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TRADE AND TERRORISM

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This past weekend saw the collapse of global trade negotiations in Geneva, a lose-lose outcome for more efficient and equitable long-term economic sustainability. If the Bush administration had devoted even a fraction of the attention to the Doha round trade negotiations that it did to its follies in Iraq, the world might have benefited from a more positive outcome. Ironically, a little bit more attention to trade talks could have produced more terror-reducing conditions than new military commitments in Baghdad.

This was supposed to be the ‘development round’ of global trade talks. Developing countries were supposed to get a fairer shake out of the global trade rules than what they are getting now. which is definitely the short end of the stick. Developed country governments shovel billions of dollars a year in agricultural subsidies to their politically powerful farming interests, effectively freezing out Third World farmers from their markets and depressing global prices through oversupply.

Americans should be supporting the Doha round aggressively, because it’s the right thing to do economically and ethically (a two-fer for sure). The reforms might also have reduced some of the global inequality that helps breed resentment and attacks against the U.S. (I think that’s a three-fer.)
However, it appears that the US administration remained hostage to its farmers. Getting a full and clear picture of the US bid relative to other developed countries is difficult, and the US trade representative’s call for an “ambitious outcome” may have been just a ploy to demand the impossible in order to appear to take the high road while actually scuttling the talks.

But having said all that, the picture gets complicated pretty quick. The EU is dragging its feet big time, with France militantly resistant to reform. (France is willing to import soccer players from the tropics, but not bananas or green beans). Japan has taken a similar stand and continues to protect its own pampered farmers. Nor were the Brazilians and other militant third wordlists willing to shave some of their demands to get a deal that might help the poorest of the poor in Africa and south Asia.

Therein hangs another dilemma. Even if some of the big agricultural trade reforms do go through, it isn’t clear that very poor countries like Mali or Burkina Faso will be able to reap the benefits of more open international markets, or whether the new export opportunities will be snarfed up by Brazil, China and the other biggies of the rising global middle class countries of the world community.

So, there is enough blame to go around, and this is one missed global opportunity that the US needn’t claim entirely as its own.

I don’t know about you, but none of this makes the world sound particularly tractable or ‘flat’ in a Friedman-esque best seller sense. It sounds to me that pursuing multiple good things like trade reform and anti-terrorism, all at the same time, is doable but daunting. The first step is to recognize that these things are interrelated and interdependent, and to insist that our future national leaders (whomever she may be) appreciate these interconnections and act on them so we can start getting some win-win outcomes for a change.


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Until we resolve the trade problems that allow US jobs to be outsourced, demand an end to NAFTA/CAFTA et al.. and get real job creation here, our nation's "future leaders" will be from the class that most profits from the exploitation of third world.

Sorry, but we can't do any more to help the less fortunate in the world until we clear up our own economic problems and inequities... and the majority of Americans agree with me on that.

Perhaps someone can explain to me how poor, underdeveloped countries are supposed to compete with advanced countries with highly mechanized agricultural systems?

Even if all the subsidies are eliminated the US, for example, has large farms which use little labor, it also has highly developed transport, storage and processing facilities. So how is a farmer in Africa going to compete? US farmers consistently complain that they get very little of the final price, so it isn't the raw growing costs which control prices.

I think this whole issue is a red herring. I don't know who in the poor countries is pushing for adjustments of trade subsidies, but either they are deluded or they have some other, secret, agenda. NAFTA ruined much of the peasant corn industry in Mexico, pushing farmers off the land and into the cities and the US. Without the limits on the amount of exports from the US our highly efficient corn industry just overwhelmed their subsistence farming sector.

Why wouldn't this happen for cotton or soya or any other bulk commodity? Or is the US suddenly going to start consuming great quantities of casava?

--- Policies not Politics
Daily Landscape

The basic problem with the Doha Round is that the Western nations have thrown too many of our own citizens overboard and then broken every promise they made to deal with the consequences. The resulting loss of credibility has doomed any trade deal for the remote future. Who is masochistic enough to try and get one of these monstrosities through the French Parliament, to say nothing of the U.S. House of Representatives?

