New York Times 12.30.03.
HARVESTING POVERTY
The Unkept
Promise.
There is a deceiving sense of
timelessness to the stillness of rural life. The jungles of Mindanao
offer few clues as to whether it's the early 20th century, or the early 21st.
Nor do the highlands of Guatemala,
the Mekong Delta in Vietnam
or the cotton-rich plains of the Sahel in West Africa.
But these disparate regions are very much of the present, stitched into the
quilt of global commerce. World trade links us to them, as surely as it links London, Tokyo and New York.
In an effort to understand that relationship, we visited
some of the poorest nations in the world in the last six months. We listened to
12-year-old Arnel Mamac's parents on Mindanao,
the Philippine island besieged by an Islamist terrorist group, tearfully say
they often don't let him walk to school because they fear he may not have the
energy to make it on an empty stomach. In a cotton-growing village in Burkina Faso we
saw a school with two rooms, but because of a lack of funds, only one classroom
was finished. Most unsettling, to an American, is the realization that our
nation's agricultural policies -- its protectionist trade barriers and the
billions in subsidies doled out to its own farmers -- contribute mightily to the
hardships felt by poor farmers in the developing world.
The club of rich nations that wrote the rules of global
trade has been aggressive in dismantling barriers when it comes to industrial
goods and services, in which they hold a comparative advantage. But they refuse
to do the same when it comes to agriculture. Politically powerful farm lobbies
in Japan, Europe and the United States
are not willing to face global competition on fair terms. So agriculture
remains the hypocritical asterisk to our fervent free-trade and free-enterprise
creed.
It's bad enough that a country like Japan, which
became wildly prosperous thanks to the willingness of the outside world to buy
its exports, maintains 500 percent tariffs on imported rice. Or that the
American Congress would overrule science to decree that catfish from Vietnam, which
found popularity among American consumers, are not catfish after all and cannot
be marketed as such.
Worse, the developed world funnels nearly $1 billion a day
in subsidies to its own farmers, encouraging overproduction, which drives down
commodity prices. Poor nations' farmers find they cannot compete with
subsidized products, even within their own countries. In recent years, American
farmers have been able to dump cotton, wheat, rice, corn and other products on
world markets at prices that do not begin to cover their cost of production,
all courtesy of the taxpayers.
The rigged trade game is not only harvesting poverty around
the world, but plenty of resentment as well. In the Philippines, a former American
colony, our agricultural trade policy is seen as a plot to perpetuate
imperialism. In Vietnam, a nation that was able to start reducing rural poverty
only when it deviated from its Marxist orthodoxy and allowed entrepreneurs to
have access to global markets, an exasperated seafood exporter told us, ''We
are made to wonder if you wish us ill as much in the present as you did in the
past.''
In Burkina Faso,
we heard a cotton farmer tell colleagues that America's bizarre cotton program
could be explained only by the fact that President Bush is a cotton farmer. He
was wrong. It is some leading members of Congress responsible for the $180
billion 2002 farm bill who are cotton farmers, or who blindly follow the
dictates of the so-called King Cotton lobby.
The idea that our agricultural protectionism harms poor
nations is hardly a fanciful one held only by aggrieved third world farmers.
Just about any multilateral economic or development agency you can think of has
issued reports railing against rich nations' farm subsidies. The World Bank
estimates that an end to trade-distorting farm subsidies and tariffs could
expand global wealth by as much as a half-trillion dollars and lift 150 million
people out of poverty by 2015.
The urgent need to address globalization's imbalances, and
restore the credibility of the free-trade system, has never been as apparent as
it was in the raw weeks and months immediately following the terrorist attacks
on Sept. 11, 2001. That November, at Doha,
Qatar, the members
of the World Trade Organization committed themselves to a new round of trade
talks focused on the elimination of the farm subsidies that are so harmful to
the developing world.
The year 2003 was to be crucial in this endeavor. A deadline
of last March was set for the 146 W.T.O. members to agree on a framework to
proceed on the subsidy question, with substantive agreements expected by a
September meeting in
Cancϊn,
Mexico.
Neither happened.
The March deadline came and went with no accord. Even more
disappointing, on the eve of the Cancϊn gathering, American negotiators
switched sides. Despite Congressional support for gargantuan agricultural
subsidies, Robert Zoellick, the United
States trade representative, had taken an
aggressive position on the need for reform. But suddenly, Mr. Zoellick and his
team joined hands with the more recalcitrant Europeans against much of the rest
of the world.
There was a time when the European Union and the United States
could jointly dictate terms to the rest of the World Trade Organization, but
they cannot any more. Washington's betrayal of
its free-trading principles outraged not only the poorest countries, but also
some food-exporting allies like Australia.
The developing world lashed back. At Cancϊn, Brazil, India
and China
created a formidable bloc of 22 nations that rightly opposed proceeding on
anything else until some of the more outrageous farm subsidies had been
addressed.
Hence the current stalemate. Negotiations meant to inject
fairness into global trade are on life-support, thanks mainly to the appalling
absence of American leadership. The Bush administration could have joined
forces with the likes of Australia
and Brazil
at Cancϊn. Our trade representatives could have worked to overcome both the
narrowest interests of the American farm lobby and the developing world's own
self-defeating protectionism. Instead, the United States meekly aligned itself
with a group of countries scared of fair competition.
For all the hand-wringing about a trans-Atlantic rift over
Iraq this past year, President Bush stood shoulder to shoulder with Jacques
Chirac of France on a matter that is far more pressing to the billion or so
people on earth trying to get by on $1 a day. Together, they formed a veritable
coalition of the unwilling. Despite their post-9/11 promises, the United States
and the European Union defiantly refused to give up their economic weapons of
mass destruction: their trade-distorting farm subsidies.
More rational agricultural trade policies would actually be
a boon to many American farmers because their high-tech equipment and large,
fertile acreage would make them winners in a more open competition. But there
would be losers both here and abroad, and we visited some of them as well, to
understand all sides of the story. Ronnie Hopper in Texas, Hubert Duez in
France and Koushi Seiwa in northern Japan are all smart, gracious, hard-working
farmers. But as appealing as they are as individuals, they have been given an
unfair advantage by nostalgia-driven policies that are indefensible on
economic, and even moral, grounds.
