The
rules reduce opportunities for corruption
The
rules include commitments not to backslide into unwise policies.
Protectionism in general is unwise because of the damage it causes
domestically and internationally, as we have already seen.
Particular
types of trade barriers cause additional damage because they provide
opportunities for corruption and other forms of bad government.
One
kind of trade barrier that the WTO’s rules try to tackle is the
quota, for example restricting imports or exports to no more than a
specific amount each year.
Because
quotas limit supply, they artificially raise prices, creating
abnormally large profits (economists talk about “quota rent”).
That profit can be used to influence policies because more money is
available for lobbying.
It
can also provide opportunities for corruption, for example in the
allocation of quotas among traders. There are plenty of cases where
that has happened around the world.
In
other words, quotas are a particularly bad way of restricting trade.
Governments have agreed through the WTO’s rules that their use
should be discouraged.
Nevertheless,
quotas of various types remain in use in most countries, and
governments argue strongly that they are needed. But they are
controlled by WTO agreements and there are commitments to reduce or
eliminate many of them, particularly in textiles.
Many
other areas of the WTO’s agreements can also help reduce corruption
and bad government.
Transparency
(such as making available to the public all information on trade
regulations), other aspects of “trade facilitation”, clearer
criteria for regulations dealing with the safety and standards of
products, and non-discrimination also help by reducing the scope for
arbitrary decision-making and cheating.
Quite
often, governments use the WTO as a welcome external constraint on
their policies: “we can’t do this because it would violate the WTO
agreements”.
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