Liberalizing Western Hemisphere Farm Trade Without Opening Up The Asian Market Could Mean A Flood Of South American Farm Goods to The US
CHURCHVILLE, Va.–The Quebec trade summit is over, the protesters have gone home and Western Hemisphere nations have agreed to wipe out their mutual trade barriers within the next four years.
Are U.S. farmers listening? Are the agriculture committees of Congress listening? What happens if the United States opens its borders to Argentine wheat and soybeans and Brazilian corn and chicken without any liberalization of the World Trade Organization’s existing farm trade rules?
Western Hemisphere farmers, Americans included, would still be mostly barred from exporting to help meet the burgeoning farm demand in densely populated Asia.
Inevitably, America and Canada would be flooded with South American grain, sugar, meat and oilseeds. The U.S. Congress couldn’t find enough subsidy money to fund American farm prosperity in that scenario.
The United States has 437 million acres of arable land, Canada 114 million. But South America has 290 million acres of arable land, and they’re learning to broadly achieve high yields.
Brazil is building the roads, waterways and railroads to move crops and meat from its interior. Argentina and Brazil have only two-thirds as many people as the United States and Canada to eat their farm produce.
The Asian governments keep out foreign food and feed. Their major excuse is that First World farm exports are subsidized. And Congress is eagerly setting itself to exacerbate the problem by resurrecting the old U.S. commodity programs.
One answer would be for the United States to renege on the Quebec promises. But that’s unlikely. Most Americans, based on Mexico’s post- NAFTA success, are seeing free trade as a win-win situation. It creates jobs, raises incomes and strengthens democracy for both First and Third World families.
President Bush is pushing hard for the American free trade initiative, having grown up near the poverty of the old Mexican border. Can a few farmers and the congressional agricultural committees reverse a major international movement and the president’s own vivid life experience?
So far, Congress is pretending not to hear the echoes from Quebec. That’s because congressmen like buying votes whenever there’s any money in the Federal kitty. Whether there’s anything but IOU’s from the Social Security trust fund they don’t care–the checks aren’t bouncing yet.
The same odd political ballet is also playing in Western Europe. The European Union has just agreed to remove all EU trade barriers that keep out imports from the 48 poorest countries in the world (most of them in Africa).
Most of Western Europe is excited about this remarkable treaty, which they see as global leadership for a massive reduction in Southern Hemisphere poverty. It’s a practical alternative to the failed foreign aid programs of the 1960s and 1970s.
But the EU farmers don’t get it. They’re trying to hang on to their old sugar subsidies, and if there’s anything the poor tropical countries can produce with world-class efficiency, it’s sugar.
In Europe, too, farm politicians are refusing to end the old subsidies at least until the last moment. Europe’s farm politicians have just blocked any changes in the EU sugar policy, even though the new EU anti- poverty treaty phases out sugar trade barriers over the next five years.
The British agriculture minister charges that EU politicians want two or three more years worth of votes out of the sugar program before they are absolutely, positively forced to change. Western Europe’s sugar farmers apparently hope for some last-minute reprieve.
Bush has a better solution. He wants to move simultaneously on Western Hemisphere free trade and liberalization of WTO farm trade rules in order to open up Asian exports. Then the commodity flow would be from the Western Hemisphere to East Asia, rather than South America to North America.
Asia’s meat demand is surging, and Asia is short of land. With global farm trade, huge tonnages of additional farm exports would move every year from the United States, Canada, Argentina and Brazil (and France) to China, India and Indonesia. Eventually Pakistan, Bangladesh and the rest of Asia will be prime markets too. Farm prices would rise in the world market even as food prices declined in developing countries.
At the moment, of course, little of that is happening. Grain prices in India are double the world market level, and many Indian housewives can’t afford to buy chicken for their families.
China’s grain prices are 50 percent higher than the world market, which helped to drive deforestation and flooding in the Yangtze River valley.
Too many farmers and farm politicians in the First World are living in the past, even as they criticize urban consumers for being nostalgic about organic and “natural” farming. We’ve got to realize that the old farm subsidies inevitably produced farm surpluses, low prices, export dumping and pervasive trade barriers.
The surpluses ruined farmers’ reputation with city folks as hard- working and vital members of society. The surpluses also destroyed the public support for high-yield farming and research.
If farmers want to be something more than welfare recipients, they have got to recognize today’s international free trade movement as the biggest opportunity in farming history.
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.
