TAKING STOCK: WTO, Hongkong and Bastiat As all eyes focused on Hong Kong, WTO was given far more importance than is due to it. Most people think that a country’s best negotiators are required to bring a reasonable deal home from Hong Kong; a deal which will protect the home country’s interests. Most people in most countries are of the view that, presently, they are getting a raw deal. Behind all these shrill cries of, “You are unfair”, lies a mammoth fallacy: protectionism by one’s own country is good, free exports are good, but, protectionism if practiced by another country is bad, and free imports are equally bad. This attitude is wrong. I have said it earlier and I will say it again: Unilateral free trade is good for the country which practices it, irrespective of what the rest of the world may be doing. Under free trade, people in Nepal may buy and sell products and services as they wish. Buyers over here will not be penalised with taxes, tariffs, quotas, and licensing laws that currently apply to imports. This, unequivocally, is good for all the consumers of this country. Under WTO, Nepal will be forced to bring changes, which will benefit its consumers. This is good. However, the fact remains that Nepal could have done this, on it’s own, much earlier. Nepal can also, starting today, go beyond what it is obliged to do under WTO and make this country duty free. This, though, is unlikely to happen. Reciprocation and fair trade is the rage worldwide; Nepal too will first want duty free access to the Western markets and only then consider opening its own. This is both unwise and unnecessary. Why should Nepal penalise its own consumers just because other countries are penalising theirs. In the words of the former US president Ronald Reagan, this is like shooting a hole on your side of the boat because the other person in the same boat has made a hole on his side. Empirical evidence has repeatedly shown that countries which eliminate barriers to trade progress faster, create wealth, and provide immense opportunities to their people. In the 80’s the world was clearly demarcated between those nations which sealed themselves with protective tariffs and other barriers, and countries which were relatively open to trade. Low restriction countries became the world’s powerhouses: among them were Ireland, South Korea, Taiwan, Malaysia, Singapore and Hong Kong. The high restriction economies stagnated and kept their people in poverty: the foremost among these nations were India, Pakistan, Bangladesh, Brazil, Peru, Argentina, Ghana, Rwanda, Sierra, Leone, and Iran. What if rich countries subsidize their exports, will it not kill employment opportunities in poor countries? Agricultural subsidies by the rich nations become the hottest topic of debate at Hong Kong. India, Brazil and African nations, accused US, France, and other rich countries of depriving means of livelihood to the poor farmers in the developing world. Agricultural subsidies are bad, they distort the free market. However, the burden falls squarely on the shoulders of the taxpayers of the nation which subsidizes. If Nepal gets free rice from Japan — courtesy the Japanese taxpayer — should we be thanking the Japanese or crying about exploitation. Yes, those engaged in rice farming in this country may loose jobs, but, is that the only form of employment available? No. Let free markets operate in Nepal, foreign investment come unhindered, taxes be minimized, unnecessary restrictions on businesses be lifted, and the government provide secure property rights for all its citizens. If this happens there will be no shortage of employment opportunities for the people over here. It is only warped logic, which makes us think that free trade is bad. Frederic Bastiat, an 18th century French Philosopher, made brilliant use of satire to expose the hollowness of the arguments of those seeking protection from imports. He petitioned his government on behalf of candle makers, who sought protection from ruinous competition launched by a mighty foreign power sending free light to earth: The Sun. (The writer can be contacted at: