Thursday, February 03, 2005

Protection in the Pacific 

Jonathan Edelstein has a fascinating post on the latest post-colonial developments in former French possessions in the Pacific. It's well worth your time to read.

One quote from the post caught my eye for reasons quite different from Edelstein's. In discussing the prospects of a Pacific Island free trade area, New Caledonian trade minister Didier Leroux offers this opinion:
I think that in a globalisation of the trade in the world, Pacific island countries have to adopt a common policy and a common attitude towards bigger countries, because it's obvious that small islands in the Pacific cannot compete with big countries such as Australia or United States or Europe.

We have to define a common way of protecting our own small industries, because they are in several ways the only way we have to create jobs and maintain employment in our islands.
There are lots of good reasons for small countries to coordinate on trade negotiations with larger nations. Regional trade agreements are probably a good way to solve a lot of the underlying coordination problems, and can produce a lot of other benefits as well. But the second part of Leroux's statement suggests that he's not clear on how all this is supposed to work. At first glance, at least, Leroux's talk of common protection reads like Jagdish Bhagwati's nightmare of regional trade agreements serving as stumbling blocks, not stepping stones, on the path to global trade liberalization. It's also worth pointing out that since Leroux is focusing on small industries in small countries, it's tough to justify his idea of integration with any economic theory at all, let alone the mutual-gains-from-trade logic which usually underpins schemes like the proposed PICTA. Presumably the other PICTA trade ministers (and/or his former economics professors) have been frantically trying to reach Leroux to remind him.

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