In a rational global marketplace that conformed to our
stated values and commitments to the rest of the world, consumers would forgo
Mr. Hopper's cotton, Mr. Seiwa's rice and Mr. Duez's sugar, and buy from others
who are now being shut out of the global economy.
This does not mean that rich nations ought to halt their
rural development programs. But farmers must be weaned from payments that
merely reward them for overproducing crops on which they would otherwise lose
money. Such madness is no longer sustainable. Besides proving so costly for
taxpayers and for the developing world, there is too glaring a gap separating
American and European agricultural policies from the entire logic of the global
trade system. Now the developing world is demanding consistency, and a fairer
playing field.
The Bush administration, which has been so proudly proactive
in Iraq,
could jump-start reform with a sweeping unilateral gesture. The ideal starting
point would be the dismantling of the most wrongheaded market distortions, our
astronomical cotton subsidies and our sugar quota system, which props up
domestic sugar prices by restricting imports. But instead of moving in that
direction, the president, ostensibly a free-trading Republican, signed the most
trade-distorting farm bill in history.
The dutiful Mr. Zoellick may travel the world saying all the
right things, but his boss does not seem to appreciate the degree to which
trade is integral to broader economic and foreign policy, and to the projection
of American power around the globe. Does President Bush sit down with Mr.
Zoellick, Condoleezza Rice and his top cabinet officials for far-ranging discussions
on farm subsidies and the Doha
round of trade negotiations? He should.
Next year's election offers little hope on this score.
Democratic lawmakers were among the strongest supporters of the 2002 farm bill,
and most of the candidates vying for the Democratic Party's presidential
nomination seem to have turned against the Clinton administration's belief that freer
trade is a win-win proposition for rich and poor nations alike.
Trade frictions may grow worse, therefore, before we stop
harvesting poverty around the world with our farm programs. It could take a
threatened collapse of the global rules-based trading system for the political
balance of power from Washington to Tokyo to shift decisively
against the coddled farm lobbies. But until we start chiseling away at our farm
subsidies, the promise of trade will remain a promise unkept for many of the
world's poor.
Harvesting
Poverty: Editorials in this series remain online at
nytimes.com/harvestingpoverty.
New York Times 12.23.03.
HARVESTING POVERTY
A New Trade Deal.
Ten
years after entering into a free trade agreement with Mexico, the United States
has negotiated a similar deal with four Central American nations
Guatemala, Nicaragua, El Salvador and Honduras. Costa
Rica and the Dominican Republic may yet join
"Cafta." Though its terms are far from perfect, the proposed
agreement deserves Congressional support.
It is hard to energize a pro-trade lobby to counter the political clout
of vocal protectionist interest groups, especially in an election year. But
this deal should be judged on its merits.
The agreement means more to Central America's fledgling democracies
than to the United States.
That said, Cafta's terms reflect the asymmetry in negotiating power between us
and them. For instance, agricultural tariffs and quotas, a key impediment to
Central American exports, are phased out over a longer period than tariffs on
industrial goods and services, most of which are from the United States.
Intellectual property is another concern. Congress must ensure that the
accord allows developing nations to circumvent pharmaceutical patents in order
to combat serious diseases like AIDS.
Some of the agreement's less ambitious terms are sops to American
protectionist interests. Take sugar. Robert Zoellick, the trade negotiator, rightly
included it in the deal, to the dismay of Florida's
cane growers and sugar beet farmers in the Midwest.
The accord doubles the amount of duty-free sugar the Central Americans can sell
us. It would have been better to scrap the quota system altogether. Still,
Cafta promises to be the beginning of the end for America's absurd sugar program,
which shields our inefficient growers from competition at a high cost to the
developing world.
On textiles, Cafta also serves up free trade with an asterisk. To gain
duty-free access to the American market, Central American clothing will have to
use fabrics from the region or from a Nafta country. This is an attempt to
promote North American yarn a bow to the textile and
cotton lobbies.
Weaving protectionist clauses into a free trade agreement only cuts its
value, without necessarily winning over the industry being protected. Catering
to special interests tends to backfire, as the White House discovered with its
recent reversal on steel tariffs.
New York Times 12.7.03.
HARVESTING POVERTY
The Case Against King Cotton.
The
Bush administration has wisely decided to lift steel tariffs deemed illegal by
the World Trade Organization. But an even more potent test of American fealty
to principles of fair competition, and to international trade law, looms on the
horizon. Will the United
States scrap its costly array of
cotton-growing subsidies if they, too, are found illegal by the W.T.O.?
The question is
of immense importance to impoverished farmers in places like West Africa, whose
livelihoods are hurt by America's
unfair, taxpayer-financed version of global trade. It is also pressing. Brazil has mounted a strong legal challenge to America's
cotton subsidies. It is a historic case, the first time agricultural subsidies
are being credibly challenged before the W.T.O. A preliminary decision is
expected next spring.
There is nothing
that creates more anger and disillusionment in poor and developing countries
than the refusal of rich nations to play by fair rules when it comes to
agriculture. The United States,
Europe and Japan
use government subsidies to make their farmers' products more competitive. In
many cases, they wind up selling their produce for less than it costs to grow,
elbowing other countries' goods out of the global marketplace.
Until now, the
losers got no help from the W.T.O. At that body's inception in 1995, the
wealthy nations rammed through a so-called peace
clause that gave them the right to bend the rules as much as they
wanted as long as their subsidies did not rise beyond the level of 1992. They
argued that it would provide some time to address the issue through
negotiations. But as the failed September W.T.O. talks in Cancϊn showed,
Europe, Japan and the United States
are unwilling or unable to terminate the addiction to farm subsidies on their
own.
Fortunately, the
peace clause will lapse next year, despite shameless attempts by Europe and America to have
it extended. And Brazil's
cotton challenge can proceed regardless because Washington's payments to cotton growers have
exceeded the already astronomic 1992 levels. Brazil's lawyers have mounted a
compelling case, as even some Bush administration officials privately concede,
that America's
subsidies have indeed suppressed global prices and stolen market share from
others.
American cotton
costs a great deal to produce by international standards. Yet even though
global cotton prices were crashing from 1999 to 2002, our share of global
exports grew to 40 percent, from 25 percent. That was because Washington propped up King Cotton with $12.9
billion in subsidies. We were, in effect, paying the rest of the world to buy
American product rather than the cheaper cotton grown in Africa and South America. In recent arguments in its W.T.O. case, Brazil offered credible expert testimony that
absent Washington's subsidies, America would
have exported some 40 percent less cotton. That actually seems like a
conservative estimate. Still, it illustrates the magnitude of the injustice
being perpetrated against poor nations for which cotton might be the only
competitive export.
Antiglobalization
protesters who claim to act on behalf of the world's poor are fond of taking
aim at the World Trade Organization, but the cotton case shows that what the
developing world needs is not a weaker trade referee, but a stronger one
capable of standing up to rich nations.
Poor African
farmers and American taxpayers stand to gain if the W.T.O. does what Congress
should have done long ago, and kills our cotton subsidies. Brazil should
prevail, and with the peace clause's retirement, more such cases should be
brought against indefensible agricultural protectionism.
New York Times (11.29.03).
HARVESTING POVERTY
America's Sugar Daddies.
Sugar
growers in this country, long protected from global competition, have had a
great run at the expense of just about everyone else
refineries, candy manufacturers, other food companies, individual consumers and
farmers in the developing world. But now the nation's sugar program, which
guarantees a domestic price for raw sugar that can be as much as three times
the world price, needs to be terminated. It has become far too costly to America's
global economic and strategic interests.
The less
defensible a federal policy is on its merits, the greater the likelihood that
it generates (or originates from) a great deal of cash in Washington, in the form of campaign
contributions. Sugar is a sweet case in point. The Fanjul brothers, Florida's
Cuban-American reigning sugar barons who preside over Palm Beach's yacht-owning
society, were alone responsible for generating nearly $1 million in soft-money
donations during the 2000 election cycle. Alfonso Fanjul, the chief executive
of the family-controlled Flo-Sun company, served as Bill Clinton's Florida
co-chairman in 1992 and even merited a mention in the
impeachment-scandal Starr report, when Monica Lewinsky testified that the
president received a call from him during one of their trysts. Meanwhile,
brother Pepe is equally energetic in backing Republicans, so all bases are
covered.
The Fanjuls
harvest 180,000 acres in South Florida that send polluted water into the Everglades. (A crucial part of their business over the
years has been to lobby not just against liberalization of the sugar trade, but
against plans to have the sugar industry pay its fair share of the ambitious $8
billion Everglades restoration project.) The
Fanjuls had been Cuba's
leading sugar family for decades before Fidel Castro's takeover. Crossing the
Straits of Florida, they bought land in the vicinity of Lake Okeechobee, which
feeds the Everglades, and imported platoons of poorly paid Caribbean
migrant workers. Their business was aided by the embargo on Cuban sugar. The
crop is protected from other competition by an intricate system of import
quotas that dates back to 1981.
The government
does not pay sugar producers income supports as it does many other kinds of
farmers. Instead, it guarantees growers like the Fanjuls an inflated price by
restricting supply. Only about 15 percent of American sugar is imported under
the quota rules, and while the world price is about 7 cents a pound, American
businesses that need sugar to make their products must pay close to 21 cents.
Preserving this spread between domestic and world sugar prices costs consumers
an estimated $2 billion a year, and nets the Fanjuls who
have been called the first family of corporate welfare
tens of millions annually. The sugar exporters who are able to sell to the United States
also benefit from those astronomical prices. The Dominican Republic is the
largest quota holder, and one of the big plantation owners there is surprise the Fanjul family.
The sugar
situation hurts American businesses and consumers, but its worst impact is on
the poor countries that try to compete in the global agricultural markets.
Their farmers might never be able to compete with corn or wheat farmers in the United States,
even if the playing field were leveled. But they can grow cotton and sugar at
lower prices than we can, no matter how advanced our technology. Our poorer
trading partners bitterly resent the way this country feels entitled to suspend
market-driven rules whenever it appears they will place American producers at a
disadvantage.
In fairness, the United States
is not alone in distorting the sugar trade, and the European Union's massively
subsidized exports of beet sugar make it the biggest culprit. The American
sugar lobby uses that fact as a shield, arguing that the crop not be included
in any regional trade deals until distortions are addressed by all countries at
the World Trade Organization. But quotas are set between trading partners, not
on a global level. Right now the United States
is negotiating the creation of a hemispheric free trade area that would benefit
many United States
industries, including other agricultural sectors. It is ridiculous for the
sugar lobby to argue as it does vociferously that sugar should not be included in the agreement even though
it is one of the few products that some Latin American republics can hope to
ship to the American market.
So far the Bush
administration has rightly rejected the sugar lobby's push to keep the
commodity off the table. The danger, however, is that American trade
negotiators might still prove far too deferential to sugar industries when
hammering out the trade deals' specifics. For instance, any move to phase in
elimination of sugar quotas over a period longer than a decade (as was done in
the North American Free Trade Agreement) would undermine any promise a trade
deal might hold for poor farmers in Latin America.
The strength of the protectionist sugar lobby in Washington
which unites Southeastern cane growers and Midwestern beet farmers was apparent in the success of Senator Mary Landrieu of
Louisiana last year in bashing Nafta's modest sugar provision during her
re-election bid.
If the sugar
trade were liberalized, world prices would start creeping up and domestic
prices would fall, which would benefit both the developing world and the
American economy. The industry itself cites "alarming" studies that
if the United States imported an additional two million metric tons roughly the amount Central America exports
domestic prices would be cut in half. But that is no argument for opposing
trade liberalization. That is an argument for the handful of individuals who
control the sugar business in this country to start thinking about a new line
of work, and be grateful for the long run they had.
New York Times (11.22.03).
HARVESTING POVERTY
Free Trade, ΰ la
Carte.
It
was a good week for protectionists in Brazil and for subsidized American
farmers. The outcome of this week's hemispheric trade gathering in Miami suggests that both
will continue to be shielded from full competition in a global market. It also
means the ambitious effort to create a mammoth free trade area throughout North
and South America by 2005, begun with such
fanfare nine years ago, runs the risk of being downsized to a point of near
irrelevance.
There was no
acrimonious meltdown in Miami,
to be sure, as there was in September at the World Trade Organization meeting
in Cancϊn. The 34 trade ministers from all hemispheric
nations but Cuba agreed to further negotiations toward
the creation of the Free Trade Area of the Americas. But it's a vague plan that
caters to the lowest common denominator. Brazil and the United States forced
upon the other nations a framework that calls for talks in nine areas like intellectual property rights and agriculture while giving countries the right not to take on all the
obligations in any one of them. Call it free trade, ΰ la carte.
