IBNA op-ed: Policies of commerce must be guided by rationality, not by the doctrine of “freedom”.

IBNA op-ed: Policies of commerce must be guided by rationality, not by the doctrine of “freedom”.

By Visar Ymeri

 

The fact that free trade is a guarantor of the economic development is already a heavily used rhetoric. This doctrinaire postulate is seen as an immune to the circumstances by the ideological doctrinaires. According to them, free trade is good, no matter where it takes place and between whom. This means that despite other circumstances, even the trade balance between countries, free trade, however, (unhindered by tariff or non-tariff barriers) is profitable in the long run.

Surely, it does bring profits. Trades wouldn’t exist, if it was unprofitable. This is true, if we put it in a mathematical axiom. But the main question is if this profit is mutual. Given the fact that the exchange is impossible if there aren’t involved at least two parties, then the most fair and accurate troubling of the truth of this axiom is the treatment of reciprocity (or lack thereof) towards profitability. Who benefits from the trade profits?

The free and open competition, without the protection of domestic industry, destroys the latter since the very beginning. It would the same as if a 6 months infant goes in the boxing ring to fight against an 18 year old boy, who has worked out in the gym for the last 8 years and let the open fight decide the winner. In such situations, we know who the winner is before the start of the fight.

This is exactly the case with Kosovo. Our destroyed industry throughout the 90s and during the war, the last blow it received during the process of privatization, was put in such a situation from the international and local priests of free trade. This ideological principle was materialized in the CEFTA Agreement, in which a major part of the trade was freed from tariffs between member countries (Kosovo, Albania, Croatia, FYR Macedonia, Montenegro, Bosnia and Herzegovina, and Moldova). The vast majority of these countries are in a much higher level of industrial development than Kosovo. Therefore our market was passive, without having the real possibility to sell our products in these countries. (Not even having a formal possibility in the case of Serbia and Bosnia.)

Now the main argument of the free trade ideologies is that the fruits of this principle will be harvested after a long time, as a result of short term effects not being compelling. But this isn’t true. The truth is that short term impacts of the free trade could be positive as a matter of fact, in terms of price reduction to consumers for a matter of time. But in the long term, this fact damages the domestic economy and the standard of households, as a result of the impossibility of industrial development, which would create more jobs, increase purchases, standard of living, and would see an increase in the quality of the domestic products. The destruction of the industrial potential of the country damages the general economic and social interest. Therefore, in the long term the free trade, as a factor which limits this destruction, could not be useful to individuals either. Since we are talking about the long term, Kosovo has more or less used full mechanisms of the free trade since 1999. 14 years later, the negative balance of the trade has increased continuously. This means that the others have benefited from unhindered trade with us, and we have lost from this trade.

Even the regulations of World Trade Organization, whose basic principle is the free trade, recognize the necessity of partial protection of infantile industrial trade, particularly for the poor countries. On the other hand, the basic rule of trading between two countries is that the subsidized products are not allowed to enter the other country without tariffs. None of these regulations have been applied from the government of the country (with the exception of some sporadic precautions of the Trade Ministry, which have often raised many doubts about the motives and objectives of the Ministry)

Industrial trade policies should be selective and not flat. We cannot treat every sector of the economy as the same. The logic of flatness if autarkic, with which the state says that it will develop the production of every possible product towards self-sufficiency. This is absurd and impossible. The selectivity enables the development of certain strategic industries for the country, which would enable the economic development and increase prosperity, under which we’d have the opportunity to export goods.

We certainly need bigger markets than ours. But the integration towards the global market should come gradually, carefully and selectively. At this stage, we should prioritize the countries with similar industrial development. Thus, the first trade integration should be with Albania, given that this unification of the market would be beneficial to both countries, the nation in general.

The trade is part of foreign policy, a part of relations with other countries. We must insist that not only bilateral relations with other countries, but also the multilateral ones, should have mutual benefits. This way we’ll have a relation based on equal terms. Any agreement/contract that puts us in a position of inequality or exploitation cannot be fair, nor useful. Justice and the usefulness of an agreement is measured with what the parties benefit from it. Currently in the trade world, Kosovo is losing. And of course, someone else is benefiting from it.