A puzzle - Yusak ---------------- What policies should a developing country follow now, in light of the failure of the Seattle Tear Gas Round of trade negotiations? Since there were no new agreements of substance, the trade regime remains about where it was before. Let's suppose you are the President of a reasonably honest government in a developing country and that you believe that trade can help your people. Of course, you know that the rhetoric will remain in favor of 'free trade' with some future, minimal agreements about the environment or labor standards. So, you instruct your Foreign Minister to speak loudly and often about the virtues of trade and open markets. This qualifies you as an international player with the trading big boys. Next, you identify goods which your country needs to further your development and which it will never have the capacity to make. On these you eliminate all barriers to trade and make a great public outcry about your commitment to 'free trade'. This solidifies your credentials with trade's big boys. Now, you make sure that your agricultural industry can feed your people. Then, you make it impossible to import food stuffs from any other country via tariffs, quotas, licenses, etc, etc. When questioned, you point to your tariff free sectors as evidence of your commitment to 'free trade' and plead intolerable political pressure from your farm lobby. [This will sound just like every country in the EU and should earn you a pass.] Create a list of products in which your business people possess a competitive advantage in world markets, perhaps from your natural resource, low wages, etc, etc and loudly demand that other countries eliminate their barriers to your products. Combine with other similar producers to create a monopoly just like OPEC and raise prices to the point where you can obtain a monopoly profit, just like Microsoft. Develop a second list of products where you think that your business people may be able to compete someday and erect tariffs, quotas, etc etc so they can be protected from world prices. Encourage your business people with contracts, R&D grants, etc etc. Carefully monitor your current account balances of foreign currencies so that you import only as much as you export. Allow no capital to leave your country. That will keep you from the clutches of international lenders such as the IMF. If any one actually pays attention to what you're doing, they will accuse you of fomenting a trade war and protectionist, isolationist, trogdolyte policies. Respond by quoting your commitment to 'free trade' and peace. Be secure that you are doing exactly what the biggest practitioner of 'free trade', the USA, has been doing for the past fifty years, except for the current account and capital balances