Brazil, by far
Latin America's largest economy, has never been eager to create a meaningful
free trade area for the entire hemisphere. It would like to protect its
industry from outside competition, and it has no desire to agree to the types
of rules governing intellectual property, investment and government procurement
that should be part of a muscular trade deal.
That ambivalence
was to be expected, but American negotiators' deference to it was rather
shocking. Nations like Canada, Mexico and Chile strong
Washington allies that have already signed ambitious trade deals with the
United States could not help but feel betrayed by the
outcome in Miami. Washington says it wants to strike more ambitious deals with
individual Latin American nations, but the prospect of a patchwork of minideals
is a messy one, and one potentially unfair to those countries that have made
greater concessions to Washington.
The Bush
administration succumbed to Brazil's
ambivalence because of its unwillingness to end America's trade-distorting farm
subsidies. At the W.T.O.'s gathering in Cancϊn, the United
States sided with the European Union on this point and
against Brazil.
Agriculture is of immense importance to Latin America
because its farmers can compete against American agribusiness in some markets
if given a level playing field.
The Bush
administration's disturbing pattern of defensively siding with the most
obstructionist party at these international negotiations mirrors its domestic
strategy of trying to placate narrow protectionist special interests, be they
steel makers, cotton farmers or the textile lobby. Both at home and abroad,
this approach is a recipe for disaster.
New
York Times
(Nov. 10, 2003)
HARVESTING
POVERTY
Welfare Reform for
Farmers.
A great rift is
opening in America's
once-impregnable farm lobby. It is a gap between those forms of agriculture that
can prosper on their own and the ones that must be perpetually propped up by
huge subsidies. This is a critical development if this country is ever going to
control the costs of its farm programs and deal fairly with poor countries that
want their chance to prosper from global trade. The United States has to acknowledge
that it can no longer continue to support hopelessly unprofitable agricultural
enterprises, even if they are in states represented by powerful members of
Congress.
This new schism
shows up in the debate over proposals to cap the amounts individual farmers can
receive in government aid. Right now, some of the nation's wealthiest welfare
recipients are farmers "earning" taxpayer subsidies in the high six
figures, or more. Senator Charles Grassley, the chairman of the Finance
Committee and an Iowa farmer, has long been eager to impose new limits.
Unfortunately, he was unable to get the Senate to debate an amendment to the
Department of Agriculture's annual funding legislation last week that would set
a new cap on the overall amount farmers can obtain in federal subsidies. Many
Southern senators were eager to avoid the issue.
Of course the
senator is right in wanting to place tighter limits on farmers' checks, and
it's important that a representative of a farm state is leading this charge.
The wheat, corn and soybean farmers in Mr. Grassley's area get subsidies, but
they tend to be smaller than those for capital-intensive crops like rice and
cotton farming in the South (and California).
Midwestern farmers also are more enthusiastic about genuine global fair trade.
Southern farmers fear, rightly, that it would mean the end of the huge
subsidies that allow them to export their product at prices below the cost of
growing it. One West Texas cotton farmer
jokingly accuses Mr. Grassley of triggering a new civil war.
The farm
subsidies are fraudulently sold to the public as a way of propping up the small
family farm, when in reality they only accelerate the concentration of farming
in this country. Taxpayer handouts amount to almost half of the total net
income for American farmers, but two-thirds get no subsidy. Among those who do,
the top 10 percent receive 65 percent of all payments, according to an analysis
by the Environmental Working Group.
It's astonishing
that a program can continue to get Congressional support when it hurts
virtually everybody our representatives are supposed to be concerned about small farmers, other taxpayers and poorer nations struggling
to join the global economy. According to a government report issued in
September, the lack of realistic caps on individual subsidies only encourages
more overproduction by large farms. Meanwhile, industrial-scale farms awash in
subsidies have the incentive to accumulate more land, further inflating prices
beyond the reach of modest farmers, many of whom are renters. Smaller farmers
are also afflicted by depressed crop prices.
The 2002 farm
bill set a $360,000 cap on an individual's subsidies, but that's widely abused
as farmers create legal entities with interests in the same land, each entitled
to a payment. Still, in opposing Senator Grassley's efforts to rein in the
abuses and to limit payments, earlier this year the National Cotton Council
shamelessly stated that such a move would drive farmers to "make cropping
decisions based on program benefits rather than market signals."
Get it? The
cotton lobby would like you to think that smaller payments distort market
realities more than unlimited subsidies. This is the kind of nonsensical claim
underlying the nation's absurd farm policies. Stringent payment limits would be
a step toward some semblance of sanity. Senator Grassley should persevere.
New York Times (10.19.03)
HARVESTING POVERTY
The Fabric of Lubbock's Life.
Lubbock is a rock-solid,
conservative kind of place, located where northwest Texas meets the southernmost part of the
great American plains. Its citizens like to think of themselves as self-reliant
straight talkers. It seems strange, then, to think of this region as a
sprawling welfare case.
But the cotton
farms that give Lubbock
much of its identity thrive from huge government subsidies that drain the
federal treasury and shelter the industry from the discipline of the market.
The rest of the world rightfully regards those subsidies as unfair to poor
countries, whose cotton farmers cannot compete against the below-cost prices at
which American cotton sells.
America's
cotton farmers are currently at the center of an international outcry against
the way rich countries rig the trade game with protective tariffs or
agricultural subsidies. "Judging by what's written in some Eastern
newspapers you'd think I murdered my parents or something," says Ronnie
Hopper, a cotton grower in nearby Petersburg.
Mr. Hopper, 57, grows some of the most coveted cotton in the world on a
2,500-acre high-tech farm. But most years his costs exceed the global price,
which is why he has relied on nearly a half-million dollars of subsidies since
1995.
"Why do you
want to get rid of me?" asked Mr. Hopper, who works hard and plays by the
rules as the government sets them. Like many farmers who receive subsidies a glaring exception to America's ostensible free-market values
he argues that the United States needs some agricultural
self-sufficiency and that no cotton farmer could break even at market prices.
Indefensible as
the subsidies are, it's impossible not to feel sympathy for his situation.
