Despite The Setback For Free Trade In Seattle, There Are Bright Spots In the Farm Trade Liberalization Picture
CHURCHVILLE, Va.–As trade protesters gather again, this time in Quebec for the Summit of the Americas, the farm trade negotiators conducting the World Trade Organization’s reform talks have agreed to step up their pace.
They’re trying to regain the liberalization momentum lost more than a year ago, when the city of Seattle was taken over by angry union members and eco-activists.
The farm trade reform effort remains daunting. Figures from the Organization for Economic Cooperation and Development show that farm subsidies in the 30 affluent OECD member countries still total nearly $350 billion a year, with 90 percent of them handed out in the European Union, the United States and Japan.
Government farm handouts continue to account for 40 percent of OECD farm income just as in the mid1980s. In such heavily protected agricultures as South Korea, Switzerland and Norway, government payments make up two-thirds of farm income.
In America, President Bush proposes to reduce farm subsidy spending. Both Democrats and Republicans agree that farm subsidies cost too much, go mostly to the largest farmers and represent no real solution to the farm income problem. But neither side wants to risk losing a close congressional election because the farmers are unhappy.
Nevertheless, there are some bright spots in the farm trade liberalization picture.
The European Union recently surprised most of the world by ending all trade barriers to imports from the world’s poorest 48 countries “to encourage investment and economic growth.” The agreement covers “everything but arms,” though the barriers to imports of sugar, rice and bananas will be lowered gradually over several years.
Nevertheless, the agreement represents an enormous blow to the EU’s hitherto-sacred sugar growers. The new poor-country import policy represents a major step away from the adamant protectionism of Western Europe’s last 100 years, and its broad-gauge endorsement of globalization could set the stage for an even more dramatic agricultural policy change.
The EU has determined to take in at least 10 new members countries over the next few years, including such big (or potentially big) agricultural producers as Poland, Hungary and Romania. Extending the EU farm subsidies to millions more hectares and farmers would break the EU piggy bank.
In America, Federal Reserve Chairman Alan Greenspan offered powerful Senate testimony on the importance of freer trade in raising living standards all over the world.
Greenspan, who is either the first or second most powerful man in America, “hammered home his long-held belief that free trade promotes higher standards of living by encouraging competition,” according to The New York Times.
Greenspan’s testimony stressed his belief that protectionism saves only the worst jobs (such as those in Britain’s antiquated and dangerous coal mines) and even those only temporarily.
The New York Times did its small part for farm export reform just by giving Greenspan’s testimony prominent play. In recent years, the paper has appeared torn between its historical support for free trade and its more-recent affinity for environmental protests and local organic farming.
The odds are still against any quick removal of farm trade barriers, which means Congress will resist President Bush’s proposed cuts in farm subsidy spending.
However, the Bush team knows there can be no long-range solution to the U.S. farm depression or the EU budget problem until American and European farmers can export more meat and feed to meet the burgeoning demand in densely populated Asia.
Meanwhile, the California electrical blackouts are severely damaging the public reputation of eco-activists. Though global temperatures have not risen significantly in 60 years, California took eco-advice not to build power plants, despite a 22 percent rise in electrical demand over the past dozen years.
Now Californians are being urged to turn up their air-conditioning thermostats and unplug second refrigerators to avoid an electrical grid collapse this summer.
America’s million-acre forest fires last year didn’t help eco- credibility either. As the United States has accommodated the activists’ demand for less tree harvesting, the resulting buildup of fuel in the forests has increased fire losses by more than fivefold. Americans are beginning to wonder why they should accept high lumber prices if the unharvested trees will simply burn up.
Farmers in both the United States and Europe should remember that feeding high-quality diets to 4 billion increasingly rich Asians in the 21st century still represents the greatest farming opportunity in all history.
By comparison, the “bird in the hand” of government subsidies may soon begin to look like a scrawny sparrow.
DENNIS T. AVERY is based in Churchville, Va., and is director of global food issues for the Hudson Institute of Indianapolis. His views are not necessarily those of BridgeNews, whose ventures include the Internet site www.bridge.com.
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Dennis T. Avery is based in Churchville, Va., and is director of global food issues for the Hudson Institute of Indianapolis.
