3.5.4.5 Free Trade Agreements

(This is a current page, from the Patterns of Power Edition 3 book contents.  An archived copy of this page is held at http://www.patternsofpower.org/edition03/3545.htm)

World-wide trade agreements are negotiated within the World Trade Organisation (WTO) process (3.4.1.3), but this is proceeding at a snail’s pace.  The Doha round of trade talks at the World Trade Organisation (WTO) in Geneva reached an impasse after 10 years of negotiation: The Economist reported, in an article entitled The Doha round on 28 April 2011, that “[t]en years of trade talks have sharpened divisions, not smoothed them” – citing political disagreements between America, China and India.

Numerous bilateral and multilateral agreements have been or are being negotiated because governments don’t want to wait until the whole world has agreed tariff reductions.

The EU (3.4.1.2) pre-dates the WTO.  Its single market allows (mostly) frictionless trade between member countries; it has also negotiated several bilateral trade agreements with other countries, as described on its website.  EU members have made the calculation that the membership costs are justified by the benefits.  Some administrative costs are inevitable, to create, maintain and police the agreements – but the EU also offers support for poorer regions, as part of its wider political benefits that are described later (6.6.5.1).  The British vote in 2016, to leave the EU in a ‘Brexit’, was driven by several factors unrelated to the value of its membership (6.6.5.8).

America was setting up a Trans-Pacific Partnership (TPP) and a Transatlantic Trade and Investment Partnership (TTIP) with Europe, but Donald Trump changed direction immediately after he was elected.  As reported by the New York Times: Trump Abandons Trans-Pacific Partnership, Obama’s Signature Trade Deal.

Despite the overall benefits of free trade (3.5.4.1), there has been a political backlash from people who feel left behind or are uncomfortable with the speed of change – as described later (6.7.8).  The situation in mid-2018 remains fluid.

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