Laissez-faire and the dentist's chair

PUBLISHED : Monday, 06 February, 2012, 12:00am
UPDATED : Monday, 06 February, 2012, 12:00am


Free trade and dentistry have a lot in common. Everyone is in favour of dental work, in principle, but few are enthusiastic about visiting the dentist. Free trade is like that, but more so because while it remains a much lauded principle, in practice the excuses for avoiding its implementation are even more effective than dentist evasion.

At the recent World Economic Forum in Davos, Switzerland, where free trade has regularly been touted as a worthy aspiration, Ron Kirk, the US trade chief, admitted that it was impossible to sell this concept to the American public.

Pascal Lamy - chief of the World Trade Organisation, the body responsible for implementing free trade - conceded that a decade of talks over the so-called Doha Round had failed and no comprehensive trade deal was feasible.

Anyone who thinks that this is a new, ominous development needs to study a bit of history to rapidly discover that the ideal of free trade has almost always been honoured only in the breach.

For example, take a look at what happened during the years of the Roman empire, when world trade became a reality and goods flowed at an unprecedented rate. Of course, back then there was no fancy and complex world trade regime of the kind now in place, but Rome ensured that trading was skewed to favour the imperial capital.

While parts of the empire could engage in more or less free trade among themselves, the main benefits of international commerce resided with the empire's rulers.

Fast-forward to 1947, when the General Agreement on Tariffs and Trade (GATT) - the WTO's predecessor - was founded to enhance international co-operation after the second world war.

It seems churlish to say this, but the bald facts are that, although agreements were indeed signed under GATT, most of its meetings were dominated by negotiations over exemptions from these agreements. Indeed, GATT became such a byword for failed negotiations that by 1995 it was decided to replace it with the WTO.

Lamentably, the record of the WTO is similar to that of GATT. While international agreements have had limited success, some smaller regional bodies have at least had the benefit of freeing up trade within their regions. One notable example of this is the European Union, but - as its current travails show - it has hardly been painless.

However, the alphabet soup of regional organisations have fared less well in Asia, where the Association of Southeast Asian Nations and Asia-Pacific Economic Co-operation have both hosted colourful heads-of-state meetings, yielding studiously minimal results.

Hong Kong, meanwhile, is often held up as an exemplar of the free-trade principle. It has few barriers to imported goods, a largely open commercial regime and a business-friendly government.

Again, illusion looms large in the beliefs among free-trade ideologues. Hong Kong is actually riddled with government controls on vital matters such as land supply, and its regulations have allowed anti-competitive cartels to thrive.

Yet in the international market, tiny Hong Kong is indeed open, as it has no significant domestic manufacturing or agricultural industries to protect. It thrives on its role as an international business facilitator. Although it is rarely said, Hong Kong happens to be the perfect example of the problem with free trade, which is that it can thrive only in circumstances where few domestic protectionist pressures exist.

Hong Kong imposes few trade restrictions with outside markets, because the territory's business interests profit greatly from such trade. Meanwhile, very powerful cartelists who control large parts of the domestic market sit comfortably behind a wall of restrictive regulations in Hong Kong.

So it can be confidently predicted that dentistry and free trade will continue to walk hand in hand for some time to come.

There will be occasional forays into a more liberal global regime. Some barriers to trade will be removed when they pose no threat to vested interests at a national level, but real global free trade remains a mirage.

That's because most people's enthusiasm for the practice is equal to their love of the dentist's office.