Poison from the failed DP World Ports deal

In the Philippines, oligarchs might just cite “national security” to derail reforms to remove monopolies in shipping and port operations, telecommunications, transport, banking. These monopolies, experts have been saying are among the major reasons why the Philippines could not take off and join the fast-growing economies of the Asia-Pacific Region. Please read the entire post.

The Americans have invented a new term for protectionism. It’s called “national security.” By the term “Americans” I don’t mean those nice families (in Washington DC, Florida, and Nebraska) during my visit there late last year under the US State Department’s International Visitors Program. What I’m referring to are the politicians from both the Republican and Democratic parties who pressured DP World to withdraw its offer to buy a British firm Penisular and Oriental Navigation Co, a $6.8 billion deal that would enable the Arab firm to operate five major American ports including those in New York City, Baltimore, and Miami. Americans politicians fear that Al Qaeda may worm through Dubai World’s Port, a state-owned business organization based in the United Arab Emirates, and eventually cause damage to American lives, property, and economy.

Danny Griswold, executive director of Cato Institute’s Center for Trade Policy Studies (CTPS) dismissed politician’s objections to the port deal as plain demagoguery:

“…Dubai Ports World would not be in charge of security at the U.S. port facilities it would be managing. That responsibility remains firmly in the hands of the U.S. Coast Guard and the Customs and Border Protection Agency….The demagoguery surrounding this issue has the potential to do serious damage to our efforts to build alliances with moderate regimes in the Middle East. The United Arab Emirates has cooperated with the United States in our war on terrorism. Its capital of Dubai has become an important hub for commerce and free enterprise in the region. We are currently negotiating a free trade agreement with the UAE. What sort of signal does it send to moderates in the Middle East who are seeking to engage in the global economy if we reject their investment in the United States simply because they are Arabs?”

Viewed from the Philippines, that failed business deal could look like plain double standards. I hope it’s not racism. But what I’m concerned really is the poison that the scuttled deal may have put on the ongoing efforts to free up international trade and investments.

For so many decades, experts and investors from the West have been telling us here in the developing world that “free trade” is a positive sum game—that everybody benefits from the rising tide of commerce. We have been responding to that message by dismantling a lot of our trade and investment barriers. Now that developing countries are returning the favor, capitalism has become a threat to national security.

Unwittingly, American politicians are teaching the rest of the world how to go about protecting special or vested interests that are blocking progress in much of the developing world.

Countries are currently trying to conclude the Doha Round of trade negotiations under the World Trade Organization. Now, Fortress Europe could now cite “national security” to block exports from developing countries.

In the Philippines, oligarchs might just cite “national security” to derail reforms to remove monopolies in shipping and port operations, telecommunications, transport, banking—one of the major reasons why the Philippines could not take off and join the fast-growing economies of the Asia-Pacific Region.

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