Lubbock is in the heart of the national cotton belt, and the idea that the
United States is no longer well positioned to grow cotton at all is shocking in
the top-producing cotton state, where in Dallas last weekend, Texas played
Oklahoma in the venerable Cotton Bowl.
There is actually
no sign that American cotton farmers are going to suffer from anything but hurt
feelings in the short run. The 2002 farm bill's complex cotton subsidies will
continue at least until 2007, giving farmers the right to a direct payment of 6
cents for every pound of upland cotton, plus loans pegged at 52 cents a pound.
Besides helping growers pay off their loans if the price dips below that, Uncle
Sam then makes what are known as countercyclical payments to allow farmers to
obtain a lofty "target price" of 72 cents a pound. All told, with
this web of federal supports which can exceed $3 billion
in some years American taxpayers often end up footing as
much as two-thirds of the cost of growing America's exported cotton.
This helps the United States,
among the world's highest-cost cotton producers, rank first in exports. Dumped
abroad at below cost, our cotton depresses prices and hurts farmers in poor
nations like Mali or Burkina Faso
that cannot set aspirational "target prices."
African farmers
are aware that they are competing in a fixed game many
believe, incorrectly, that President Bush is a cotton farmer himself. They are
rightfully outraged that a nation that enjoys all the benefits of open markets
for its industrial products keeps putting up walls around its farmers.
At the recent
World Trade Organization meeting in Cancϊn, where attempts to reform the
agricultural trade rules ended in failure, widespread outrage against American
cotton subsidies dominated the headlines.
If all
protectionism disappeared tomorrow, the poor farmers of the world would not all
benefit. Small corn or wheat growers abroad might not be able to compete
against the huge, efficient farms of the fertile American Midwest.
Peasants with tiny plots of land would inevitably give way to bigger
agricultural enterprises. There is no magic fix to a world order in which the
rich countries invariably hold most of the cards. But the global community has
to start moving in the right direction, giving farmers in the poorest countries
an opportunity to compete where they have a chance to do so.
The
"cotton-picking truth," as they might say in rural Texas,
is that the United States
has no business growing 16 million bales of cotton a year. Continuing to deny
this reality is patently unfair. If the United States eliminated the
subsidies, the world prices for cotton would rise, helping farmers overseas but
having minimal effect on consumers (there is only about a dollar's worth of
cotton in a pair of jeans). It would save the American taxpayers billions of
dollars, and it would allow Americans to strike a very visible blow for
fairness between rich countries and poor.
The pain in Lubbock, of course, would
be real, as it is in any region where new economic patterns deal a mortal blow
to a local industry. The government needs to help such places make the
transition to businesses with a future. But it cannot afford to prop up
inefficient ventures forever. It is not fair to other regions that were forced
to accept change, lost jobs and an end to old ways of life. It is not fair to
the poor, cotton-producing countries. The subsidies are a bad deal for everyone
but the American cotton farmers, and they leave the United States in an unconscionably
hypocritical stance when it faces the rest of the world. Free trade cannot work
ΰ la carte, only for those sectors where we stand to win.
New York Times (10.6.03)
HARVESTING POVERTY
The Looming Shrimp War.
The nasty catfish war
with Vietnam
has tempted American shrimpers to engage in some trade mischief of their own.
Using spurious allegations of unfair trade practices, American catfish farmers
have been able to hoodwink the federal government into slapping tariffs of up
to 64 percent on Vietnamese catfish. A group of shrimpers from eight Southern
states is now preparing to file a claim requesting a similar tax on imported
shrimp.
Americans believe
in the free trade game until they start losing at it. Then we accuse the other
side of cheating. That is the message these baseless dumping cases send to the
rest of the world. It is understandable for people to seek protection when
their livelihoods are adversely affected by trade. But as a nation that
benefits from freer trade, the United
States cannot afford to continue encouraging
these cases. They antagonize poor farmers and laborers around the world who
discover that the world's superpower does not really believe in what it
preaches.
Trade laws allow
domestic industries to seek protection to keep imports from being
"dumped" into the United
States, either below their cost of
production or below their price in their countries of origin. True dumping
should not be tolerated, but these claims are judged by Commerce Department
officials, who tend to be highly solicitous of domestic lobbies. Vietnam is an
enticing target for such cases. It is also the second-largest exporter of
shrimp to the United States.
Because Vietnam
is considered a "nonmarket economy," the department is free to ignore
actual production costs and determine what they theoretically ought to be,
making it even easier to establish that imports are being dumped.
The good news for
Vietnam,
and American consumers, is that this time, in contrast with the catfish wars,
it will have powerful allies. The Southern Shrimp Alliance
will also be doing battle with other major shrimp exporters, like Brazil and Thailand. These countries'
sophisticated shrimp farms can get products to market at a lower cost than
American trawlers can, and since both Brazil and Thailand are classified as
market economies, the Commerce Department cannot engage in accounting
shenanigans to fudge reality.
Sales of shrimp
by American fishermen have been flat for some time while imports have surged,
accounting now for more than 80 percent of the market. Plummeting prices have
allowed shrimp, once an expensive delicacy, to rival tuna as the most popular
seafood in the United States.
If a case is filed, seafood importers will side with the foreign defendants on
behalf of consumers, arguing that this is not a case of dumping but a textbook
example of the theory of comparative advantage.
The government
should heed this argument, and avoid further erosion of America's
reputation as a fair trader. For their part, American shrimpers should rethink
their decision to pursue what amounts to a groundless case. They would do
better to focus on becoming more competitive, or to lobby for some transitional
aid for fishermen whose livelihoods are threatened.
September 16, 2003
(NYT)
HARVESTING
POVERTY
The Cancϊn
Failure.
Cancϊn
means "snakepit" in the local Mayan language, and it lived up to its
name as the host of an important World Trade Organization meeting that began
last week. Rather than tackling the problem of their high agricultural tariffs
and lavish farm subsidies, which victimize farmers in poorer nations, a number
of rich nations derailed the talks.
The failure by 146 trade
delegates to reach an agreement in Mexico is a serious blow to the
global economy. And contrary to the mindless cheering with which the breakdown
was greeted by antiglobalization protesters at Cancϊn, the world's poorest and
most vulnerable nations will suffer most. It is a bitter irony that the chief
architects of this failure were nations like Japan, Korea and European Union
members, themselves ads for the prosperity afforded by increased global trade.