When Western govts subsidize their farm products, they do indeed depress the world price for those products. Now, how is that supposed to _hurt_ poor people in poor countries? It doesn't, the main result is that they get cheaper food!

As for development effects, no country has ever gone from undeveloped to developed on the back of farm exports. It is done, or at least gets started, by protecting and growing strategic infant industries and exporting (low capital input &) cheap industrial goods. This development strategy is not allowed anymore by the WTO! (There's their development stance for you!) Anyway, if countries were allowed such a strategy, moving workers out of agriculture and into industry while relying on artificially cheap foreign food imports might be one of its useful subcomponents.

The professor also does not mention that the real main purpose of the latest Doha Round is to advance Western patent laws that have already done a great deal of damage to the third world. 'Development Round' was the PR slogan, of course. In fact, the WTO and related organizations and agreements are the major obstacle to the world's economic development and growth.


We in Hong Kong tend to disagree that no economy has ever prospered without restricting trade. As for outsourcing US jobs, the fact is that America earns more from in-sourcing than it spends on out-sourcing, and creates more jobs than it loses.

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DOR

Register to Vote, who ever you are.

What about the farmers in those countries who earn less? What about countries that want to move to an added value economy and have less resources to do so?

Daniel A. Greenbaum

It can happen now. Under your senario poor countries are fundamentally doomed. The Doha round is meant to reduce the hypocrisy built into past trade agreements. Past agreements were much better for developed countries than for developing ones open markets both for manufactured good and various services.

The West and Japan both subsidize their farms and protect them with tarrifs and quotas. Under these circumstances there is no prayer. Look at the Vietnamese shrimpers. They wish to sell more fish here but are blocked by various mechanisms.

Daniel A. Greenbaum

If the majority of Americans agree with you, then they are wrong. Why can't we do more to help the less fortunate? It isn't that we can't afford to. There is plenty of money floating around, all we have to do is have the courage and sense to at least restore capital gains and upper bracket income tax rates to where they were in the 60's, and we will have plenty of money to do lots of things. Plus fighting for the American worker probably doesn't need more than removing obstacles to unions (legal obstacles, monetary policy obstacles, free trade obstacles, etc.) and letting them get back to the work of helping workers.

Maybe you think we shouldn't help them until we deal with our own problems. I think I am with you to a certain extent, that our compatriots deserve special consideration. But I cannot see how it can be morally justified, given how badly off the people in the thirld world are, to not help them at all. Lose a job here and you are in for a tough time, there is no doubt about that. Lose your farm in Rwanda and you will probably die of starvation or disease at some refugee camp.

I will also present a dirty strategic argument. So long as the overwhelming majority of people throughout the Southern hemisphere have to spend almost all their time trying to provide the basics for them and their family, they won't have the power to resist the corporations that have an interest in keeping them at subsistence wages. Basically the weaker the poor in the third world are the richer the multinationals get, and the harder it is to fight their program at home.

I don't understand your point rdf. On one hand you think this is a red herring, but then you show that you are on board with the point by mentioning what happened with Mexico. I might be wrong, but I am pretty sure that between NAFTA and their IMF conditionalities Mexico could not provide subsidies to small farmers. The fact that we can produce stuff cheaper doesnt show that it will be cheaper in country X to buy American food no matter what. There are transportation costs to consider. In addition a country could index their subsidies to the average cost of US goods in their country to make up for any price difference.

I think some people are confused. The idea is not to allow subsidies in third world nations so that their agricultural products can compete with ours here, the idea is to allow them to compete in their own country. Why is this important? Well for alot of reasons.

One, they shouldn't be dependent for their food on us, for the same reason that the PA shouldn't be dependent for their water on Israel, it reduces the sovereignty of the people.

Two, small family farming is often better for the environment than mega-farming, and when families get priced out of their farms it will probably be large corporations with factory farming techniques that fill the vacuum.

Three, family farming is a good way of life and worth preserving. Jefferson had a thing or two to say about this. It leads to a class that is relatively independent and (contra Marx) can often provide a block to the interests of the super-wealthy.

