Jagdish Bhagwati: The Broken Legs of Global Trade

NEW YORK – The Doha Round, the latest phase of multilateral trade negotiations, failed in November 2011, after ten years of talks, despite official efforts by many countries, including the United Kingdom and Germany, and by nearly all eminent trade scholars today. While trade officials in the United States and the European Union blamed the G-22 developing countries’ excessive demands for the failure of earlier negotiations in Cancún in 2003, there is general agreement that this time it was the US whose unwarranted (and unyielding) demands killed the talks. So, now what?

The failure to achieve multilateral trade liberalization by concluding the Doha Round means that the world lost the gains from trade that a successful treaty would have brought. But that is hardly the end of the matter: the failure of Doha will virtually halt multilateral trade liberalization for years to come.
Of course, multilateral trade negotiations are only one of three legs on which the World Trade Organization stands. But breaking that leg adversely affects the functioning of the other two: the WTO’s rule-making authority and its dispute-settlement mechanism. The costs here may also be large.

Until now, preferential trade agreements (PTAs) among small groups of countries co-existed with multilateral, non-discriminatory trade-liberalization rounds. As a result, the rules that govern trade, such as anti-dumping duties and countervailing duties to offset illegal subsidies, were in the domain of both the WTO and the PTAs. But, when there was a conflict, WTO rules prevailed, because they conferred enforceable rights that extended to all WTO members, whereas PTA-defined rights extended only to the PTA’s few members.

So, while powerful, “hegemonic” countries like the US managed to impose their own rules on weaker partners in the PTAs that they helped to proliferate, big emerging economies like India, Brazil, China, and South Africa insisted on rejecting such demands when made as part of multilateral trade rounds like Doha.

Now, however, with the era of multilateral trade rounds and system-wide rules behind us, the PTAs are the only game in town, and the templates established by the hegemonic powers in unequal trade treaties with economically weaker countries will increasingly carry the day. In fact, such templates now extend beyond conventional trade issues (for example, agricultural protection) to vast numbers of areas unrelated to trade, including labor standards, environmental rules, policies on expropriation, and the ability to impose capital-account controls in financial crises.

The US-led public-relations blitzkrieg of euphemism has already begun, with US Assistant Trade Representative Wendy Cutler describing the latest PTA, the Trans-Pacific Partnership, as a “high standard” agreement. Other American officials have taken to calling PTA’s “trade agreements for the twenty-first century.” Who could possibly be against the twenty-first century?
What is disturbing is the way in which some trade economists in Geneva and in Washington have capitulated to such propaganda, and regard capitulation by the WTO as a way to “salvage” and reshape the organization. The WTO, like a village during the Vietnam War, must be destroyed in order to be saved.

Unfortunately, this insidious attack on the second leg of the WTO also extends to the third leg, the dispute-settlement mechanism. The DSM is the pride of the WTO: it is the only impartial and binding mechanism for adjudicating and enforcing contractual obligations defined by the WTO and accepted by its members. It gives every member, big or small, a platform and a voice.

Once PTA-based DSMs are established, however, adjudication of disputes will reflect asymmetries of power, benefiting the stronger trade partner. Moreover, third countries will have little scope for input into PTA-based DSMs, though their interests may very well be affected by how adjudication is structured.

Given that the US has abandoned any pretense of leadership on world trade, it is up to major emerging economies and like-minded developed countries to establish their own template, one that adheres to trade objectives and discards what special-interest lobbies in hegemons like the US seek to foist on PTAs. This is exactly what India has done with the EU, which is now stripping such features out of its proposed PTA.

Other countries – Brazil, South Africa, and China among the major emerging economies, and Japan and Australia among the developed countries – should back such “garbage-free” PTAs as well. That just might be an adequate rebuff to the rise of PTAs whose main objective is to serve hegemonic interests alone – perhaps even sufficient to get the multilateral approach back on track.

