I BELIEVE I can trace the collapse of the World Trade Organisationâs trade talks to a crucial intellectual error: I blame much of the troubles on a meeting between Richard Cobden and Henri Charpentiere, 150 years ago.
Both were good and wise men. Both created a vast error. Cobden was in the service of Gladstoneâs Liberal government, Charpentier was the agent of Napoleon III. Their mission was to create a free trade area between France and Britain.
Ever since these fateful deliberations, it has been assumed that trade liberalisation has to be mutual.
I think those who only believe in reciprocal free trade have no credentials as liberals. The economics are plain. Comparative advantage, the defining principle of international trade, applies regardless of the tariffs imposed by its trading partners. Trade terms simply do not need to be reciprocal. The hunt for such agreements is now a deterrent to opening up the worldâs markets.
All this horse-trading at the WTO is largely a waste of effort. Far better just to cut tariffs, regardless of how other nations operate. The boldest move in British economic history was the reduction of tariffs accomplished by Sir Robert Peel. We remember it from history lessons as the abolition of the Corn Laws, but it wasnâ