Global Free Trade Organization - Is "Greener Grass" The Answer to the WTO?
Lately, I've been looking into this idea of a Global Free Trade Organization (GFTA), proposed by scholars at Heritage Foundation in Washington DC. for quite some time. This policy works closely in conjunction with the Index of Economic Freedom that Heritage publishes every year.
As I understand the argument here, the World Trade Organization (WTO) has been bogged down in too much red tape over the years, having to take too much into consideration from member states (all 147 of them), and doing so slows the progress that can be made in the name of free trade and economic freedom world wide.
Enter GFTA, where the basic underpinning is that the grass is alwaus greener on the other person's lawn. In the GFTA, a country would enter into an alliance with other countries and these countries would trade freely amongst one another. The indicators that would allow (or in many cases bar) entry into such a volentary alliance are four-fold.
The first of these stipulations is that of a Trade Policy that is favorable to such an arrangement; such a policy would be one where tarrifs are low, both in letting things into our country and into other countries that are part of the alliance. This brings down the barriers to entry that are commonly prevalent within the global economy. A great example of such a nation is that of Hong Kong, who, accrding to the Index has had the highest rating of economic freedom in the world according to the indicators that the Index uses to determine such.
The second stipulation is that of Capital Flow and Foreign Investment. Keeping this process an easy one encourages such investment, but bogging it down and making it difficult (through government red tape and such) would discourage such investment (and as one would conclude, greater foreign investment assists in the facilitation of effective trade between nations). An example that falls here is that of Ireland, a country that has opened itself up to such investment(1200+ foreign businesses).
The third stipulation is that of Property Rights, knowing with ceritanty that businesses can flourish without incident, that risk can be taken. If profits are made, they can then be kept. The USA is here a great example here, making it high priority for these rights to be protected.
The fourth stipulation is that of Regulation. This has to do with government regulation and how much of such comes into play with businesses and their creation. The greater regulation the less likely a business is to want to jump through the hurtles to start a new venture.
There are 11 countries that qualify for this GFTA, among them are the USA, Estonia, Chile, Denmark, Hong Kong, Luxemborg, UK, New Zealand, Singapore, and Ireland. There are also a greater number of countries that would qualify if one or more of their stances on these for stipulations were lessened. Among them are France, Germany, Russia, and a number of others.
The idea here, in a nutshell, is that things will be so open here, so booming, that nations that are on the sidelines will look at participating nations with envy and say "I like his lawn better, how do I get that?" Time will tell if this idea actually works itself out, as we know that some nations are so despot that they really don't care about their country only themselves and how they can supress - such as Iran, North Korea, Sudan and others. Time will tell...
