By Llewellyn H. Rockwell,
the trick? That's the first question to ask about any international
trade deal these days. What appears to be a step in the right direction
towards greater liberty in trade across borders turns
out to be a leap into world statism.
was true of Nafta, with its labor regulations, environmental restrictions,
trade-diverting rules of origin, foreign aid, investment guarantees,
and supranational bureaucracies. The agreement placed a legal imprimatur
on the worst aspects of the mixed economy, as one might expect from
the Clinton administration. And the recent Gatt negotiations are
"Uruguay Round," if approved by Congress, will create a menacing
new supranational institution, the World Trade Organization. The
WTO, which international statists have worked for since at least
the Wilson administration, will entangle the entire world in a Keynesian
thicket of regulation, enact international fiscal planning, and
link trade with wealth redistribution.
multinational corporations aligned with big government will benefit
from all of this, but medium and small businesses, not to speak
of American liberty and sovereignty, will suffer.
present version of the WTO was outlined in 1992, when Gatt director
general Arthur Dunkel advocated merging all the agreements reached
under Gatt into a new agency. The centerpiece of the "Dunkel Text"
was the Multilateral Trade Organization.
compared the MTO to the wealth-destroying World Bank and the International
Monetary Fund. What they are to foreign giveaways, he said, the
MTO would be to trade. But at the end of the Uruguay Round in December,
U.S. Trade Representative Mickey Kantor changed the name of the
bureaucracy. It would now be the World Trade Organization, or WTO.
That title has more "gravitas," said the former Hollywood
fixer, and sounds less bureaucratic.
between nations, like trade within nations, takes place when parties
make contracts to their joint benefit. The rules are simple: primarily,
keep your promises. A Domestic Trade Organization, and we have dozens
of oppressive agencies in Washington, D.C., that could be called
exactly that, only mucks up the market to benefit the state and
the special interests. The WTO will do the same on a global scale,
while also promoting world government.
WTO will convert peaceful trade into policy imperialism. It will
allow economic exchange with some countries under approved conditions,
and impose a variety of sanctions on others. The conditions will
include all the legislation beloved of U.S. left-liberals, such
as preferences for labor unions, artificially high labor costs,
controls on the organization of industry, high taxes on capital
and income, central-bank inflation, invasive tax collection, and
abolition of financial privacy. The goal, as with Nafta, is to transform
every country, developed or developing, into a carbon copy of Clintonian
is wrong, of course, to use private trade to export statism. Such
a tactic violates the sovereignty of nations that dare to be independent
of the New World Order. Meanwhile, our economy is encumbered with
the richest, biggest, and most powerful government in the history
of the world. Developing nations, former Soviet clients, for example,
do not need to follow our example.
the WTO, we'll also hear much talk about democracy. If a country
is rules by an "authoritarian regime," i.e., one that disobeys the
State Department, it will have to depose its leaders before it can
benefit from cross-border trade. Or if a country proves itself too
democratic by electing someone that Al Gore and the New York
Times don't like, it will also face sanctions.
WTO is nothing new, however. It has had many predecessors in this
century, all thankfully stopped in their tracks. One close call
came at the end of World War II, when the governing elites sought
to refashion the world in their image. Crucial to their plan were
the Bretton Woods institutions of the World Bank and the IMF. The
third leg of this managerial tripod was supposed to be the World
Trade Board, as outlined by government planner Otto Tod Mallery
in his 1943 work Economic
Union and Durable Peace.
WTB would "control international depressions by international action,"
and "regulate international cartels and enforce international fair
trade practices." However, the board could not be subject to public
approval. It must appear, wrote Mallery, "not as an argument," but
as "a news event." He suggested a series of propaganda articles
for the New York Times to run, which is today busily promoting
the World Trade Organization.
the news event took place, however, the World Trade Board had become
the International Trade Organization, to be run by the United Nations.
forces worked from 1945 to 1948 to draw up their "Havana Charter,"
but only Liberia and Australia signed on. President Truman, a perfervid
supporter, faced sure defeat in the Congress, and had to withdraw
the ITO bill in 1950.
the opposition? Because the Old Right saw the ITO as an attempt
to impose world central planning in the name of free trade.
anti-ITO forces were led by Philip Cortney, an attorney and businessman
in New York City. His magnificent book The Economic Munich
(1949) took on the ITO and destroyed it. No surprise, Cortney was
a follower of economists Ludwig von Mises and Henry Hazlitt, the
two greatest free-market champions of the time.
dedicated his book to his country, "which I worship for having taught
me the real meaning of liberty." The Havana Charter, he wrote is
nothing but the product of economic fallacies," of "Keynes' teachings"
and of zealots, ignorants, clever politicians or 'do-gooders.'"
