Importing Wealth: India should drop out of the WTO

By SAUVIK CHAKRAVERTI The Times of India Friday, 09 June, 2006

WE export in order to import, just as we sell whatever we produce in order to buy all that we consume. It makes no sense to sell and sell more and more of one’s produce and not purchase the produce of others; similarly, it makes no sense to export and not import. In the old days of free trade, you got rich “when your ship came in”, not when your ship went out.

The East India Company started off exporting gold in order to import spices. Ignoramuses of those days criticised the EIC, saying exchanging gold for spices (mere fripperies and luxuries) was the same folly of Red Indians exchanging land for colourful glass beads. But spices were in demand, and the Company wagered its gold to get them cheap from their source. Profits were pursued, and obtained. The enterprise of importing spices was richly rewarding.

In the modern world, India is leading a pack of underdeveloped nations in the WTO who want to export everything and import nothing. This is the proverbial case of the blind leading the blind. All that is earned from the process of “export promotion” are US dollars. We are all “working for the Yankee dollar” and managing these burgeoning dollar reserves is troublesome. Instead, if we imported, we could be working for French wine and cheeses, cheap second-hand cars, and loads and loads of other stuff for which profits are there for the taking if customs duties were lowered to a bare minimum.

Indeed, India should drop out of the WTO and opt for unilateral free trade. The entire subcontinent could be the world’s largest duty-free trading area. It is only through cheap imports that the “wealth of nations” can be augmented. As Adam Smith had said, the “wealth of nations” does not lie in the gold in the vaults of banks. Rather, it lies in the possessions and properties of the citizenry.

Through cheap imports, the citizens will have more and more possessions and properties — and therein lies their wealth. Unilateral free trade will free us from rent-seeking politicians and bureaucrats negotiating terms in the WTO. There will be loads of profits made from importing, citizens will grow wealthier, and politics will be separated from international trade. “Into such a haven of freedom, Lord, let my country awake!”