Saturday, December 10, 2005

Expensive trade

While the fact that past trade agreements have often been biased toward richer countries shouldn't be news to any great degree, the AP's report on the plight of Mexican corn farmers provides a valuable reminder:
While the tiny, marginally productive farm plots have been in trouble for decades, the plight of many was worsened by the 1994 North American Free Trade Agreement, which cut tariffs on U.S. government-subsidized corn, allowing it to pour into Mexico.

In 2008, the last limits on U.S. corn will be lifted under NAFTA rules. The trade pact doesn't regulate the generous U.S. farm subsidies. Researchers said some U.S. crops are being sold in Mexico at below their already-advantageous U.S. production price.

That combination - subsidies and advantages of scale at larger U.S. farms - has led to millions of dollars in lost income for Mexican farmers and the loss of over two million farm jobs since 1993.
It should be kept in mind the status quo (both within NAFTA and in wider trade bodies) reflects developed states' choice as to which trade they want free far more than it does true free trade. It's that fact, not any problem with genuinely free trade, that has done so much to prevent developing countries from making up any ground. And until developed countries take the lead in eliminating the factors which artificially benefit their domestic industries, any lectures as to the value of free trade can do nothing but ring hollow.

No comments:

Post a Comment