Jagdish Bhagwati is University Professor of Law and Economics at Columbia University and a senior fellow at the Council on Foreign Relations. A renowned expert on international trade, he has served in top-level advisory positions for the World Trade Organization and the United Nations, including Economic Policy Adviser to the Director-General, GATT (1991-93), and Special Adviser to the UN on globalization. He is the author of many books, including In Defense of Globalization.

Jagdish Bhagwati: The Brain-Drain Panic Returns / 「人才流失」擔憂卷土重來

NEW YORK – While developed countries are angst-ridden over mostly illegal immigration by unskilled workers from developing countries, a different set of concerns has surfaced in Africa, in particular, over the legal outflow of skilled, and even more importantly, highly skilled, people to developed countries. This outflow is supposedly a new and damaging “brain drain,” with rich countries actively luring away needed skills from poor countries.

This fear is misplaced. At the outset, we have to distinguish between “need” and “demand.” Yes, many African countries need skills. But they are unable to absorb them, owing to several factors associated with economic backwardness.

In India in the 1950’s and 1960’s – a time when many professionals were emigrating – working conditions were deplorable. Bureaucrats decided whether we could go abroad for conferences. Heads of departments carried inordinate power. So, no surprise, many of us left. We Hindus may believe in an infinity of lifetimes, but we maximize our welfare in this one, just like everyone else.

Besides, simply holding people back, even if feasible, would do little for their countries. The “brain” is not a static concept. Trapped in Kinshasa, under appalling conditions, the brain will drain away in less time than it takes to get to New York.

Moreover, keeping people at home is easier said than done. In many poor countries, except those like India and South Korea, which have now developed superb educational institutions, the brightest citizens receive their education abroad. The challenge, then, is to prevent them from staying there and settling down.

But, in any event, emigration restrictions today would violate a human right enshrined in current international treaties. But would immigration restrictions work instead, as proposed by some developed-country organizations, which worry about the “brain drain”?

Here, human-rights concerns pose serious difficulties. Could we really say to a Ghanaian doctor that she must return to her country while an immigrant Russian doctor is allowed to settle down and start a new life? This is likely to run afoul of anti-discrimination principles and constitutional provisions in countries like the United States.

The proper response to the outflow of skilled manpower from poor countries, especially those in Africa, is to be found in a different direction. Given that outflows of skilled workers cannot be restricted – and, indeed, should not be – we must devise institutional mechanisms to work with it. This means adopting a “diaspora” model, which implies four policy proposals.

First, stop crying over the fact that the diaspora is not returning home. Instead, nurture the loyalty of professionals settling abroad, so that they assist their home countries in a variety of ways. Thus, they may be offered voting rights. Restrictions on investment and land purchases can be dropped. And immigration experts like me have proposed since the 1970’s that schemes be developed to enable the academic diaspora to run workshops aimed at bringing teachers up to the best international standards.

Second, while the diaspora should be integrated through more rights, its members also ought to accept obligations that put them on an equal footing with those who remain behind. I suggested in the 1970’s that a tax be levied on citizens abroad. Known as the “Bhagwati Tax,” it is of course “the American way”: US citizens and permanent residents abroad, like those at home, must pay federal taxes.

Third, because skills are necessary for nearly all activities in most of Africa, here and now, we need to organize ways to supply such skills to these countries. I have long argued that, because many in rich countries are retiring while still in sound health, and because altruism increases with age, we could organize a Grey Peace Corps of senior citizens to share their skills in countries whose own trained professionals prefer to settle abroad.

Finally, foreign aid should be used to expand training massively for Africans in all the essential fields in rich countries like the US, the United Kingdom, France, and the Netherlands. They would add to the diaspora, while the Grey Peace Corps would help to fill current needs. When development has taken off, and conditions have improved sufficiently to attract people back to their homelands, the hugely increased diaspora would indeed return, as they have done in India, South Korea, and China.

Together, these policies would benefit Africa both immediately and in the long run. Sentimental handwringing over the “brain drain,” and foolish attempts at restricting people’s mobility, will not.

