A thought on trade for Independence Day

I realized I did have one thought to offer on Independence Day.

As I’ve posted before the latest round of WTO talks aimed at liberalizing international trade are on the verge of collapse or may have already collapsed. Developed countries including the United States and the EU subsidize their agricultural sectors and find it politically difficult if not impossible to remove; developing counties want to maintain their tariffs to protect their own agricultural sectors among other reasons.

Robert Wade (hat tip: Pundita), economist at the London School of economics, writes that the collapse is no bad thing and that these tariffs are necessary for the development of the burgeoning economies:

…virtually no country has managed to industrialise and become “advanced” without going through a stage of protecting new basic industries. As the domestic industrial sector became deeper the now-advanced countries liberalised their trade selectively and gradually.

People frequently point to the tariffs the U. S. had during the 19th century to protect its industries from mostly European competition.  This is to miss the point.

When the United States won its independence from Britain and adopted its Constitution Article I of that Constitution included this clause:

No tax or duty shall be laid on articles exported from any state.

That provision created the largest free trade zone then in existence.  And that free trade zone which grew with each new state added to the Union was the basis for the economic growth that astonished the world.

Just a thought.

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