ALTERNATE SOLUTIONS INSTITUTE LAUNCHES FREEDOM TO TRADE CAMPAIGN IN PAKISTAN

On September 4, 2003, the Alternate Solutions Institute arranged a meeting with journalists at Lahore Press Club in connection with the launching of the Freedom to Trade Campaign. A significant number of journalists from various Urdu and English newspapers and news agencies attended the event. After welcoming the attendees, Dr. Khalil Ahmad, President of the Institute, explained that the driving force behind the WTO was 'free trade,' but that the politics of big powers and its vested interests has divided this platform into warring forces. He stressed the importance of trying to achieve global free trade through WTO, and reiterated the demands made in the Manifesto of the Freedom to Trade Campaign. Dr. Sajid Ali, a founder member of the Institute, emphasized the role of a limited government in strengthening free trade, and said that the bigger the size of the government, the more restrictions are there on trade. The event ended with a question and answer session.

FREE TRADE BRINGS PROSPERITY

[The text of the Press Briefing given at a meeting with journalists in connection with the launching of the Global Freedom to Trade Campaign arranged by the Alternate Solutions Institute, Lahore, Pakistan.]

Welcome. I, Khalil Ahmad, on behalf of Alternate Solutions Institute, welcome you to this Press Briefing. Alternate Solutions Institute is a registered, non-political, non-profit educational think tank. Its mission includes promotion of the concept of a limited government under the rule of law protecting life, property and individual liberty of its citizens. Its motto is: Welfare of the People by the People.

This Press Briefing has been arranged in connection with the launching of Global Freedom to Trade Campaign. As we know that WTO's 5th ministerial conference is going to be held in Cancun, Mexico, from September 10 to 14, this is to remind that the driving force behind the WTO was 'free trade' but the politics of big powers and its vested interests have divided this platform into warring forces. We at Alternate Solutions Institute want to stress the importance of trying to achieve global free trade through WTO, and taking advantage of this Campaign wants to highlight the fact that free trade is the way of prosperity for the people of the world.

From the platform of Freedom to Trade Campaign we call on world leaders to permit the people of the world the real freedom to trade. That means removing all barriers to trade imposed by governments, including quotas, tariffs, subsidies and protectionist regulations.

We demand that all nations:

Eliminate import tariffs and quotas.
Eliminate production and export subsidies.
Eliminate protectionist, trade-linked environment regulations.
Remove other bureaucratic restrictions on trade.
Allow entrepreneurs, traders and innovators the freedom to protect and exchange their property.

Free trade frees people: it is fundamental to eliminating poverty, promoting development and achieving political and economic freedom.

Now a few words about free trade:

In Pakistan, it has become intellectually fashionable to outrightly dismiss free market, free trade, globalization, capitalism, privatization, etc. Most of the mainstream politics and NGO activities thrive on the slogan of fighting for the poor. But, nobody ever gives a thought to the fact that these economic phenomena actually benefit the poor.

Let's have a look at free trade: is it good for the poor or not? The opponents of free trade believe and propagandize that it is bad for the poor. How? They won't explain it in detail.

Here are some real samples:

A news item reads as: Call to stop Chinese chicken import

Pakistan Veterinary Medical Association has demanded of the government to stop imports of frozen chicken from China besides imposing duty on such imports. The President of PVMA said the imported frozen chicken meat was much cheaper than the locally produced chicken.

Another news item reads as: Heavy duty on chicken meat import sought

Karachi: Pakistan Poultry Association (PPA) has demanded of the government to impose heavy duty on the import of chicken in order to protect the local chicken industry from plunging into crisis. The office bearers of PPA said that two consignments of 25 tonnes of chicken had already been imported from China which would have drastic consequences for the local industry and the country will suffer a loss of Rs.14 million in GDP and thousands of people attached with the industry would be rendered jobless. The Convener Press and Public Relations of PPA said that imported chicken is much cheaper in comparison to local chicken but the public gets no relief from it as its full consignment goes to hotels and catering houses.

Whose interests the stopping of cheaper chicken import from China or duty imposed on it will serve? No doubt, not the interest of consumers.