Of course these are all reasons to save small farming as a way of life in this country, which is reason to retain some subsidies for those who own and operate small farms. Since they typically don't export to other countries, this wouldn't present much of an ethical problem either. So I don't think the author should talk about politicians being hostage to farmers. I think independent farmers deserve some help. Monsanto and ADM don't, and they are the one's that politicians are being held hostage by.

I responded to your first question in my post. In essence, farmers changing into factory workers is a sign of a developing economy. So that's what would happen to farmers. As for the second question, cheap food means the society has more resources, more surplus capital, left over to devote to economic development.

What are you talking about? Third world farmers don't need or get subsidies; they produce commodities incredibly cheaply, because they and their countries are incredibly poor. They aren't "dependent for their food on us", and the question isn't whether they can "compete in their own country". The question is whether they will be allowed to take advantage of their one immense competitive advantage - their poverty - to produce food to export to us, and thereby build up some capital to lift themselves out of dire misery. I'm sorry, but no one should be growing sugar cane in the United States of America. The money that goes to subsidize American sugar cane growers and keep them artificially competitive is food snatched from the mouths of malnourished children in countries like Haiti and Ivory Coast.

"When God ariseth, and when he visiteth, what shall we answer!" - Rev. Benjamin Hancock

Corvid

Agreed. There's a day-and-night difference between subsidizing big, industrialized farms on the one hand and local, small-scale farmers on the other. The latter deserve the support of any government that can afford to give it. And the key reason is local production for local markets.
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And that brings us to global warming. If you believe that we're heating up the planet, then you have to believe in the necessary solution, which requires us to reduce CO2 emissions by 70 percent over the next few years. To do that, global trade (ie transport) of just about anything that can be produced locally is out of the question. This goes double for food.
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And THAT brings us back to subsidies. If we eliminated subsidies for fossil-fuel consumption (government spending for highways, airports and Middle East wars would be a start), transport of goods over ridiculously vast distances and lavish use of petrochemicals on crops would be prohibitively expensive and we would have a lot less to worry about regarding so-called free trade.
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It always strikes me as odd that global warming--far, far, far and away the biggest threat to the planet and an actual existential threat to human civilization--always, always takes a back seat in free-trade discussions. Trade and global warming are intimately linked and yet they're rarely discussed together. It's as if goods from Indonesia or Taiwan or Outer Elbonia magically appear in our malls or on our doorsteps or tons and tons of petrochemically produced American grain are just teleported to Africa.

As for development effects, no country has ever gone from undeveloped to developed on the back of farm exports.

Argentina, Australia...let's just go through the alphabet, shall we?

the main result is that they get cheaper food!

This is the stupidest thing I've ever read. Why don't you head over to Mali and explain to them that the cheap rice imports that destroyed their domestic rice production were actually a favor to them, because now they can all go to work in the factory! (Silence, as illiterate farmers look around, hoping to see a factory somewhere within 1000 miles, or anyone with even the remotest interest in building one in Mali, when the Pakistanis or Vietnamese could do any conceivable industrial job for a quarter of the price and twice the efficiency.)

"When God ariseth, and when he visiteth, what shall we answer!" - Rev. Benjamin Hancock

But does the globe really need more cheap industrial goods and more box stores to sell them?  Over the last fifty years I've watched the United States redefine success from making to consuming.  I hasten to add that I'm defining both of these in the broadest sense, including the creative world where we become more spectators and and consumers as well.

E. F. Schumacher's Small is Beautiful:  Economics as if People Mattered still has something to teach us, I think.

If futurists like James Howard Kunstler are right, the developmental model based on 19th century exploitation of cheap labor and cheap energy has just about run its course.  It may be less than fair to criticize a suggested solution without offering an alternative.  But I'm a historian and that gives me a little license.  But I think we're going to have to fumble ourselves to a solution based on a new model, where basic human needs don't escalate, seduced by limitless human wants.  I recently read where the basic American house constructed between 1945 and 1955 was about 900 square feet.  The size of a three-car garage today?  About 900 square feet.  Average family size today? Slightly smaller, if anything. 