The Cancϊn meeting came at the
midpoint of the W.T.O.'s "development round" of trade liberalization
talks, one that began two years ago with an eye toward extending the benefits
of freer trade and markets to poorer countries. The principal demand of these
developing nations, led at Cancϊn by Brazil, has been an end to high
tariffs and agricultural subsidies in the developed world, and rightly so. Poor
nations find it hard to compete against rich nations' farmers, who get more
than $300 billion in government handouts each year.
The talks appeared to break down
suddenly on the issue of whether the W.T.O. should extend its rule-making
jurisdiction into such new areas as foreign investment. But in truth, there was
nothing abrupt about the Cancϊn meltdown. The Japanese and Europeans had
devised this demand for an unwieldy and unnecessary expansion of the W.T.O.'s
mandate as a poison pill to deflect any attempts to get
them to turn their backs on their powerful farm lobbies. Their plan worked.
The American role at Cancϊn was
disappointingly muted. The Bush administration had little interest in the
proposal to expand the W.T.O.'s authority, but the American farm lobby is split
between those who want to profit from greater access to foreign markets and
less efficient sectors that demand continued coddling from Washington. That is one reason the United States made the unfortunate decision to
side with the more protectionist Europeans in Cancϊn, a position that left
American trade representatives playing defense on subsidies rather than taking
a creative stance, alongside Brazil,
on lowering trade barriers.
This was an unfortunate subject
on which to show some rare trans-Atlantic solidarity. The resulting
"coalition of the unwilling" lent the talks an unfortunate
north-versus-south cast.
Any hope that the United States
would take the moral high ground at Cancϊn, and reclaim its historic leadership
in pressing for freer trade, was further dashed by the disgraceful manner in
which the American negotiators rebuffed the rightful demands of West African
nations that the United States commit itself to a clear phasing out of its harmful
cotton subsidies. American business and labor groups, not to mention taxpayers,
should be enraged that the administration seems more solicitous of protecting
the most indefensible segment of United States protectionism rather
than of protecting the national interest by promoting economic growth through
trade.
For struggling cotton farmers in
sub-Saharan Africa, and for millions of others in the developing world whose
lives would benefit from the further lowering of trade barriers, the failure of
Cancϊn amounts to a crushing message from the developed world
one of callous indifference.
September 10, 2003
(NYT)
HARVESTING
POVERTY
Showdown in Cancϊn.
The
world's attention should be focused on the World Trade Organization's meeting
at Cancϊn this week for reasons having nothing to do with the
anti-globalization protests. The protesters will be trying to be as colorful
and disruptive as they were when the W.T.O. met in Seattle in 1999, but their role is marginal.
The real drama involves the delegates from 146 nations. They are bound to be
speaking in eye-glazing bureaucratic Esperanto, but they will be engaged in
crucial negotiations aimed at making life fairer for poor countries' farmers,
who are struggling haplessly against a rigged global trading system.
Few things could improve the lives of more people including the more than one billion struggling to live on a
dollar a day or less than a positive outcome in Cancϊn.
By that we mean a strong W.T.O. commitment to create a fair and efficient
global market for agricultural goods.
To date, globalization remains a flawed game whose rules
have been fixed by rich nations. The United
States, Europe and Japan have succeeded in forcing
others to reduce trade barriers in services and in the industrial goods they
excel at producing, while maintaining high tariffs on imported agricultural
goods. Or they dole out lavish farm subsidies the
developed world pays its farmers roughly $1 billion a day in subsidies and the produce is then dumped on the international market at
prices below the real cost of growing it. That has devastating effects on
poorer nations, many of which could improve living standards if only given a
chance to export farm products at fair market prices.
Agriculture, the key export industry for many poor
countries, is the cornerstone of these trade talks
called the "development round" launched at
Doha, Qatar, in late 2001. Nobody doubts what needs to happen to restore the
credibility of the global trading system. Eliminating agricultural
protectionism could help the developing world's income grow by an estimated
$1.5 trillion in the next decade, and that possibility makes the developed
nations' selfish reluctance to abandon their farming subsidies all the more
appalling. Repeated deadlines have already been missed in this effort, and
unless substantial progress is made in Cancϊn, with all the trade ministers
locked in the same conference hall, the chances of coming up with an agreement
by the scheduled end of the development round next year seem slim.
Since World War II, the United States has been a steadfast
champion, and beneficiary, of freer trade and ever-greater global economic
integration. It is in the nation's broadest economic and security interests for
the Bush administration to reassume this leadership role, but doing so entails
offending powerful farming interests cotton and sugar
lobbies, for starters that stand to lose if forced to
compete fair and square against foreign farmers.
Despite the barrier-reducing proposals put forth in the
past by his trade czar, Robert Zoellick, President Bush's record of abandoning
principles to score cheap political points with special interests like steel
unions and the farm lobby raises doubts about whether he will have the stomach
to defend the broader national interest and do right by the world's poorest.
Japan
and Europe have been even more resistant to
the idea of surrendering their harmful agricultural policies. Last month, the United States
and the European Union agreed to a vague joint negotiating framework, roundly
denounced by others as insufficiently ambitious. It fails, for instance, to
stipulate the complete elimination of egregious export subsidies. Mr. Zoellick
was no doubt trying to pull Europe closer to the American position, but he must
now try again, rather than digging in his heels at the side of European
protectionists.
No longer can the two richest trading powers set the
world's trading rules on their own. At Cancϊn, an influential alliance of
developing nations and major agricultural exporters
including Brazil, Thailand, India, Australia and South Africa
will be pressing, and holding out, for a meaningful liberalization of
agricultural trade. The United
States ought to make common cause with them.
August 11, 2003
(NYT)
HARVESTING POVERTY
Napoleon's Bittersweet Legacy.
Hubert Duez, a successful French farmer, has the English Navy
to thank for his good fortune. In response to an English blockade two centuries
ago, Napoleon pushed French farmers to replace imported cane sugar with beet
sugar. And to this day, a passion for this homegrown, temperate root crop
remains a cornerstone of the European Union's protectionist agricultural
policy, much to the detriment of farmers in the developing world.
Mr. Duez, who farms in the Picardy region near the Belgian
border, acknowledges that the arrangement today is hard to justify on economic
grounds. "It is more a political choice for Europe," he said in a
recent interview on his tidy farm, a patchwork of ruffled green (those would be
Napoleon's beets) and gold, punctuated every so often by islands of poplars.
