Dave's article is right on target. Whenever you have unrestrained trade
with unequal trading partners, there are going to be dislocations. Some
are going to be very severe dislocations. One of the slogans of the very
hard working farmers in the U.S. is that "we will be able to compete
well on the world market." Now that may or may not be completely true,
but hurting agriculture (not marketing, but agriculture ... or the
growing of crops and livestock for food and fiber) in other countries is
going to be an unintended consequence. And it needs to be tempered with
some restraint. It also works in reverse as sometimes it will hurt the
farmers in the U.S., so it is a double edged sword.
I have spoken out for many years now that I believe that it is not in
the best interests of nations to destroy their local agricuture just to
have the lowest possible price for the consumer. Some competition can be
healthy, but when you start impacting food production at a certain
point, you put a self sufficient country at risk in the long term. We
only have to recall what the U.S. did to other countries under the
Carter years of withholding food. Suddenly, the expected food is cut off
with disastrous results for citizens who became dependent on the source.
This can come about by politics and war but also disease issues and
other disruptive events.
I don't profess to know the percentage of basic food production that
need to be preserved within the borders of a given nation, but I have
suggested a rule of thumb that when 20% is displaced, that is too much
displacement. That is strictly an opinion and others who look at this
from an economic and political base would have to make the final decision.
And to make it clear, so there is no misunderstanding, I am not
including products that are not practical to grow within a given
country, nor am I including non-essential products for basic health. I
am mostly concerned about adequate supplies of grains, meat, vegetables,
fruits that are domestically appropriate. Some areas can not grow much
and those areas will never be very secure for the long term events that
will surely happen at some future time. Being prepared is far better
than to be lulled into believing that disruptions can never happen.
It is far better to not destabilize third world countries, but help them
improve their economic situation. Unfortunately, some have governments
that make this impossible, but when you consider the dramatic increase
in the number of democratic countries in the past few decades, I believe
things are more optimistic
Sincerely,
Rick W.
>
>
> 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.
>
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