Ricardo Hausmann on Hillary on trade
This is from Dani Rodrik's blog, where Ricardo Hausmann made a guest appearance:
Dani has many complex and sophisticated arguments regarding his less
than enthusiastic support for the Doha Round and his willingness to
entertain the wisdom of a standstill. He argues in favor of Hillary
Clinton’s position on this matter and against the view that if trade
agreements do not go forward, they inevitably fall back.
may be a tenable position for a trade theorist or for a trade policy
wonk. However, suppose the question is the following: do you trust the
motivations of this candidate or is the candidate just hiding behind
plausible arguments to justify dangerous and wrongheaded policies? Is
this candidate rationally worried about the welfare calculation Dani
has in mind or is he/she just using our limited understanding of the
relationship between trade policy and welfare to advance a different
agenda? To ascertain these questions one is allowed to use not just the
position of the candidate vis a vis the Doha Round, but instead her/his
position on other policy issues as well.
Candidates have a
clear opportunity to signal their type, as economists like to say, in
their position vis a vis the free trade agreement with Colombia. Here
is a country that is a triple frontline state. It is at the frontline
in the devastating war against drug-trafficking, suffering most of the
casualties both in human lives and in institutional damage. It is in
the trenches in the war on terrorism, having to face the deadly and
costly consequences of the kidnappings and drug-financed guerrillas. It
is also in the frontline against the new totalitarian conception of
society now espoused by neighboring Hugo Chavez and his floundering
Socialism of the XXI Century.
The US has been aware of this
predicament and, since the times of Bill Clinton, has been willing to
assist the country with a few billion dollars in military and
development support through the so-called Plan Colombia. Now the
country has negotiated a free trade agreement with the US and has been
able to gain a large support of domestic public opinion in its favor.
But this agreement has not been approved by the US congress because of
the opposition, among others, of Hillary Clinton.
is not whether the free trade agreement is good or bad for Colombia:
that is the sovereign decision of Colombia and should not form part of
Hillary’s decision. The question is what are the overall effects of
Hillary’s position on the US, including its impact on employment and
economic wellbeing of American citizens and the standing of the US as
an ally in the many confrontations that this world posses to other
It is difficult to see how Hillary comes out the way
she does on this one. By the way, she also opposes a free trade
agreement with neighboring Panama, a country of barely 3 million
people, where the US ran its main industry, the canal, for almost a
A free trade agreement with the US is a much more
limited offer than membership in the European Union. There are no
fiscal transfers, no labor mobility, no monetary union, no acquis
communautaire. In spite of its modesty, several democracies in the
region have been willing to go for it. The fact that Hillary is
unwilling to support a more integrated economic space in the Americas,
which her husband espoused so much, makes it very clear to me that she
may use Dani’s arguments as an excuse, but she does not share Dani’s
The comments, and Ricardo's responses, are worth reading too.
Scroll down to December 6 for my earlier take on this.