In a fully liberalized global marketplace, Mr. Duez knows
that Europe would produce no sugar whatsoever.
It would be far cheaper to import the sweetener from tropical climates that
Europeans once colonized precisely because they were rich in things like sugar
cane. Poor countries where sugar is one of the few crops capable of bringing in
money on the international market would be deliriously happy if that occurred.
But in a perverse reversal of traditional trade patterns, Europe
ranks among the world's leading sugar exporters. To protect its sugar growers,
the European Union mandates that farmers like Mr. Duez get paid 50 euros per
ton of harvested sugar beets, or five times the world market price, up to an
allotted quota. Mr. Duez runs a well-diversified farm, but the 1,600 tons of
sugar beets he sells every year at an inflated price is by far his most
profitable crop.
The European Union's extravagant contortions to remain in
the sugar business may be the hardest of all its farm policies to defend, much
like the United States'
irrational protection of its cotton growers. (An official at the French
Agriculture Ministry, the most zealous champion of the protectionist status quo
within Europe, candidly referred to sugar as "Europe's cotton" when
discussing farm policy.) Yet so powerful is the sugar lobby in Brussels representing not just farmers, but also monopolistic
processing companies that the crop was excluded from the
European Union's recent modest reform of its $50-billion-a-year common
agricultural policy.
European trade and agriculture officials are sensitive to
powerful criticism by the likes of Oxfam and the World Bank, on behalf of
farmers in the developing world. They are quick to note that in an effort to
even things out, the E.U. does import some cane sugar at its own inflated
internal price from developing nations. That is a bit disingenuous. Not all
poor countries get this special access and those that do are subject to strict
quotas.
Meanwhile, European farmers, eager to profit from the
inflated price, produce far more sugar than European consumers can use. The
rest is dumped on the international market, depressing commodity prices for
farmers elsewhere. (The United States,
which has its own politically connected sugar producers, is Europe's
co-conspirator in this indefensible system.)
Mr. Duez's good fortune, in other words, comes at the
expense of farmers in countries like Mozambique, Brazil and Guatemala, who are
being denied their chance to reap the benefits of globalization. Europeans'
sympathy for the travails of farmers in poor countries creates a kind of split
political personality when coupled with the desire to see their historic and picturesque rural communities stay
just the way they are now. Mr. Duez himself has traveled to Burkina Faso to
teach farmers in that poor West African nation how to build wells. But he
believes that Europe needs to protect its
agriculture from unfettered free trade. In his view, a prevalent one in France,
agricultural trade should be managed between regional blocs, with an eye toward
promoting self-reliance .
This view is at odds with free-trade orthodoxy, not to
mention proven development strategies in which countries benefit when they
focus on what they do best. It also creates an impossible situation for
countries that have little to sell but farm products, and a desperate need to
keep rural residents from migrating en masse to the cities.
Fixing, or at least mitigating, the worst effects of rich
nations' farm subsidies is supposed to be the central effort of the ongoing
"development round" of World Trade Organization talks. In advance of
next month's critical W.T.O. gathering in Cancϊn, European and Japanese
resistance to an aggressive easing of agricultural protectionism is threatening
to derail this effort. (Although Congress might ultimately have something to
say on the matter, right now American negotiators are pushing for serious
subsidy reductions that would prove painful to American farmers.)
Europeans should not allow their farm lobbies to hijack the
union's policymaking and obstruct a new trade deal that could bring hope to
poor countries living in despair and strengthen the credibility of a global
trading system that has helped Europe prosper.
Lifting farm subsidies will surely be a gradual process, but Europe
must start reining them in and stop dumping its surplus harvests below cost on
world markets. Kicking the sugar habit, Napoleon's bequest, would be a good
place to start.
August
5, 2003 (NYT)
HARVESTING POVERTY
The Long Reach of King Cotton.
If it weren't killing them, people in Burkina
Faso might get a good laugh at America's unprofitable
cotton-growing fetish. Burkinabe, after all, are known for their sense of
humor. And what could be more absurd than the sight of the world's richest
nation a fiery preacher of free-trade and free-market
values at that spending $3 billion or $4 billion a year
in taxpayer money to grow cotton worth less than that and selling its mounting
surpluses at an ever greater loss?
But those American subsidies are killing the Burkinabe
farmers, so the inclination to laugh hardens to sorrow and resentment. As in
neighboring Mali and Benin, cotton
has long been the sole bright spot in this country's ever-dismal economic
prospects. White gold, they still call it, though now there's a hint of sarcasm
to the expression. Subsidized American cotton farmers now dump so much product
on the market that it has driven down world prices. So much so that it
currently costs Burkina Faso's cotton industry, traditionally one of the
lowest-cost producers, about a dime more than the prevailing global price to
get a kilo of cotton to international markets.
American farm subsidies, like those in Europe and Japan,
are intended to support a traditional way of life and save farmland from either
development or abandonment. If city-dwelling Americans think of the subsidies
at all, it is to complain about their cost, or to express a vague sense of
satisfaction that we are protecting what seems like a wholesome part of Americana. The idea that
we might be inadvertently ruining the chances of small African farmers never
occurs to us. But it certainly occurs to the people in the cotton districts of Burkina Faso.
The odds have always been stacked against Burkina Faso, a small landlocked country in the
West African Sahel, the region between the Sahara and the Atlantic.
This predominantly Muslim nation, where life expectancy has yet to hit the
half-century mark, ranks third from the bottom in global rankings of living
standards.
Americans send some of their finest young people to places
like Burkina Faso, where there are almost 80 Peace Corps volunteers and plans
to double that number. The United States
also backs debt-forgiveness programs for Burkina Faso and other types of
economic assistance. But Americans would be horrified to learn that all the
good accomplished by dedicated volunteers and millions of dollars in aid is overwhelmed
by the havoc wreaked by Washington's
bloated cotton subsidies. By cutting generous checks to 25,000 American cotton
farmers whose average net worth is nearly $1 million, Washington underwrites massive
overproduction. This results in depressed global prices and a harvest of
poverty for Burkina Faso's
two million cotton farmers.
"America wants us to comprehend the evil posed by
violent anti-Western terrorism, and we do," said President Blaise Compaorι
in an interview in the capital city of Ouagadougou.