Yet another news item reads as: PTC urges govt to check duty evasion, smuggling The Managing Director Pakistan Tobacco Company (PTC) urged the government to check duty evasion and smuggling which is seriously hurting the tobacco industry. The Managing Director further stated that the loss to the government annually is around Rs.6 billion at the current rate in which evasion amounts to Rs.4.2 billion and smuggling Rs.1.8 billion.

Isn't it another case of avoiding open competition to fleece the consumers? Of course, the smugglers provide cheaper and better things that is why people buy them, and, in turn, the smugglers earn profit from this 'illegal' trade. And, why the producers and importers try to evade the duty? Because this duty raises the cost of a product and makes it less competitive in the market, so the people had to evade such duties to be successful in their businesses. Why don't these Poverty Politicos ask the government to eliminate or reduce such duties, instead?

And yet another news item reads as: Duty on used monitors fails to boost TV sales The imposition of 25 per cent import duty on used computer monitors in the budget FY

2003-2004 has failed to hold back the declining sales of both the imported as well as the locally manufactured television sets. The price of used monitors is so low that even with the addition of 25 % import duty, the monitors are still considered cheaper by the lower and middle income group buyers who are the biggest seekers of this item. Used monitors are not only used with unbranded or second hand computers but used as television sets too by adding a device known as 'TV Card' which has a remote facility to view at least 256 channels; and this type of a modified television plus computer monitor with better picture quality (is far cheaper) than any new brand television set.

Whose interests this 25 % import duty on used monitors did serve? Hasn't the advancement in technology (made by some 'greedy' capitalist to earn profit) brought things in the reach of low income groups? And, even the import duty purported to serve the interest of the TV set importers failed to stop this benefit to the poor.

You know about the present shortage of cars. In a world where innumerable cars exist, can you imagine a country where people have been forced to buy cars from black market? Reason is that if you do not create a free market, a black market will emerge.

On the whole, what do these news items amount to? Clearly, they amount to Protectionism. The poultry association, the tobacco manufacturers, all of them and many others in the same situation clamor for Protectionism because it serves their interest, and it is understandable. But, why do the people fighting for the cause of poor favor import duties, restrictions on free trade, and advocate protectionism? It is quite unintelligible.

They plead, as has been argued in the above news items, that local industry will be destroyed. Do they mean that the local industry should flourish at the cost of poor consumers? I hope they won't concede to this anti-poor measure. Then, they try to frighten us that so many people working with this industry will be rendered jobless. Again, do they mean that so many people should have job and live at the cost of other people? I hope they would like to give a serious thought to this exploitative situation. Their final argument is like this: free trade results in a loss to the government. This loss may be in the form of foreign exchange (as the volume of imports increases in the case of an under-developed economy), revenue (as the uncompetitive businesses vanish), and reduction in GDP (as the Pakistan Poultry Association argued 'the drastic consequences for the local industry will incur a loss of Rs.14 million in GDP').

Will the opponents of free trade answer these two questions: Is the loss to the government is the loss of the people? Or, is the loss to the people is the loss of the government? It is these answers that determine who is in favor of the poor and who is not. As a principle, the good of the people should be considered the good of the government since government is instituted for the sake of people and not vice verse. The poor benefit from free trade and a government that seeks the good of people should follow what is in the interest of people. It should not seek protectionist policies that serve only a limited section of society.

Moreover, economic decisions are judged against a background of long term consequences. If an uncompetitive industry or a business closes down, the causes which played this 'havoc' start working toward the birth of other businesses. New vistas open and investors and producers find new ways to do business to fulfill their own and others' needs. This is what economic history tells.

This argument against free trade is a contradiction in terms. Had history followed this course, no economic and social progress would have been possible. For instance, if to save the jobs of the typists or say calligraphists or in like cases government had imposed duties on the new products and restrictions on their use were we able to go ahead with computers and information technology? Akbar, the great moghul emperor, was shown by a foreigner the type of an earliest printer. He rejected its use on the same pretext that our calligraphers would be rendered jobless.

Also, economic decisions are judged by their consequences for all the people and not this or that section of society. Surely, the number of people attached with an industry doomed to failure is quite limited and no policy should be formulated to provide them at the cost of other people.