Without principled opposition, their economic theories could be
"the grave-diggers" of our freedom.
noting that no real free-trade agreement would be this complex,
Cortney then showed, line by line, that the ITO was the opposite
of free trade. Instead of allowing business to make its own trade
deals, the bureaucracy ran interference for large corporations while
hobbling their medium and small competition.
must defeat ITO, he said, and work for real free trade, by reducing
our own barriers, letting business make its own deals abroad, and
reinstituting the international gold standard. Central-bank inflation
is the worst enemy of international economic cooperation.
pressure from their constituents caused the Chamber of Commerce,
the National Association of Manufacturers, the National Foreign
Trade Council, and the U.S. Council of the International Chamber
of Commerce to join Cortney in opposition. Even John Maynard Keynes
had to take notice, denouncing Cortney and his writings.
waged a magnificent fight, taking years from his business, because
he saw that the ITO threatened free enterprise and decentralized
government. He was inspired by his frequent talks with Mises, whose
injunction that we must fight for liberty and not count the cost,
as Mises himself had done, struck home.
promoters of the ITO made apocalyptic predictions. Its defeat would
be an "unthinkable tragedy," wrote White House advisor and Marshall
Planner Will Clayton. Opponents were called "isolationist," "protectionist,"
"backward- looking," and every other epithet in an all-too-familiar
unthinkable and wonderful did happen, however, and, no surprise,
the world kept turning. In fact, we were much better off. We got
growing trade without international bureaucrats directing the process.
"most ambitious attempt ever made" to enact "a comprehensive code
of rules" for international trade "ended in failure," said William
Diebold, Jr., economist at the Council on Foreign Relations, in
his 1952 history of the ITO.
the international statists never give up, and in 1955, they tried
to establish the Organization for Trade Cooperation (OTC), but it
too went down to defeat.
attempt came in the mid-1970s. It was the New International Economic
Order (NIEO), essentially the World Trade Organization all over
again, but this time the inclusion of the Soviet Union was a sticking
was defeated by the anti-Soviet left-liberals known today as neoconservatives.
Using the rhetoric of the right, they pointed out that the NIEO
was not about free trade, but international redistribution of wealth.
the Third World is saying," wrote Irving Kristol in Commentary,
is "that their poverty is the fault of our capitalism." William
Safire predicted in the New York Times that "in the name
of price stability and economic order, we will have acquiesced in
the creation of a network of barriers, tariffs, special deals, reciprocal
restraints, and income redistributions that will enmesh every American
business decision in foreign policy."
ally, then-Secretary of the Treasury William Simon attacked "the
false gods of many who seek a New International Economic Order."
These gods, expropriation and cartelization, "are not the answer
for either the developing nations or the industrialized nations."
the Nafta debate, however, these same people favored an NIEO for
North America. With the Soviets gone, they will also undoubtedly
pump for the WTO, calling its opponents as they did Nafta's
"isolationist," "protectionist," "backward- looking," etc.
We may, however, be spared Safire's most hysterical Naftaism, when
he called his foes "skinheads."
the World Trade Organization's supporters at the UN are also calling
for a World Development Authority, an International Central Bank,
an International Development Fund, and a World Food Authority.
all dates back to the Progressive Era. Woodrow Wilson's 1918 plan
for a World Trade Tribunal was part of his League of Nations Covenant.
It was suggested by Huston Thompson, head of the Federal Trade Commission
under Wilson. Thanks to Henry Cabot Lodge of Massachusetts and his
allies, neither the League nor its Trade Tribunal were approved
by the U.S. Senate, in one of the most courageous acts in its history.
19th century saw the freest trade in history. Not only were there
no international bureaucrats, but the American government was, by
today's standards, barely visible. There were courts of law where
contracts were enforced, but government interference was rightly
seen as injuring trade, not helping it.
trade does not need management. The passionate speeches of Richard
Cobden in the 19th-century House of Commons were about the obligations
of domestic government to allow imports and exports, not about new
bureaucracies or supranational agencies. And the anger of the Jeffersonian
free trader, John Taylor of Caroline, was directed not at other
countries for their real and supposed trade restrictions, but at
his own government for not allowing freedom for Americans.
ended his treatise on the failed ITO by wondering what he and his
colleagues at the Council on Foreign Relations should do after the
defeat. "Can we invent new means of attaining old aims? How can
we devise a policy that is not only promising but politically acceptable?"
it is, answers Mickey Kantor more than 30 years later. But in the
spirit of Cobden and Taylor, of Mises and Hazlitt, of Lodge and
Cortney, we should say no.
should toss the World Trade Organization into the dustbin of history,
along with the World Trade Tribunal, the World Trade Board, the
Organization for Trade Cooperation, the International Trade Organization,
and the New International Economic Order. That, Mr. Kantor,
would involve the classical republican virtue of gravitas.