Here is an article that will find agreement from everyone on the board. Too bad we can't get Congress to agree.
[The New Republic Online]
CHICAGO SCHOOL
Unequal Protection
by Jacob T. Levy
Only at TNR Online
Post date: 08.20.03
The round of world trade negotiations launched in in Doha in 2001 is being been kept alive, for now, by a U.S.-E.U. agreement on agricultural protectionism. If the two farm-subsidy superpowers had been unable to agree, then the upcoming World Trade Organizaion (WTO) negotiation summit in Cancún, Mexico might have collapsed before it had ever even begun. But, in a sense, that might have been preferable. Unlike past WTO negotiation rounds, America and Europe--or even America, Europe, and Japan--won't be able to present the rest of the world with their deal and just expect everyone else to sign on. That's because the U.S.-E.U. deal is pretty much a bust with respect to two of the Doha round's major goals: liberalizing trade in agriculture and making sure that global trade liberalization takes greater account of the interests of developing countries, which is basically the same thing. Negotiators from the Cairns group of competitive agricultural producers, including Australia, India, and Brazil, have already said as much, and in barely-diplomatic terms. They're going to Cancún to press for more, and better. And though they'll be in the right, that probably won't help their cause.
Agricultural protectionism--the combination of quotas, tariffs, and subsidies for farm products--may be the purest example of destructive special-interest politics ever created. Rich countries--with a few exceptions, such as Australia--burden their own populations three times over. The policies cost taxpayers directly--the atrocious 2002 U.S. farm bill is slated to cost $180 billion over ten years. (Worse, annual unbudgeted "emergency" farm spending during the late 1990s accounted for a great deal of the spending boom that squandered much of the predicted budget surplus long before the first Bush tax cut took effect.) In return for their largesse, taxpayers get the privilege of paying higher prices as consumers (and, of course, inflated prices for basic foodstuffs hit the poorest proportionately hardest). And, by locking up an excess of labor and capital in an agribusiness sector that couldn't turn an honest profit on its own, agricultural protectionism inhibits productivity growth, preventing shifts in employment and investment to more productive parts of the economy.
Still, the costs agricultural policies impose on their own societies are manageable in the huge economies of the developed world. The costs they impose on the rest of the world are often devastating. By shutting off access to developed countries' markets for the goods that developing countries are most likely to produce competitively, agricultural protectionism forecloses the most likely route to development and poverty alleviation. Moreover, the artificially high prices in the rich countries encourage overproduction there; the surplus gets exported at cut-rate prices, which not only makes it hard for developing countries to compete in export markets, it typically makes poor farmers uncompetitive in their home markets as well. And as farms go out of business, unemployed and underemployed farmers migrate to sprawling cities; but often there aren't many jobs available in the cities, either. (The next rung up the development ladder after agriculture is typically textiles, which is also the subject of massive protectionism.) In the end, the damage done to poor countries by the agricultural policies of the United States, the European Union, and Japan probably far outweighs the aid they gives those countries. Liberalizers have recently begun deploying this calucllation: In a world where more than a billion people, mostly the rural poor in the developing world, live on less than one dollar per day, every cow in the European Union receives an average daily subsidy of more than twice that.
The European Union is traditionally a worse offender than the United States in this business. The 2002 farm bill made up a great deal of the gap between them, but the United States has still taken a trade-friendlier position during the most recent negotiations. Unfortunately, the U.S.-E.U. deal seems to have been concluded mostly on European terms, and the American urge toward liberalization may be weakening.
The administration has allegedly been pursuing a strategy of capitulation to protectionist interests in the short term in order to build political capital for the big fights down the road: eventual ratification of the accords from the Doha round and for a Free Trade Area for the Americas (FTAA). But there is neither theory nor evidence to support the idea that ratification will go more smoothly because of three years of surrender. Every quota, tariff, and subsidy organizationally strengthens the special interest that it benefits, not only keeping employment in those sectors artificially high compared to more productive uses of the same labor, but also entrenching the sector's dependence on the protective measures. The steel industry, for example, won't be any less hostile to the FTAA than it otherwise would have been; but the organized steel lobby, dedicated to protecting the least competitive American steel producers, will be stronger than it would have been. Conservatives occasionally attempt to initiate a political spiral in their favor by "defunding the left"--cutting government spending to those groups, such as Legal Services, that lobby or sue for further government spending--and by privatizing the federal workforce, which undercuts the political power of government employees' unions. Whatever its ethical implications, the idea makes tactical sense--and is precisely the contrary of the strategy the administration has been pursuing on trade.
Unfortunately, the six months before the Iowa caucuses are the period in which the president is least likely to feel political pressure on the issue. Indeed, one can almost guarantee that Democratic presidential candidates--some out of conviction, some out of electoral imperatives, and some who are unable to distinguish between the two--will be calling for more "help for America's farmers," and will condemn Bush for any tentative moves he might make toward openness. Some important actors on the left and center-left, including NGOs like Oxfam as well as The New York Times and The Guardian , have been pushing for policies more just to the world's poor; but that's not where the votes are in the Democratic nomination contest. In the absence of any domestic American pressure to open trade further, the United States won't push as hard on Europe and Japan as it ought to. So the negotiating burden falls on the Cairns group. We'll just have to see how they do in Cancún.
In the meantime, the ostensible U.S. position is an odd one. We accept the principle that trade in agricultural goods ought to be liberalized, and that this is a matter of justice as well as of efficiency. But we're not willing to give any more than Europe and Japan are--and "Europe," in this case, means "France." The current administration is supposed to be unburdened by the temptation to wait for French approval for everything that happens in the international arena; it's supposed to be willing to indulge some American idealism rather than reducing everything to the cynical level of Gallic sophistication. Where's a bit of unilateralism when you need it?
Jacob T. Levy is Assistant Professor of Political Science and the College at the University of Chicago, and the author of The Multiculturalism of Fear (Oxford 2000). He writes regularly at volokh.com.
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Copyright 2003, The New Republic |