So how do we create a developmental model based on human dignity, human safety, and mutual respect, rather than on human consumption/production?  If I come up with an idea I'll let one and all know.  I'm eager to applaud someone else if he/she discovers it first.

Mike

What is with all the NAFTA fictions? One group says NAFTA hurt Mexican farmers another says NAFTA hurt American workers. As far as I know both are false. NAFTA has increased trade between the United States, Canada and Mexico. However, it did not solved the problem of China and India for Mexico.

Daniel A. Greenbaum

Ernest

Do you read the business pages? It may be true that the Doha Round is not going weill. Governments in the face of various interests, especially farmers, are digging in their heals. However, globalization is continuing apace. The internet, wireless at that, is expanding its reach. An India steel company buys a French one, GE sets up a solar panel plant in Portugal, there is talk of an alliance between Renault, Nissan and GM. Everywhere you turn businesses are crossing borders and creating new realities.

Daniel A. Greenbaum

I'll try to clarify what I was saying.

1. NAFTA hurt Mexican subsistence farmers (if you want to see the documentation read my little essay: Immigration 'Facts' Debunked )

2. Mexico is a special case because it is so close to the US that transport costs and other factors are different than for agricultural trade with more distance places like Africa

3. My question (which includes an implied hypothesis) is: isn't the existing efficiency of our highly mechanized, industrial scale farming more of a factor against competition in poor regions than the existing subsidies? So that, even if the subsidies are removed, the poor farmers still won't be able to compete? This is, remember, a question.

4. Many of the schemes proposed by international bodies to "eliminate poverty" and other high sounding goals are unrealistic. For example, the poverty goal really means to lift those making under $1 per day to $2 per day. Even this modest goal would affect over one billion people. Assuming this could actually be achieved, this is not what anyone (in the west) would consider eliminating poverty.

5. Critics of these grand international schemes like Joseph Stiglitz and William Easterly (both worked at the World Bank) have recently pointed out that these approaches have been tried for decades and the underlying problems have not been solved (or even improved in a meaningful way).

6. To restate my hobby horse from other discussions, the real issues are that the west consumes an unsustainable amount of nature's bounty and that the world has too many people, and that this number continues to grow at an unsustainable rate. Read the works of Herman Daly for a discussion on Sustainable Development

My guess is that the goals of the trade talks are to benefit the west and that the poorer countries have finally realized this and that's why there has been no progress. And, since might makes right, there is little chance of the west yielding on any important points.

--- Policies not Politics
Daily Landscape

Argentina is an economic basket case. Australia and New Zealand are diversified economies, and uniquely underpopulated. In other words, most countries' problems have to do with an overpopulation of agricultural workers who can't be supported at a middle-class level by an agricultural economy. The solution is economic development.

As I wrote, the WTO DOESN'T ALLOW THE ONLY DEVELOPMENT STRATEGY THAT WORKS. So, whether as impoverished farmers who can't compete with imported agricultural products (whether those products are subsidized or not) or as impoverished former farmers, the underdeveloped world will stay that way.

As I wrote, if the WTO etc. allowed a protectionist/infant industries economic development strategy -- which every now developed economy used as its development strategy (possible exception: Hong Kong) -- then poor farmers from the overpopulated countryside would be able to come into the cities and find work in factories. Basically, if you oppose protectionism for underdeveloped countries you're part of the problem.

Mike, the main article and I have been focused on deeply impoverished countries and how they're supposed to get out of that pit. Consumption doesn't need to be America-sized to conform to standards of basic human dignity. A large chunk of the world is just fighting to get up to that level.

I completely agree with you about excess consumption, in particular the excessive consumption of America's SUV/Suburbia/Mall/TV culture.

Small farms in impoverished countries definitely can't compete on quality with first or third world industrialized farms. So, your "food snatched from the mouths of malnourished children in countries like Haiti and Ivory Coast" is simply false. Go to Mexico and look at the huge, heavily polluting, poverty wages industrialized farms: that's who you're fighting for.

