San Francisco -- For years the advocates of trade giveaways like NAFTA and the WTO have argued that they wanted a "rules-based" set of global trading regulations. It's a good idea. Unfortunately, they haven't delivered. Instead, we have huge components of global trade that are little more than organized-crime cartels.
This week we heard how new diamond discoveries in Zimbabwe might keep the Mugabe regime afloat for a few more years. What's important to understand about the Zimbabwe story and its counterparts is that the issue is not governments profiting from trade -- it's individual officials. In Zimbabwe, one regime insider described what's happening this way:
"This is ZANU-PF's salvation," said one of Mr. Mugabe's closest confidants, on the condition of anonymity because his conversations with the president were supposed to be confidential. Diamonds are being sold on the black market for partisan and personal gain, he said, with some party leaders gaining and others being cut out: "The looting has intensified over the past six months."
In the case of diamonds, an international effort has been made to bring law to the trade. The Kimberley Process Certification Scheme is supposed to determine whether rough diamonds are from sources that are free of conflict fueled by diamond production. A meeting this weekend will determine whether the new Marange fields meet that standard.
But other natural resources don't have a Kimberley Process -- yet. And the existing world trade order not only fails to prevent the trade in stolen goods, it actually prevents governments from individually setting their own standards against fencing. So if China, for example, buys logs taken from forests at gunpoint by criminal gangs in Indonesia, and then turns those logs into coated paper for export to the U.S., we are precluded by the WTO from simply refusing to take paper from China unless we first set up our own elaborate processes. While the Sierra Club and the United Steelworkers have been struggling to get U.S. trade officials and the Congress to make it clear that illegal logging and its products should not have access to American markets, the European Union has finally taken the lead.
Last week the EU, after a decade of campaigning by environmental groups, required that those importing wood-based products into Europe after 2012 be able to document that the trees in question were logged legally. Still, the EU rules took far too long to put in place, and they aren't perfect. Printed materials are exempted for another five years.
It's still a major victory. "If this law is passed, illegal timber will be banned from Europe. The world's largest market is about to shut its gates to companies profiting from illegal trafficking and forest destruction," said Sebastien Risso, a forests campaigner with Greenpeace.
Considering that globally between 20% and 40% of all trade wood products are from illegal logging, and that one-fifth of this ends up in Europe, this is a big victory for groups like Greenpeace. But you have to wonder: If trade agreements are supposed to be "rules-based," then shouldn't a flat prohibition on the trading or fencing of all stolen goods simply be a basic part of the rules?