08 January 2006

WTO : get on with it!

Tim Worstall writes:

The New York Times carries an editorial on the Doha Round and trade talks. They are, by the standards of that paper, extremely blunt in their phrasing:

And guess where negotiations have stalled? The European Union and the United States are busily fighting over how little they can get away with when it comes to liberalizing farm trade. Listening to these two economic powerhouses snipe about who should be doing what is revolting; neither is doing anything real. The developed world funnels nearly $1 billion a day in subsidies to its own farmers, encouraging overproduction, which drives down commodity prices. Poor nations' farmers cannot compete with subsidized products, even within their own countries. In recent years, American farmers have been able to dump cotton, wheat, rice, corn and other products on world markets at prices that do not begin to cover their cost of production, all thanks to politicians and at the expense of American taxpayers. Europe's system, meanwhile, is even more odious: United States farm subsidies are equal to only a third of the European Union's.

"Odious" and "revolting" are not words lightly used by America's self-proclaimed newspaper of record. And they are right to use them. The one single thing that would have the greatest effect on world poverty is the simple abolition of our absurd system of agricultural subsidies. What is even more distressing to me is this:

But so far it has been nothing but talk, talk, talk on trade. While the rich continue their shameful obfuscating, poor countries are priced out of the market. A few weeks ago, the European Union's trade envoy, Peter Mandelson, actually complained to reporters that Europe had been making more than its fair share of compromises in the W.T.O. talks. "This process of compromise has been a one-way street for well over a year," he said.

We appear to have a Trade Commissioner who is two centuries behind the times. By compromise he means the shaving of a tariff here, the slight reduction of a subsidy there. But we've known ever since Ricardo that the precepts of mercantilism are incorrect. We should not be attempting to boost exports and limit imports, this is precisely and exactly the wrong way round. It is imports that make us rich, exports being merely the undesirable side of the bargain, that consumption which we must give up in order to get the imports which we desire more. These "negotiations" and "compromises" are all about what access the rest of the world might have to the EU market, yes, we'll allow you to sell your cheap and delicious produce to our citizens but only if you let our manufacturers sell your citizens their products. This leads to the almost Kafkaesque nightmare of the negotiations, where the offer is, well, if you keep your people poor by making manufactures more expensive then we'll keep ours poor by making food more expensive!

What is so absurd about the entire debate is that it is in our interest to abolish the Common Agricultural Policy. It consumes a fortune in tax and makes food across the continent grossly more expensive than it need be. We will be richer by doing away with it, so why is anyone negotiating on it at all? Get on with it!

By Paul Staines

1 comment:

mike mayer said...

Yes - lets get on with it. In fact, lets go further - drop tarifs on all product and services. Eliminate all barriers to entry for all goods and services.

It is by far the best foreign aid the developed world can give to the developing world.