Your heroic image of a self-reliant family farmer who could compete it if it wasn't for first-world farm subsidies is a myth. The reality is that as long as the WTO etc. control impoverished countries 'development' policies, those countries will stay extremely poor.

Argentina was one of the richest countries in the world in the early 20th century, on the back of beef exports. Its recent collapse is neither here nor there nor anywhere. Australia and NZ have diversified economies - NOW. They didn't when they joined the First World. More recent countries which have used agricultural exports as a liftoff for accumulating capital for economic growth include Thailand and Vietnam, respectively rice exporters number one and two in the world, and each in the top five of shrimp exporters; Vietnam is also among the top coffee and pepper exporters. Last year Vietnam's growth rate was the second highest in the world. Any country in sub-Saharan Africa (except South Africa and maybe Botswana) would kill to be Vietnam.

There are very, very few things that most sub-Saharan countries can do competitively. Among those few things are growing coffee, cacao, sugar, bananas, pineapples and cotton, and some specialty crops like herbs. Take away their ability to export these products to the richest countries in the world, and you are strangling their economies in the cradle.

"When God ariseth, and when he visiteth, what shall we answer!" - Rev. Benjamin Hancock

Who said anything about family farmers? Industrial sugar cane farmers in Ivory Coast and Burkina Faso are just as critical to their countries' economies. But since you brought it up, coffee and cacao are farmed throughout the world on a contract basis to small farmers. Family farmers produce and export fruit profitably in Southeast Asia; I don't know about Africa or Latin Am. And big farms paying poverty wages are a lot better than no farms paying no wages, and no worse than factories paying poverty wages, which is what you hold up as an alternative - as if the two were mutually exclusive.

"When God ariseth, and when he visiteth, what shall we answer!" - Rev. Benjamin Hancock

I thought I was being fairly straightforward but I guess not. I don't think I said that they were dependent on us for their food, but that it is worth avoiding that outcome, and that is one argument for farming subsidies.

And yes there certainly is an important question as to whether they can compete within their own countries. When the price drops it affects commerce within the borders just as much as it does exports, so if you already agree that the presence of US goods can cause the agricultural exports of third world countries to dry up, then you should also admit that farmers are going to have a hard time selling products within the country.

As for what you think the big deal here is, developing agriculture as an export sector of the economy, I have to say I don't see why this is so significant. Even if you are right and this is one path to development, it is only one path. Most of the countries we are talking about have other resources which they can target for the development of export capacity. If you grant me the importance of maintaining small/family farming, there really isn't any other way to protect it besides subsidies, not when the US overproduces and can get away with it through its own subsidies. The fact that they are poor doesn't help that much. They might accept lower wages, but the farms I was talking about the whole way through were ones that didn't rely on that much hired help anyway. The fact that they are poor just means that they are less able to absorb losses than richer farms either at home or abroad, so they are more vulnerable to price collapses.

Basically I was arguing that we shouldn't get rid of all subsidies in the US, since small farms are worth preserving, and that this was not going to put a burden on small famers elsewhere by forcing them to sell below what they can aford. I was just talking about the ethical problems that arise out of farm subsidies. Mabye I didn't make that clear, since you seem to be arguing about a path towards overall economic development, which is much more complex than what I was trying to handle.

At what point would there be no farms at all? I can see there being farms that are so small they pay no wages, but I don't see why that is worse than factory farming paying low wages. Presumably at least some of the people working for low wages on the factory farm would have owned their own land if the plots were kept small.

There are very, very few things that most sub-Saharan countries can do competitively.

Argentina, Thailand, and Vietnam were not competing by WTO rules when they took agricultural profits and stuck them into industrial development. As I said, an essential part of a development strategy for countries with large rural populations is to quickly take whatever surplus (farm or simple manufactured goods) profits you can get and funnel them into a protectionist infant industries strategy. If you aren't allowed to do that, and sub-Saharan Africa is not, then you don't have a development strategy. You have permanently starvation wages (on environmental nightmare industrialized farms) or starvation and unemployment.

