Yesterday, at the meeting of the global leaders, the IMF and World Bank dropped two important aspects from its closing statement sending shock waves across the globe. The first is trade protectionism and the next is climate change. The watering down of trade protectionism represents a moment of vindication and the change on the climate change agenda, alas, represents a moment of sheer impotence. This new and reformed international agenda comes after both of these organisations sent developing and even least developed countries, for years, on kamikaze missions by parroting out the importance of “reduction of trade barriers” even when local realities and national economics clearly highlighted that some level of protectionism was required to create egalitarianism.
Together this reformed new agenda represents one important mantra for developing countries. That is, superior ideological positions generally touted by Western intellectuals are amenable to change provided it affects them adversely! After all, even big bang events — the AIDS crisis that wiped out millions decrying protectionism for local pharmaceutical industries and food insecurity in parts of the globe that would have benefited from protectionism for agricultural sector in poorer countries— did not move the two big organisations to re-consider its philosophy on trade.
So, what moved the IMF and the World Bank to this new protectionism-friendly avatar? Well, finally, the developing countries figured out the brahmastharam — the big weapon — of this century. Educated from the back roads of countries such as India and China, developing countries deployed the one capital that it always had in excess – human capital. As Indian, Chinese and other developing countries took over jobs (doctors, engineers, professors and lawyers) that the US and the rest of Europe considered exclusive to themselves, the West realised that free trade was not free anymore! They had built an entire global trade regime without expecting competition. As competition from unknown quarters shocked developed countries, culminating in the Trump agenda, the IMF and the World Bank have seemingly relented.
What does this mean for countries such as India, China and Brazil? At the outset, this should mean something to Big Pharma that is yet to rein in its prices and the big-farm lobby that has been fed by never ending amounts of subsidies at the cost of poor country farmers. Poorer nations should showcase this change into meaningful policy flexibilities for itself at the Ministerial meeting at Buenos Aries meeting of the World Trade Organization. If H1B visas are going to be curtailed, then domestic procurement programmes, protectionism for solar panels, pharmaceutical flexibilities and more need to be accepted without much ado. Countries like India and Brazil that have a thriving bio-technology sector should resist protectionist strategies such as imposing unreasonable data exclusivity requirements.
After all, 2017 marks the end of 50 years of inception of the Stockholm Treaty that created the World Intellectual Property Organisation in 1967 followed by the World Trade Organisation which came in with a bang to eliminate “all trade barriers.” It is time for poorer nations to use the sudden enlightenment of the IMF and the World Bank to seek egalitarianism in trade policies.
The writer teaches law at Texas A&M School of Law