Jagdish Bhagwati, Professor of Economics and Law at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, recently edited, with Gordon Hanson, Skilled Migration Today.

Jagdish Bhagwati: 「人才流失」擔憂卷土重來

紐約—發達國家正在為來自發展中國家的無技能非法移民而焦慮，但非洲國家卻在面臨另一種擔憂，即有技能（甚至高技能）公民合法移民至發達國家。這種流出被認為是具有傷害性的新型「人才外流」，即發達國家積極地吸取貧窮國家所急需的技能。

這一擔憂可謂使錯了力。從一開始，我們就應該區分「需要」和「需求」。誠然，眾多非中國家需要技能。但因為諸多與經濟落后有關的因素，它們無法吸收這些技能。

印度在20世紀五六十年代經歷過大量專業人員的外流，當時，印度的工作環境相當惡劣。官僚決定著我們是否可以出國參加會議。行政部門頭腦掌握著無上的權力。因此，毫不奇怪，我們當中有許多人決定離開。我們印度人信仰「生也無涯”，但與其他人 一樣，我們也會設法最大化這輩子的財富。

況且，僅僅把人留住，即使成功了也對國家助益有限。「人才」並不是靜態的概念。身處金沙薩壓抑的環境中，人才流失會比讓他們前往紐約更快。

此外，把人留在國內說起來容易做起來難。在許多貧窮國家（印度和韓國除外，它們已經發展起了優秀的教育制度），最聰明的公民往往都是在國外接受的教育。於是，挑戰就變成了如何防止他們留在國外，在國外定居。

但是，無論如何，在今天，移民限制違反了被國際法視為至高無上的人權。但是，一些擔心「人才流失」的發達國家組織所實施的限制外來移民政策是否有效呢？

在這方面，人權方面的顧慮相當棘手。我們真的可以對加納博士說，你必須返回你的國家，而一轉身又允許俄羅斯博士定居開始新生活嗎？在美國等國家，這可能有違反歧視原則和憲法相關規定。

應對貧窮國家（特別是非洲國家）技能人力外流的合理措施應該另辟蹊徑。技能工人的外流是不能加以限制的，事實上，也不應該加以限制，因此我們必須設計能合理處理這一現象的國際機制。這意味著採取一種「流散猶太人」的模式，其中包括四大政策方案。

首先，停止抱怨外流人才不回國的現象，而代之以培育海外專業人士僑民的忠誠度，讓他們在諸多方面為祖國效力。因此，他們應該被授予選舉權。投資和購置土地方面的限制也可以解除。而移民專家（比如我）從20世紀70年代便開始建議應該發展相應的機制方便學術人才回國舉辦培訓班，培養本土符合國際最高標准的師資。

其次，在用更多的權利團結外流人才的同時，也應該讓他們接受相應的義務，使他們和留在國內者處於平等地位。我在20世紀70年代時曾建議對僑民征稅。這一「巴格瓦蒂稅」顯然是相當「美國」的：在外永久定居的美國公民與國內公民一樣，都必須繳納聯邦稅。

第三，在非洲，幾乎所有領域的活動都急需技能，因此我們需要組織向這些國家供給所需技能的渠道。我很早就指出，發達國家有大量高技能人才退休時身體健康，精神矍鑠，而且人年紀越大，越有助人為樂的精神，因此我們可以組織一支由高端人才組成的「灰色和平部隊」（Grey Peace Corps），與自身訓練有素的專業人士更喜歡移民海外的國家分享技能。

最後，對於像美國、英國、法國和荷蘭這樣的發達國家，應該把對外援助用於大規模擴大在各基本領域非洲人培訓。這些非洲人會加入外流人才行列，而灰色和平部隊能填補當前需要。當非洲國家發展起來之後，國內狀況會得到足夠的改善，吸引人才流回祖國，數量大增的流失人才的確實是會回去的，印度、韓國和中國就是明証。