Another blessing of free trade is that it minimizes the possibilities of war which is one of the greatest enemies of people. Free trade brings people of various countries closer not only economically and politically but culturally and intellectually also. In addition, this mitigates or diminishes the aversions, differences, and hostilities between the peoples of those countries or creates tolerance for them; and, as a result may evaporate the causes giving rise to wars between those countries. The French Frederic Bastiat (1801-1850) aptly described this argument in a few words thus: 'If goods do not cross borders, soldiers will.'

Finally, we must admit an economic fact of utmost significance that we are all (except those who live as parasite and consume only) producers and consumers, at the same time, of this or that product or service. Another economic and psychological fact of equal significance is that producers and consumers everywhere behave like the citizens of the same country: they seek maximum value for their money. The producer no matter a billionaire or a 'have-not' tries to find the highest possible price for his/her product or service, i.e. maximum value for his/her money. The consumer no matter a billionaire or a 'have-not' also tries to find cheaper and quality product or service, i.e. maximum value for his/her money. The determination of the point at which demands of both producer and consumer happen to balance rests with a free market and not with any other authority acting in the name of people or something else. Only a free market where voluntary exchanges take place among producers and consumers allows an open competition to exist among various producers-cum-consumers. Protectionism or restrictions on free trade between various districts or provinces or countries ultimately make poor poorer since in that case they are forced to 'purchase' a product or service not worth their money.

BREAKDOWN IN TRADE TALKS AT WTO: AN OPPORTUNITY TO PUSH FOR REAL FREE TRADE

Here is the text of the press release issued by the Global Freedom to Trade Campaign:

Democracy And Free Trade Prevail at WTO

Breakdown in Trade Talks Gives WTO Members an Opportunity To Push For Real Free Trade

Sunday, 14 September, 2003, Cancun -- The decision by the G33 to walk out of the trade talks is perhaps the ultimate expression of this democratic organisation, where the rule of one member, one vote still holds true.

The talks broke down because the EU refused to reform its agricultural subsidies and attempted to foist new non-trade issues into the WTO - as a delaying tactic to avoid discussion of agriculture. But the days when a few thousand farmers in the EU are able to hold the world to ransom are over.

It is now essential that negotiations proceed on a more realistic set of issues. The Global Freedom to Trade Campaign believes that the world would be a freer, fairer, more peaceful and prosperous place if trade between people was free and not distorted by subsidies or regulations. Members of the campaign now urge the WTO to move forward with negotiation of the crucial issue of removing distortions to agriculture. The EU, US, Japan and other subsidy junkies must kick the habit.

Commenting on the outcome, Bibek Debroy of the Liberty Institute and the Rajiv Gandhi Institute (NGOs in New Delhi, India), said: "This is good news - an agreement without agricultural liberalisation would have been meaningless. But it is essential that negotiators come back to the table with the US and EU more prepared to remove distortions in agriculture. The costs of WTO talks failing are too high, and developing countries cannot afford such costs."

James Shikwati of Inter-Region Economic Network in Kenya, said: "This will force the rich countries to accept agricultural liberalisation. The talks must be restarted as soon as possible to open up the world for trade. The benefits of trade liberalisation would be felt by all." Leon Louw of the Free Market Foundation in South Africa, commented: "The breakdown in WTO talks must not become an excuse for countries to halt the process of trade liberalisation, which will benefit all, especially the poor."

Members of the Global Freedom to Trade Campaign: Alternate Solutions Institute, Pakistan; Instituto Liberal, Brazil; Instituto para la Libertad y el Análisis de Políticas; The Hayek Foundation, Russia; Association of Free Consumers, Costa Rica; MOER, Bangladesh; CSRDESD, Mali; Jerusalem Institute for Market Studies, Israel; Association for Liberal Thinking, Turkey; Instituto Libertad y Desarollo, Colombia; Fulided, Bolivia; ILE, Peru; Inter Region Economic Network, Nairobi, Kenya; Institute of Public Policy Analysis, Nigeria - Free Market Foundation, South Africa; Fundacion Libertad, Argentina; Liberty Institute, India, and others

FACETS OF FREE TRADE

Invisible Trade Barriers

International trade analysts say that the focus of trade negotiations is shifting from tariffs to invisible barriers which might hamper trade between nations in the future. Some of these barriers are environmental laws, labor standards, rules for competition and corruption.

