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From Negotiating Table to Sweat Shop

By William Bernstein
Sunday, October 4, 2009

MISADVENTURES OF THE MOST FAVORED NATIONS

Clashing Egos, Inflated Ambitions,

and the Great Shambles of the World Trade System

By Paul Blustein

PublicAffairs.

344 pp. $27.95

Oh, the glorious 1990s: communism's fall; the triumphant gospel according to Hayek, Friedman and Rand; and the promise of tranquillity and prosperity out to the far horizons. In "Misadventures of the Most Favored Nations," former Washington Post reporter Paul Blustein extols one of the dream's key tenets, free trade among nations, in this tale about the bureaucracy advancing it: the World Trade Organization. He is, however, more than a little leery of the WTO, born in 1995 at the brave new world's flood tide.

Blustein has thoroughly mastered the craft of breathing life into intrinsically dull material with compelling thematic narrative and delicious character studies. And it doesn't get much duller than meetings of the WTO and the General Agreement on Tariffs and Trade (GATT), which can include hours of dickering over the difference between "must" and "can." We learn, for example, that then-European Trade Commissioner Pascal Lamy, the closest ally of U.S. Trade Representative Robert Zoellick, believed that bananas and brown bread turbocharged his analytical skills, and subsisted on these two foodstuffs during negotiations.

Unlike many journalists, the author excels not only at the 800-word dash, but also at the long form, skillfully interweaving both his characters and engaging vignettes through the larger loom of world events. The further the author strays from the gilded, stilted venues of the trade negotiations, the more he sparkles. The few pages spent with Honduran textile worker Daunbia Rodriguez alone are worth the price of the book. Her meager pay, shantytown home and miserable working conditions must surely rouse the concern of many in the developed world, but Rodriguez doesn't see things quite this way; her hut's gas stove, indoor plumbing, television and, most miraculous of all, electricity to run them exceed her wildest dreams. She recognizes her job for what it is: the prized first rung on the ladder out of rural poverty.

The author deftly tracks the minute twists, turns and details of the latest round of negotiations, known as the Doha Round. He is scarcely enamored of the WTO's main cast of characters. For starters, there is Mike Moore, the profane, washed-up New Zealand politico who lusted after the WTO directorship to the point of expending most of his personal fortune on a shameless, and ultimately successful, globetrotting campaign for the job. Or the overachieving, overbearing Zoellick, who cynically seized on the Sept. 11 attacks as the central rationale for launching the Doha Round. Free trade, Zoellick argued, would make the world's most impoverished nations more prosperous, and thus shut off the supply of unemployed, bitter jihadist recruits. Never mind that the most successful terrorists, including the majority of the Sept. 11 hijackers, were anything but poor or uneducated.

Unfortunately, Blustein's love of detail distracts him from trade's broader historical context. The inevitability of the Doha Round's collapse cannot be fully understood without at least a dab of history. The intransigence of French and German farmers, for example, falls neatly into place when considered against the background of their impoverishment by the late 19th-century flood of far cheaper American and Australian grain. Similarly, Indian resistance to open markets becomes easily comprehensible in the context of the massive unemployment among the subcontinent's textile makers caused by cheaper and higher-quality imports from Lancashire's mills.

Blustein also shortchanges the critical codependence of free trade and a generous social safety net. As pointed out by one of his heroes (and mine, too), Harvard trade economist Dani Rodrik, when jobs evaporate across borders and oceans, the losers need not also be hung out to dry without food, shelter or health care. It is no accident that Europe simultaneously has the world's greatest economic dependence on trade and its most generous social welfare apparatus.

Blustein leaves the book's punch line until its final section: The benefits of free trade have been grossly oversold. By the WTO's own accounting, even the utopian elimination of all tariffs would boost world GDP by less than a half-percent, with most of that benefit going to the wealthiest nations. Far better, Blustein argues, to salvage the stupendous progress made in the previous GATT rounds and prevent a recurrence of the 1930s trade wars than to pursue grandiose but ultimately doomed further rounds.

The above omissions and delays, however, in no way detract from Blustein's alchemy: the transmutation of the leaden history of the WTO into a shimmering, essential read for those seeking a deeper and more nuanced perspective on the modern commerce of nations.

William Bernstein is the author of "A Splendid Exchange: How Trade Shaped the World" and "The Birth of Plenty: How the Prosperity of the Modern World Was Created."

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