free trade. The chances of success look remote as there are gulfs of understanding between most of the countries represented there. There will, almost certainly, be riots; the anti-globalisers have not pitched up in Mexico just to enjoy the weather. So it’s likely to be a hard, and unproductive, slog.

However bad things seem, however tough the negotiations, and however violent the protests, the WTO members should turn their attention for a few seconds to Brighton, and they will be given a clear understanding of why it matters that they succeed. The TUC could have been designed to point out the fatuity of the anti-capitalists’ arguments. And there have been few more fatuous comments than those of Derek Simpson, the joint general secretary of Amicus.

Pointing out that the British aerospace industry has lost 20,000 jobs in recent years, against just hundreds on the Continent, he concluded: “It was entirely the legislation that allows UK workers to be more vulnerable, cheaper to sack.”

Well, yes. But it seems not to have occurred to Mr Simpson that if workers were more difficult to sack, the 20,000 aerospace workers would almost certainly have lost their jobs anyway because their employers would have gone bust. It is precisely that more flexible labour market which has meant that, compared with the EU, the UK has more new jobs, less unemployment, and higher growth.

It’s that mindset which most infects the debate over free trade and the WTO. Just as Mr Simpson thinks he is protecting workers by arguing for a more rigid labour market, so the anti-globalisation protesters seem to think that they are protecting the poor in the Third World by opposing free trade. Their argument seems, initially, to make sense: fragile, nascent industries in developing countries need to be protected so that they can withstand competition from rapacious multinationals. Without tariffs, they have no chance. The only problem with such an argument is that it is wholly wrong.

As Hernando de Soto, the author of the seminal The Mystery of Capital points out, it is easy to make a country prosperous. It needs only security of life and property, and markets in which property rights can be valued and traded. Those developing countries that have had that framework since the 1950s have seen average living standards rise to near or equal those of the West. As recently as the early 1980s, Malaysia, Singapore, Thailand, and South Korea were poor countries. Their incomes per head ranged from $700 to $7,000. Today, they range from $2,000 to more than $21,000. Even India, one of the great sinks of world poverty in the 1960s and 1970s, is on the road to prosperity. India nearly suffered financial collapse in 1991. Its Government reacted by cutting 40 years of bureaucratic control in seven hours. As a result, a further 110 million people in India now earn far more than $1 a day, the global definition of poverty. The economy is comfortably growing faster than population, India is becoming one of the leading exporters of computer software and services, and there is a vast new middle class of 250 million.

The great failure is sub-Saharan Africa. Though progress has been made over the past decade, it has not been fast enough for economic growth to outpace population growth. During the nine years to 1999, the number of those living on less than $1 a day increased by 23 per cent, to 300 million. This number is expected to rise to 345 million by 2015. In large measure they have only themselves to blame. The average developing world tariff on textiles is 20 per cent and on agriculture 17 per cent — that’s the extra price the world’s poorest people pay when trading with each other.

They need the same engine of growth that worked for Malaysia, Singapore, Thailand, South Korea and India: the removal of the tariffs that were in place to “protect” native industries, but which only protected their poverty. For these Asian tigers, trade with the rest of the world has brought greater specialisation, moving resources away from unproductive, low-return activities and engendering prosperity. Sectors in which they have no comparative advantage have shrunk as a proportion of national output and been replaced by cheaper, better imports. Resources have been released for those sectors in which there is an advantage, such as mechanical assembly. Opening their economies to the rest of the world allowed them to attract the investment in physical and human capital that brought them comparative advantages in the manufacture of a widening range of products.

It could be the same story for the very poorest countries now, which tend to have advantages in agricultural or textile production. But, the wealthy countries refuse to practise what they preach; the EU is the worst offender, with its grotesque CAP subsidies and tariff barriers. According to Oxfam, if Africa could increase its share of world trade by just 1 per cent, it would earn an extra £49 billion a year — enough to lift 128 million people out of extreme poverty.

If the anti-globalisers truly cared about the developing world, they wouldn’t be demonstrating against the limited extension of free trade being discussed. They would reclaim the real mantle of progressives, that of Cobden and Bright, and lead the protests for genuine free trade, pushing for the main trading blocks — the EU, the US, Japan and Canada — and the developing countries to tear down their trade barriers. That would be a crusade worth joining.
MessageSpace