Sunday, March 30, 2008

Free Trade 6: Unilateral Free Traders HK, Georgia, Who Else?

A friend and also a board member of Lion Rock Institute (LRI, in HK, Mr. Dan Ryan, wrote a paper, "How to Make Hong Kong Uncompetitive". LRI is HK's first and independent free market think tank.

Mr. Ryan is protesting the HK government's decision to put up an Anti-trust or Competition regulatory body. He argues that HK's low tariffs, low taxes, little or no barriers to entry of firms, are what makes the economy free and competitive, that there is no need for a government agency to ensure competition.

He also observed that some big law firms in the US and Europe are positioning to get into HK in anticipation of law suits and legal cases that the planned Anti-trust body will hear. And a number of HK academics are gearing to be appointed as officials of the planned body.

Mr. Ryan is right, definitely. Competition or anti-trust regulatory body is first and foremost, a bureaucracy. Creating a new bureaucracy immediately creates 2 costs automatically: (1) taxes and fees to establish and sustain that bureaucracy, and (2) compliance costs to those regulated (hiring of lawyers, auditors, PR guys, etc.) that will help represent them in arguing with competition bureaucrats.

It's also true that academics -- them with PhDs included -- are among those who salivate to be appointed as government regulators, and enjoy the perks and popularity of being "public servants" while screwing the public with taxes, fees and regulations that somehow limit competition.

I urged LRI to continue this kind of public education. Many free marketers around the world are looking at HK as one of the models of a free market economy for our respective countries. If HK degenerates to become a bureaucratic country, we'll have less "models" in our fight.

People are also watching HK whether the force of socialist government of China will ultimately pull HK towards big and interventionist government philosophy, or HK will retain its Copperwhite legacy and free market tradition.

I believe that HK's unilateral trade liberalization is a good model, not those high profile, highly bureaucratic trade negotiations in the WTO. If a government really wants to give its people the freedom of having more choices for their consumption and production needs, then just liberalize international trade,
unilaterally, no ifs and conditionalities that other countries should also open up their markets to you. After all, people trade with each other; countries and governments don't.

I'm still looking around what other economies have unilateral trade liberalization policy aside from HK. The other 3 are Singapore, Dubai and Georgia. The latter has enacted a zero tariff on imports just a few years ago. I'm not sure Brunei, Estonia and Chile could be among the unilateralist free traders.

See also:
Free Trade 1: Estonia's Free Market, Globalization, May 09, 2006
Free Trade 2: Unilateral Trade Liberalization, May 17, 2006
Free Trade 3: Protectionism Perpetuate Poverty, September 05, 2006
Free Trade 4: FTA in APEC, July 09, 2007
Free Trade 5: Business, Rock Music and Cycling Globalization, July 17, 2007

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