Swapping self-interest for mutual benefit

17:00, Jul 23 2014

It's a little-known fact that Roald Dahl, the beloved author of many a ghoulish children's story, cut his teeth as a spy for Britain during World War II.

According to The Irregulars, the immensely entertaining biography of Dahl's efforts, he drank and slept his way through much of the United States' east coast high society in the first four years of the 1940s. At first, he was helping Britain turn the Americans against Germany. By late 1943, however, with the tide turning against the Nazis, his job was to influence the post-war carve-up of global aviation rights.

Pan American Airways wanted first dibs, Britain was weak because it was in debt to the US for war-time infrastructure, and both the US and Britain were playing one another off against the only other "great power" that mattered in 1945: the USSR. At the heart of the talks was a tension between outcomes favouring customers versus the self-interest of the airlines themselves.

So why does any of this matter today?

When a Malaysian airliner can crash in Ukraine, apparently downed by Moscow-backed militia, when the US is blamed because Dutch investigators can't access the site to the fury of the Australian Prime Minister, it's worth reflecting that a century ago, there was no such thing as commercial aviation.

Today's deeply interconnected world is, in fact, very much an artefact of the globalising urge that came from the end of World War II and that saw the creation of the United Nations and the emergence of the global trade negotiating entities that morphed into the World Trade Organisation.


The high-minded ideals of both the UN and the WTO were that the world needed forums where the weak and the powerful could meet on at least semi-equal terms. It wasn't, and isn't, perfect. And for opponents of the free movement of goods, services and people between countries, the WTO has not achieved its aims. Yet the evidence from almost three generations of increasingly open global trade is that it has created far more good than bad, with education, healthcare, economic opportunity and human rights all more widely available to far more people than they were 60 years ago.

However, as a former director-general of the WTO, Dr Supachai Panitchpakdi, said in an interview in Wellington this week, the democratising intentions of the multilateral WTO system are threatened by the growing focus on bi-lateral and regional trade agreements.

On one hand, this is a direct result of the failure of the Doha round of WTO negotiations, which have dragged on without resolution since 2001. On the other, the WTO's failure is opening up opportunities for the old "great powers" to reassert their dominance by seeking to dictate the terms of trade deals such as the Trans-Pacific Partnership and its US-European equivalent, the Transatlantic Trade and Investment Partnership.

"TTIP and TPP together could drive the world back into the old days before the WTO was conceived, a world trading system predominated by major trading nations, which was something I thought we tried to adjust with the more democratic participation of membership of the WTO," said Supachai, who was director-general of the WTO from 2002 to 2005, immediately after former New Zealand prime minister Mike Moore.

These comments created a flurry in New Zealand social media, where opposition to TPP is often most vigorously expressed. To many, this was proof that the free trade agenda is rotten. But Supachai was saying something far subtler, a plea for the principle of seeking mutual advantage through free trade, rather than basing all negotiations on horse-trading that favours self-interest over the greater good. It was a plea for trade deals that benefit all parties.

"We are still very much bogged down in the medieval mindset of trade negotiation," said Supachai. "You try to get something in return for something. To me, that's why it's not going to work."

The goal of truly free trade talks should be "an expansion of economic co-operation that should be good for everyone". So unless the world trade agenda can replace this rising spirit of mercantilism and recapture the spirit of mutual benefit that underpinned the early momentum for globalisation, then the arguments that undermine it will only grow.