Competition and rules

Multinational trade agreements must fail. International trade agreements involve competition among nations. In order for competition to work, the markets must be competitive and regulated for fairness. Fairness occurs when the rules of competition are freely agreed to in advance, and administered evenhandedly.

Competition without effective regulation is a race to the bottom. In a basketball game the contestants may agree to a set of rules before the game starts; but if a referee is not in attendance, expect things like fists, guns and knives to be used. The rules, regardless of their elegance, are rendered meaningless in the absence of effective enforcement. Or the reverse, a referee is present but there are no rules. Expect the referee to spend most of his time dodging violent competitors. Both rules and referees are required.

Every trade agreement into which the U.S. has entered has had numerous elegant rules, but lacked an effective enforcement scheme. The only way to get operative enforcement into an international trade agreement is for the treaty participants to surrender a part of their sovereignty to an international regulatory agency.

The nations of the world are going down the same economic path as the states traveled in the 20th century. Changes in technology increased interstate trade. Federal multistate regulation was required for markets to work. As a result the individual states surrendered much of their sovereignty to the federal government. The economic benefits are undeniable. Fortunately, the U.S. had political integration and effective regulation to go with the emerging economic integration.

The laws of economics may not be as easily discernible as the laws of physics. However, ignoring the laws of economics when facing an economics precipice can be as devastating as ignoring the law of gravity when standing on a cliff. LEN WHITE

Fayetteville