In addition, you didn't deal with the other reality: semi-modern 'small farm' agriculture can't compete on price or quality with 'indusrialized farming'. So, what you (and the author of the original article) are in fact supporting for sub-Saharan Africa is, apparently, the anti-environmental low-wages agribusiness export farming that has grown up in Mexico to serve the US market. I think that 'development' pathway has not furthered Mexico's economic developmpent, and in fact has done rural Mexico much more harm than good. The pre and post-NAFTA Mexico growth rates are some evidence of that.

The editor has been giving me fits today.  I've lost this post twice, and only sheer stubbornness is keeping me from going to read a trashy novel on a humid afternoon.

We're not in disagreement.  I was trying to tweak the topic just a little because the terms developer and development have become so deeply associated with mega-projects and I don't believe that these are sustainable or do much more than displace the problems--moving them from one country to another or from one region to another.  Given the nature of GTO and World Bank types, I'm pessimistic that even "successful" talks would lead to "successful" results.   

Amen on Basic Human Dignity.  I think the best statement is the one in the Universal Declaration of Human Rights.  http://www.un.org/Overview/rights.html  But I think that small-scale projects, many many small scale projects, may be the best way to move towards those achieving those ends.  I find many interesting things happening in the area of microfinance projects.  Links to some of them can be found here:  http://www.microfinancegateway.org/

 

Mike

I lost the last half to my little reply yet again. Perhaps I exceed the number of lines alotted. Is that a possibility. All I wanted to do was to suggest that the goals of the Universal Declaration of Human Rights might be better measured by some other measurement than the Gross Domestic Product, and then direct your attention to the academic data base for research on indexes of Gross Domestinc Happiness, or the GDH. These can be found at  http://www1.eur.nl/fsw/happiness/ The website isn't easy to navigate but there is interesting stuff there. PBS did a documentary entitled Affluenza which applied the GDH principle to American Society back in the mid 1990s. The link for it is  http://www.pbs.org/kcts/affluenza/ I apologize for the clumsiness of this response. The heart is in the right place, I hope. Mike

A few quick responses and questions.

1. Financial Factoids: Last year the US handed over $43 billion dollars to American farmers, mostly a political payoff via entrenched senators and congressmen representing what the English used to call 'rottenboroughs'. We are not alone. The EU gave their farmers $134 billion, the Japanese $47 billion, and Canada 12. Few defend this on rational economic grounds; most agree it's mostly payola.

2. I want to avoid making the best the enemy of the good. Several people raised important points about the difficulty of ensuring that the benefits flow to the people who need/deserve them the most - small farmers, not the big MNC combines. Reforming the global trading system so that poor farmers stand a better chance is a good thing. Not a guarantee, but a step in the right direction.

3. Another tough challenge is to think about what a coherent policy toward these trade-development issues should be, which first requires figuring out where American national interests -- I repeat, NATIONAL interests - lie. National policy based on national interests certainly is tied to the raw deal American workers get under the current [non] adjustment policies. It should not be based on the narrow interests of some farmers or large agro-firms. It is probably also tied to taking steps to reduce the growing gap between the global haves and have nots, for all sorts of good reasons I wrote about. One of those reasons is to reduce global hostility toward the US. Linking trade to terrorism would not be my first approach, but maybe it resonates in today's hyper-Repo environment.

Maybe the big point is - why should any of us care about this stuff in the first place??

Perhaps I exceed the number of lines alotted. Is that a possibility

No, I don't think it is, basically, not unless your contribution were huge and even then I'm not sure.

About your ideas, they bring to my mind some recent TV programs I've seen on Cuba. It's an economically poor (of course, blockaded by the US for decades) society. But, everyone has enough to eat, and there are some things about the quality of life there that the people will miss if they ever were to become, say, another Puerto Rico.

In particular, I think an egalitarian society is just more comfortable to live in, for security reasons and for a real 'fraternity' much greater than what you get in a non-egalitarian place like the US.

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