Fairness dream

TRADE: Give "fair trade" a chance, says Charlton.

If Andrew Charlton has spaghetti tangles of preferential FTAs "" free trade agreements "" pouring out of his ears, he doesn't look tormented by it. As a research officer at the London School of Economics (LSE), he has the composure of a professor in a noisy lecture hall waiting for the noise to peter out.

As co-author of Fair Trade For All, along with Nobel prize winner Joseph Stiglitz, he also has an image to live up to "" as a trade fighter on behalf of the world's poor.

Trade, to begin with, is crucial to the fight. Trade is good, "... a necessary but not sufficient condition for development."

It just has to be fair, which means not duping poor countries into deals that do good for them on paper more than the ground. After all, as Stiglitz has been arguing, "information assymetries" of the real world are wrecking the joyous symmetries of Ricardo's wonder world.

To take an example: risk markets don't work properly in some places because people just don't know enough, and without that, prices don't do a good job of directing the allocation of resources, and if that's the case, opening up an economy to trade could possibly make it even more lopsided than it is.

In other words, trade isn't an open-and-shut choice of binary outcomes (open: good, shut:bad). It's best then, offers Charlton, to recalibrate trade liberalisation with "first, do no harm" as a starting principle "" what ear-to-the-ground politicians have been saying all along. Trade was said to be win-win. In reality, says Charlton, "It's a prisoners' dilemma." To move ahead, everyone has to hold hands and trust (!) one another.

The WTO multilateralism of Doha may have become Do-ha-ha-ha to many observers, but at least claiming to pursue the common good "" with "development stamped on it" "" is better than the fist-fests of the past, says Charlton.

But isn't Doha nearly dead? "No, it has four possible outcomes," he says: success, a minimalist outcome, drift and outright failure "" the middle two being the likelier in his estimation ("after the Hong Kong ministerial meet, increasingly now, drift").

A pity, he adds, given that the agenda has already been slashed to so little "" to a point that its minimalism is a problem in itself. "There's so little left in it that nobody has an urgent interest in getting a deal." Meanwhile, the haphazard jumble of bilateral FTAs threatens to strangle whatever's left of the "fair trade for all" dream with its particularities of inclusion and exclusion.

The Stiglitz-Charlton solution is to "step back, and get a maximalist agenda" with a new universalist formula: every country gives full market access to every country smaller and poorer than itself. This is not "charity", he exclaims, it is a pragmatic approach to fair trade under the current circumstances, artificial or otherwise.

It may not be a borderless world yet, but so long as there are people out there who chew their spaghetti before they swallow, the dream lives.