Understanding Asia's WTO Stance

Posted by: Bruce Einhorn on July 30, 2008

My colleague in Mexico City, Geri Smith, writes regarding the collapse of trade talks in Geneva:

In the end, it’s so ironic that at a time of high worldwide food prices, developing countries that would normally be totally justified in trying to protect their local farmers from import surges of inexpensive foodstuffs were fighting to defend that right even when it’s not currently necessary—because of the record-high prices.

But it’s not hard to understand where countries like India and Indonesia are coming from—in “normal” times their huge local populations of subsistence farmers could be crushed by surges of cheap food imports. If they had agreed to give up the right to this mechanism now, it might have come back to bite them a few years from now, if food prices drop. It was a classic division between food exporters vs. traditional food importers.

While you can agree intellectually that the world is probably better off because of the overall reduction of trade barriers under WTO, poor countries that are ill-equipped to “protect” their local population from import surges or that aren’t well-organized enough to teach/train local populations to be more efficient farmers or to organize themselves better in cooperatives are always going to get the short end of the stick in these trade deals. If it becomes cheaper to import corn from super-efficient U.S. farms than to produce it on smaller, inefficient peasant subsistence farms, then local governments are going to just figure it’s easier to import the corn, and that leaves the subsistence farmers dangling.

Reader Comments

Am

July 31, 2008 10:19 AM

Finally a sensible view point on the issue.

peace4all1

July 31, 2008 5:33 PM

You only need to look at what just happened to Haiti, which is one of the first country encountered riots caused by recent unprecedented high food prices, everyone should expect NO from both Indian and Chinese where the majority of their population are poor farmers.

As recent as five to six years ago, Haiti was self-sufficient for about 80% of required food supply. Then it came with WTO when Haiti was forced to give up its grain production due to lower-priced food competition from US and was redirected to produce Coffee beans, sugar plant and other products for US market. Right now recession in US has reduced the demand for those products from Haiti while food prices were almost doubled. With that, it forces poor Haitian farmers into riots. While you don’t need to drink coffee everyday, you’ll have to have bread or rice for every meal just for surviving!

Now do you still expect Indian and Chinese government to accept demand from rich countries to open their farm markets without adequate compensations and safeguards against those subsidized farm products?

Tom E.

July 31, 2008 9:00 PM

I guess it is ok for China to crush American industries and livelihoods with surges of cheap products but if Americans want to have reciprocal trade selling cheap grain its not ok.

Finally, even the do-gooders in the US trade office can see that while China sings platitudes to the virtues of free trade - they have no intention of allowing any other country to exercise their comparative advantage. Trade for China is a one way street.

Joanne

August 1, 2008 5:49 AM

Honestly, I personally think that if US farm and the way of the production can be inserted to Asian, that will be awesome. Then we can let local peasants work for U.S. farm. This method can gurantee the low price and health food be enjoyed by local people. In the mean time, local farmer can be educated too.
However, there are several problems when inserting this mechanism.
First, Asian peasants are not English literate. They will not understand how U.S. farm is doing things. Second, there is a cultural difference among Asian people and U.S people. Even though U.S. people send some Asian American farmer to Asian to implement those mechanism, there still exists a problem. That is local farmer does not udnerstnad what is capitalism system, local government is very stupid. Local peasants are even not enlightened to accept western people's working style, which will be percetived as invasion by the west. Then even though U.S. farm has an intention to reduce the poverty, the consequence will be local people will even hate those people who think they are savior for local economy.
And one more thing I forgot to mention, the basic infrastrucutre in Indonesia is very bad. The same as mainland China, India. That's the reason India is very good at wireless. People there even dont have a phone. I learned that in my natural science class.

TO joanne

August 4, 2008 2:30 AM

In the words of indian finance minister - " what america is offering, is free trade, but not fair trade" ....and btw joanne...the way u talk u make it look like indians and chinese are totally oblivious to farming like it is a new concept for them...let me enlighten u...cus the farmers in india and china need not to be informed...we have been farming for thousands of years and we have survived becuase of farming and is part of our daily culture... america wasnt even discovered at that point..the key problem here is american subsidies, americans farmers have gotten the upper hand cus they government gives them subsidies that are incomparable to india and china COMBINED

Rahul

August 5, 2008 4:51 AM

It is interesting to read the comments here. While some people have written thoughtful comments - others have simply given a vent to their inner biases.

I will respond to Joanne here. I do not think you have any idea of WTO and its negotiations over last two decades. Just to give you one example, back in 1990's, US had promised to reduce cotton subsidy to inefficient US farmers. The same has not yet been fulfilled. You completely ignored this point. This is one among many promises that US and Europe have not fulfilled - as opposed to developing countries fulfilling almost all of their promises. Before preaching to the world from your glass house, look around the unkept promises US has to fulfill.

And yes, before commenting upon English skill of Indians and Chinese, please improve your own English; for instance - check your spellings.

samyvellu

August 5, 2008 10:38 AM

@ Joanne - We have a high school student who thought she know everything yet nothing, commenting in BusinessWeek! What a joke!

John Jan Popovic

August 5, 2008 12:01 PM

The Britain's Corn Laws in 1846, marked the beginning of decay of English free-trade empire, in the nineteenth century. Pendulum swings in another direction again. Industrial Economy and Big Oil is losing its absolute primate over Agriculture, after more than one century of domination. What were fossil fuels and oil for US Dollar monetary policy, will be grain in future as it was in ancient past.
Historia magistra vita est.
read:
From the Corn Laws to Free Trade, written by Cheryl Schonhardt-Bailey
http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=10874

jazzjango

August 5, 2008 2:45 PM

I as an Indian totally agree that in the name of free trade we the developing countries cannot afford to let our farmers, majority of whom are not well off, to suffer. USA and the developed needs to be actually more sensetive to human rights than just professing this in various forums.

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