這四大政策的綜合效果將使非洲在即期和長期均獲得巨大的好處。對「人才流失」怨天尤人以及愚蠢地限制人口流動是不會有效果的。

Jagdish Bhagwati是哥倫比亞大學經濟學和法律教授，外交關系委員會國際經濟學高級研究員，最近和戈登·漢森合編有《當今世界的技能人口遷移》。

Jagdish Bhagwati :America’s Threat to Trans-Pacific Trade

MUMBAI – As if undermining the World Trade Organization’s Doha Round of global free-trade talks was not bad enough (the last ministerial meeting in Geneva produced barely a squeak), the United States has compounded its folly by actively promoting the Trans-Pacific Partnership (TPP). President Barack Obama announced this with nine Asian countries during his recent trip to the region.

The TPP is being sold in the US to a compliant media and unsuspecting public as evidence of American leadership on trade. But the opposite is true, and it is important that those who care about the global trading system know what is happening. One hopes that this knowledge will trigger what I call the “Dracula effect”: expose that which would prefer to remain hidden to sunlight and it will shrivel up and die.

The TPP is a testament to the ability of US industrial lobbies, Congress, and presidents to obfuscate public policy. It is widely understood today that free-trade agreements (FTAs), whether bilateral or plurilateral (among more than two countries but fewer than all) are built on discrimination. That is why economists typically call them preferential-trade agreements (PTAs). And that is why the US government’s public-relations machine calls what is in fact a discriminatory plurilateral FTA, a “partnership” invoking a false aura of cooperation and cosmopolitanism.

Countries are, in principle, free to join the TPP. Japan and Canada have said they plan to do so. But a closer look reveals that China is not a part of this agenda. The TPP is also a political response to China's new aggressiveness, built therefore in a spirit of confrontation and containment, not of cooperation.

The US has been establishing a template for its PTAs that includes several items unrelated to trade. So it is no surprise that the TPP template includes numerous agendas unrelated to trade, such as labor standards and restraints on the use of capital-account controls, many of which preclude China’s accession.

From the outset, the TPP’s supposed openness has been wholly misleading. Towards this end, the TPP was negotiated with the weaker countries like Vietnam, Singapore, and New Zealand, which were easily bamboozled into accepting such conditions. Only then were bigger countries like Japan offered membership on a “take it or leave it” basis.

The PR machine then went into overdrive by calling the inclusion of these extraneous conditions as making the TPP a “high-quality” trade agreement for the twenty-first century, when in fact it was a rip-off by several domestic lobbies.

American regionalism closer to home shows the US now trying to promote the Free Trade Agreement of the Americas (FTAA). But its preferred template was to expand the North America Free Trade Agreement (Canada, Mexico, and the US) to the Andean countries and include huge doses of non-trade-related issues, which they swallowed. This was not acceptable to Brazil, the leading force behind the FTAA, which focuses exclusively on trade issues. Brazil’s former President Luiz Lula Inácio da Silva, one of the world’s great trade-union leaders, rejected the inclusion of labor standards in trade treaties and institutions.

The result of US efforts in South America, therefore, has been to fragment the region into two blocs, and the same is likely to happen in Asia. Ever since the US realized that it had chosen the wrong region to be regional with, it has been trying to win a seat at the Asian table. The US finally got it with the TPP, simply because China had become aggressive in asserting its territorial claims in the South China Sea, the South China Sea, and vis-à-vis India and Japan.

Many Asian countries joined the TPP to “keep the US in the region” in the face of Chinese heavy-handedness. They embraced the US in the same way that East Europeans rushed to join NATO and the European Union in the face of the threat, real or imagined, posed by post-Soviet Russia.

America’s design for Asian trade is inspired by the goal of containing China, and the TPP template effectively excludes it, owing to the non-trade-related conditions imposed by US lobbies. The only way that a Chinese merger with the TPP could gain credibility would be to make all non-trade-related provisions optional. Of course, the US lobbies would have none of it.

Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, is the author of Termites in the Trading System: How Preferential Agreements undermine Free Trade.