Fortress Europe and other myths
            concerning trade
Developing countries sometimes still
            resist free trade because of the alleged protectionism of
            industrial countries -- a myth belied by facts, says the
            author. Import growth in the industrial countries
            accelerated during the 1980s, while income growth slowed.
            Outside of agriculture (only about 2 percent of GDP) and
            with the possible exception of Japan, free trade -- not
            protectionism -- is the reality. Despite the march toward a
            frontier-less Europe, the European Community (EC)
            manufactures imports from nonmembers rose faster than
            intra-EC trade, and imports from developing countries rose
            fastest. Similar tendencies prevailed in North America. This
            pattern of imports contradicts the myth of widespread,
            effective and growing barriers to manufactures imports.
            Protectionist rhetoric is up because imports are increasing,
            not because trade barriers are rising. The rising share of
            developing countries, despite their often weak bargaining
            positions, shows that multilateral rules, rather than
            bargaining, threats and counter-threats, still drive the
            system. In the 1980s, manufactures imports rose to 40
            percent of manufacturing production in the United States and
            to 25 percent in the EC. But in Japan, manufactures imports
            in 1990 were less than 12 percent of manufacturing
            production, and their dollar value was smaller than
            Italy's. Granted, some protectionism persists
            everywhere, but it is an irritant rather than a true
            obstacle to trade. For that reason, further trade
            liberalization can bring the industrial countries little
            additional benefit in terms of faster growth, though retreat
            from free trade holds huge potential losses. Only improved
            domestic policies -- structural and macroeconomic -- can
            raise investment, accelerate growth, reduce unemployment and
            consolidate support for free trade. Developing countries
            should view the United States and the EC as open markets for
            their manufactures exports. Even in agriculture, policy
            reform over the present decade should reduce inefficiencies.
            Meanwhile, analysts should be careful to disaggregate:
            industrial countries' agricultural policies that have
            truly harmed food exporters, like Thailand, should not be
            blamed for the ills of food importers, like most African
            countries. Selective trade restraints may have blunted but
            not countered the dynamism of newly industrialized countries
            and accelerated their shift toward more sophisticated
            exports. As their barriers to manufactures imports are
            generally low, the preferences industrial countries grant to
            developing countries carry similarly low benefits. They help
            nascent exporters benefit from good policies, but they do
            not overcome the handicap of bad policies.