There are some 200 international treaties on the environment that predate formation of the World Trade Organization.

Many of these let nations use trade sanctions to enforce the treaties -- contrary to provisions of the WTO agreement restricting the use of sanctions.

The U. S. wants minimum labor standards set for the treatment of workers in the Third World; but these poorer countries say that such standards attack one of their biggest competitive advantages: cheap labor.

National policies regarding the impact of competition from abroad on domestic industries is certain to be an area of dispute.

Finally, there is the matter of corruption. The U. S. has made it illegal for its firms to bribe foreign officials to get contracts. But in many countries bribery is not against the law. Experts say that firms based in countries which permit bribery have an advantage over firms in countries which don't.

Now the U. S. is pressing other countries to bar their firms from bribing foreign officials.
[Source: Charles Oliver, "For Trade, Now the Hard Part," Investor's Business Daily, January 20, 1997.]

Why Free Trade is Good

Free trade has enabled America to become the economic powerhouse it is today. Some policymakers remain unconvinced of its practical benefits, but continuing free trade policies will allow U.S. citizens to become even wealthier in the future and help developing countries become wealthier.

U.S. trade represented only 9 percent of gross domestic product (GDP) in 1960, but today accounts for 23 percent.

Twelve million Americans owe their jobs to U.S. exports.

Over the last three years, export of U.S. goods and services has risen by 20 percent - about one-third of real GDP growth.

Today some 41 percent of U.S. exports go to developing countries, compared to 29 percent in 1970.

The available data suggest that the wealthiest countries are those whose borders are the most open to trade, and that the poorest are those whose borders are least open to trade. For example:

The average per capita income level of countries with an average tariff rate of 4 percent or below is more than $17,000.

The average per capita income level of countries with average tariff rates above 20 percent is below $2,000.

Small Businesses and Free Trade

Small business owners and their employees are benefiting by a growing trend: the tiny companies are exporting their products throughout the world. They are being lured by fast-growing overseas markets and lower trade barriers.

Firms that export are 9 percent less likely to go bankrupt than those which don't, according to the Institute for International Economics.

Workers at exporting companies make about 5 percent more on average than those at non- exporting firms.

The top importers of U. S. products are Canada, Japan and Mexico.

While only about one in ten manufacturers with fewer than 100 employees exported in 1987, about one in five was doing so by 1992.

Similarly, the share of small and mid-size firms that get 10 percent or more of their sales from exports almost doubled between 1994 and 1996 -- from 27 percent to 51 percent, according to the Grant Thornton consulting firm.

Trade experts say that fast-growing overseas economies are the reason U. S. exports rose 130 percent between 1985 and 1995 -- even though U. S. gross domestic product grew only 27 percent, inflation adjusted, during the same period.

Small exporters are getting help from private consultants and brokers in maneuvering the export maze -- as well as help from governments here.

They also have been spurred on by tariff reductions stemming from the signing of the North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada.

The only potential drawback: a strong dollar could make it tougher for small firms to make it big in the export market. For example, the dollar is trading now at about 124 yen, a 50 percent increase since April 1995.
[Source: Laura M. Litvan, "Small Firms Go International," Investor's Business Daily, February 26, 1997.]

Letteres to FreePakistan

Thanks for Dr. Klaus' article. I am delighted to understand that the Europeans are really ahead of us in whatever matter it may be. We as a country, and even as a mass of people are a lump of dirt compared with those people who felt oppressed under socialism and fought against it with their minds clear and open, and with their integrity intact.

We have no head, what to mention of clarity and our government clerk is the bones of our integrity. Our politicians are the blue blood of our principles.

Hats off for the Europeans, and Dr. Klaus and his types.

