----- Original Message -----
From: "leon" <leon@grazinginfo.com>
To: <graze-l@witt.ac.nz>
Sent: Monday, June 05, 2006 4:11 AM
Subject: Re: [Graze-l] Subsidies and USA tariffs
>>>
>>> Cut subsidies and there would not be surpluses
>>
>
> Vaughan Jones
> Waikato
> Hamilton
> New Zealand
>From the Toronto Star
Protectionism's fresh appeal
Jun. 5, 2006. 01:00 AM
CAROL GOAR
Protectionism used to be a bad word in economics. Nations that erected trade
barriers were thought to be insular and unenlightened.
That is still the majority view. But a minority of economists - including
some at prestigious academic institutions - is challenging the old
orthodoxy. Its members are no longer convinced that trade liberalization
spurs growth or development in the world's poorest countries.
African leaders have held that view - prompting lectures and lobbying from
their Western counterparts - for some time. Now a growing body of evidence
suggests that they're right.
Since 1986, when global trade negotiations began in earnest, Africa's share
of world exports has plummeted by 60 per cent. Most of its 54 nations have
become poorer, less industrialized and less able to support themselves.
Since 2001, when the current round of trade talks was launched with the
explicit goal of lifting millions of people out of poverty, the World Bank
has dramatically lowered its estimate of the benefits for developing
countries.
Initially, it predicted that a new global trade pact would generate $924
billion in new wealth, of which $598 billion would go to developing
countries. That would be enough to raise 320 million people out of poverty.
Last December, the bank revised its forecast, saying that under ideal
conditions (the elimination of all tariffs, quotas and agricultural
subsidies), a multilateral treaty would produce $319 billion in new wealth,
with $99 billion going to developing countries. Under more realistic
conditions (selective cuts in tariffs and subsidies), trade liberalization
would increase the world's wealth by $107 billion, with $18 billion going to
the developing world. That would lift between 6 million and 12 million
people out of poverty.
In the space of just five years, 97 per cent of the people who were supposed
to benefit from globalization vanished from the bank's projection.
This spring, two American researchers, Timothy Wise of Tufts University and
Kevin Gallagher of Boston University, released an analysis casting doubt on
even that modest forecast.
By their calculations, half of the developing world's gains would go to
eight rapidly growing countries: China, India, Brazil, Argentina, Mexico,
Thailand, Turkey and Vietnam.
That would leave just $9 billion for the remaining 134 developing nations.
"It is not surprising that many developing countries' negotiators are
asking
themselves if the emerging deal is better than no deal at all," the pair
wrote.
Thomas Palley, an economist at Yale University, went even further. In a
recent policy paper, he argued that developing countries would be better off
protecting their domestic markets than pursuing trade liberalization under
the existing framework.
All of this revising and rethinking comes at an awkward time.
The current world trade talks are in their final phase. Negotiators in
Geneva are pushing hard to achieve a deal by year-end.
Canada is strongly behind the drive. Prime Minister Stephen Harper vowed,
during last winter's election campaign, to "strengthen rules-based trading
arrangements and expand free and fair market access."
A few months later, however, Trade Minister David Emerson assured Canadian
farmers that their interests would be protected and their marketing boards
(for grains, poultry, dairy products and some fruits and vegetables) would
be defended.
The United States and the European Union are playing the same game, but
using bigger weapons. They are locked in a noisy showdown over agricultural
tariffs and subsidies.
Meanwhile, in Africa, local markets are being flooded with mass-produced
Western exports. Domestic farmers can't compete, let alone export their
meagre produce.
The continent's fledgling textile industry is reeling from a WTO decision to
throw open Western markets to products from China and India. Factories are
closing, incomes are falling and jobs are disappearing.
A purist would argue that there is nothing wrong with the theory of trade
liberalization. It is the implementation that is flawed.
But even if that is true, it scarcely matters to the 440 million people who
survive on less than $2 a day.
They don't live in an economics textbook. They live in a world where rich
nations jockey for advantage in a trading system they designed and control.
Economists can deliver all the sermons they like about openness and
productivity and entrepreneurship and comparative advantage.
What experience has taught Africans and their impoverished Asian neighbours
is that life was better before globalization; trade deals do more harm than
good; and Western governments can't be trusted.
Under those circumstances, protectionism is a perfectly rational economic
strategy.
--------------------------------------------------------------------------------
Carol Goar's column appears Monday, Wednesday and Friday.
