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PartTwo




INTERVIEWER What about the effect of free trade on countries that are less industrialized?

PROF. SINGH Well, the point is the fact of free trade is that they may never industrialize because the thing is that they start with an enormous disadvantage. Suppose you want to produce cars in Africa. Well, how are you going to do that, unless they were heavily subsidized, because you can't compete with the existing car producers so obviously countries which have not industrialized at all, they need a period of protection for their industry in order for them to make it strong enough to compete in international markets.

INTERVIEWER So how are economists or governments in the rich countries going to convince people of the benefits of free trade?

PROF. SINGH If you are talking about free trade, then the best way to promote free trade is to ensure that other measures are taken at the international economic level — cooperation between leading countries to ensure that there is more or less full employment in the rich countries.

But what is also clear is that if the unemployment problem - mass unemployment in the rich countries, 10% unemployment in Germany, in France and near 10% in this country - if these problems are not solved then people will walk away from free trade, and the world will be poorer as a result, so in order to sustain free trade, it is essential that governments tackle the unemployment problem. The other point is that no country on its own in an interdependent world economy can deal with the unemployment problem just on its own in a single country, it can only be dealt with by cooperation between countries, that the big countries have to coordinate their economic policies, but there is no prospect, unfortunately, at the moment, that they are willing to do so.


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