Regards Farooq Malik [Lahore, Pakistan]

how can i help your (institute) in promoting welfare of the people, i want to work for the problematic people but i do not find the way .do tell me clearly.

sadia
[Rawalpindi, Pakistan]

Letters from the Press

CHINESE CARS
[Usama Bin Jabbar, Rawalpindi, Pakistan]

Public was anxiously waiting for low cost Chinese cars, but now when the cars were likely to be marketed in Pakistan, some other car manufacturing industries have approached the court and got a stay order against the sale of Chinese cars. It is very strange that on one hand the the government is advocating economy in all fields of life and on the other hand small and cheaper cars have been kept away from the public. Public is not interested in the legal lacunas which might have permitted the court to give the stay order. The government is requested to make a law if required and allow the small and cheaper cars to come in the market.
[The News Lahore Edition August 31, 2003]

PRIME MINISTER'S CAMP OFFICE RESIDENCE [Hussain A Siddiqui, Pakistan]

A press tender, issued this week invites tenders by Pak PWD for the Special Repair of the Prime Minister's camp office-residence at Rojhan Jamali. Estimated cost of the repairs is Rs. 1,133,756.

Earlier, tenders were invited for supply and installation of body fitness and exercise machines at the PM secretariat Islamabad. When criticised by the press, there was a clarification that the same were meant for the officers of PM Secretariat and not the PM himself. What is the explanation going to be now Mr. Prime Minister for spending over a million rupees on special repairs at your Rojhan Jamali office and residence? Following the footsteps of Nawaz Sharif and Benazir Bhutto, Mr. Clean? [The News Lahore Edition August 31, 2003]

FreePakistan News-Briefs

PAKISTANIS SYMPATHIZE WITH 9/11 VICTIMS
School children lit candles and released doves in a prayer for peace in separate remembrances for the victims of the September 11 attacks here in Lahore on Thursday with some saying they wanted to show the world that Pakistanis are against terrorism.

THE MOST CORRUPT GOVERNMENT DEPARTMENTS
The Punjab Public Accounts Committee while reviewing the Auditor General's report for 1999-2000 has noted that Education, Communication, Housing and Works departments topped the list of most corrupt departments as majority of irregularities, frauds, thefts, over-payments and work against rules were found in them.

HOW TO GENERATE REVENUE
The government is devising a better deal for business in taxation as tough measures for revenue generation are backfiring.

LAW AND ORDER SITUATION SLATED
Upcountry business community has expressed concern over deteriorating law and order situation in the province urging the Chief Minister of Punjab to immediately look into the matter.

HIGH POWER TARIFF IS HALTING GROWTH
The World Bank has observed that the people of Pakistan are paying heavy price owing to the inefficiency on the part of power producer and distributor, WAPDA (Water and Power Development Authority).

KITE FLYING BAN EXTENDED
The Punjab Home Department has extended ban on kite flying for another 60 days.

TELECOM POLICY OFFERS NO PROFIT TO PRIVATE SECTOR
The Chairman Orascom Telecom, owners of the Mobilink Company, a major mobile telephone provider, has said that the telecom deregulation policy approved by the government offers no profit to any investor.

EXTERNAL DEBT SWELLS
Total external debt has swelled by $ 1.119 billion from $ 32.254 billion to $ 33.373 billion in three years from end-June 1999-2000 to end-June 2002-2003.

GHOST WORKERS EATING UP PORT QASIM
Some 1757 ghost dock workers at Port Qasim eat up Rs.14.5 million on account of their wages and allowances every year making the handling expensive. These workers are not registered either with Port Qasim Authority or Labor Directorate.

A MONOPOLY SAVING THE CARTELS
WAPDA has extended the delivery date of two contracts for the supply of Single-Phase meters tothe local cartels allegedly for saving them from the liquidated damages amounting to million of rupees.

BLACK-MARKETING THE CARS
The premium (money paid in addition to get early delivery of new vehicle) on new model of Honda City has soared to Rs.20, 000.

PROTEST AGAINST NEW INCOME TAX LAW
Karachi city traders are actively protesting against the new income tax laws being implemented since the start of the new fiscal year.

NEPRA GRANTS LICENSES
The National Power Regulatory Authority (NEPRA) has granted licenses to 12 independent power producers.

TAX ON PETROL
The minister for Petroleum and Natural Resources has informed the National Assembly that a massive amount of Rs.87.7 billion was collected from the people as tax on petrol and diesel products during the last four years.