"But we want you to equally concern yourself with the terror posed here by
hunger and poverty, a form of terrorism your subsidies are aiding and abetting.
If we cannot sell our cotton we will die."
"King Cotton," the evocative old shorthand for
the supremacy of cotton in Southern culture, still ranks high among the
hierarchy of Washington's
power lobbies. No other crop is subsidized to such an outrageous degree,
enriching so few at a cost so high to millions elsewhere. America's cotton
subsidies, mind you, exceed the gross domestic product of Burkina Faso. Because the federal
welfare program for cotton growers is so generous and unlimited, guaranteeing
farmers an inflated price for every additional pound of cotton they produce,
America's share of the world market has been increasing at a time when global
prices have been crashing. More than half of all cotton grown in this country
is now exported, only because taxpayers subsidize its sale at below production
costs.
All the good will
engendered by American aid and the sterling efforts of Peace Corps volunteers
is washed away by the outrage ordinary Burkinabe cotton farmers feel about the
$180 billion farm bill that Congress approved in 2002. In the small western village of Koumbia, where on a recent sweltering
day women stooped over, rhythmically wielding simple hoes, to weed cotton
plantings, people make a direct connection between their own impoverishment and
that 10-year subsidy authorization passed on the other side of the planet. The
way the people of Koumbia see it, their never-completed schoolhouse might as
well have been pictured on the legislation's title page.
If the United States
terminated its cotton subsidies, commodity prices would rebound to more
realistic levels, allowing third-world cotton farmers to compete and earn a
profit on their crops. And by terminating trade-distorting farming subsidies, Washington would defuse
a potent source of feverish anti-Americanism.
It's hard for
most Americans, who don't think about farm subsidies at all, to take this
problem seriously. It's also hard for farm states, which think of federal aid
simply as a way to help hard-working local farmers, to appreciate how
intensely, and bitterly, the Africans feel. But most of the developing world
believes in the superpower's omniscience. No one in Burkina Faso imagines the impact on
their cotton growers was anything but deliberate.
"If the
United States can go to the moon, which is rather complicated, one would think
it could figure out a way, if it wanted, to help its cotton producers, without
hurting us farmers in Africa," said Franηois Traore, president of Burkina
Faso's National Cotton Producers Union. Many Burkinabe farmers erroneously
believe that President Bush himself pockets sizable cotton-growing subsidies.
Burkina Faso's
hand-picked cotton is the cash crop that permits smallholder farmers to buy
fertilizers and invest in the other crops that get rotated on the land.
"If cotton doesn't sell at a decent price, it affects everything
else," Mr. Traore said. That includes Koumbia's little schoolhouse, whose
third classroom remains unfinished.
July 22, 2003
(NYT)
HARVESTING POVERTY
The Great Catfish War.
For Tran Vu Long, who lives atop his floating catfish trap
on the Mekong River near the border with Cambodia, the recent biannual harvest
day was not the joyous payday it usually is. Mr. Long, a 35-year-old Vietnamese
catfish farmer, sold his flapping fish 40 tons' worth,
all painstakingly weighed and carried in bamboo buckets onto the trading
company's launch at a loss of some $2,000, a small
fortune here.
Mr. Long, who stood sullenly to the side as his hired hands
scooped out seemingly endless gaggles of fish from underneath the space that
doubles as his living room, has Washington politicians to blame. "The United States
preaches free trade, but as soon as we start benefiting from it, they change
their tune," he said.
His misfortunes are just another part of the tale of how
wealthy countries that preach the gospel of free trade when it comes to finding
markets for their manufactured goods can become wildly protectionist when their
farmers face competition. The fate of Vietnam's catfish offers a warning
to poorer nations short on leverage in the world trading system: beware of what
may happen if you actually succeed at playing by the big boys' rules.
After embracing decidedly un-Marxist reforms, Vietnam became
one of globalization's brightest stories in the 1990's. The nation, a onetime
rice importer, transformed itself into the world's second largest rice exporter
and a player in the global coffee trade. The rural poverty rate was slashed to
30 percent from 70 percent.
The normalization of ties between Hanoi
and Washington
brought American trade missions bent on expanding Vietnamese free enterprise.
One of these delegations saw in the Mekong Delta's catfish a golden export
opportunity, with the region's natural conditions and cheap labor affording Vietnam a
competitive advantage. Sure enough, within a few years, an estimated
half-million Vietnamese were living off a catfish trade nurtured by private
entrepreneurs. Vietnam
captured 20 percent of the frozen catfish-fillet market in the United States,
driving down prices. To the dismay of the Mississippi Farm Bureau, even some
restaurants in that state the center of the American
catfish industry were serving the Vietnamese species.
Soon Mr. Long and the other Vietnamese farmers were caught
in a nasty two-front war being waged by the Catfish Farmers of America, the trade group representing Mississippi Delta
catfish farmers. The Mississippi
catfish farmers are generally not huge agribusinesses, and many of them
struggle to make ends meet. But that still does not explain how the United
States, the international champion of free market competition, could decide to
rig the catfish game to cut out the very Vietnamese farmers whose enterprise it
had originally encouraged.
Last year, with the aid of Trent Lott, then the Senate
majority leader, the American catfish farmers managed to persuade Congress to
overturn science. An amendment, improbably attached to an appropriations bill,
declared that out of 2,000 catfish types, only the American-born family named Ictaluridae could be called
"catfish." So the Vietnamese could market their fish in America only by
using the Vietnamese terms "basa" and "tra."
That was only the first step in a bipartisan assault.
Congressman Marion Berry, an Arkansas Democrat, joined in a stupendously
tactless disinformation campaign against the Vietnamese, suggesting that their
fish were not good enough for American diners because they came from a place
contaminated by so much Agent Orange sprayed over the
countryside by American forces during the Vietnam War. Catfish Farmers of
America, for its part, ran advertisements warning of a "slippery catfish
wannabe," saying such fish were "probably not even sporting real
whiskers" and "float around in Third World rivers nibbling on who
knows what."
Not satisfied with its labeling triumph
an old trade-war trick perfected by the Europeans the
American group initiated an antidumping case against Vietnamese catfish. And
for the purposes of this proceeding, Congressional taxonomy notwithstanding,
the fish in question were once again regarded as catfish, not basa or tra.
(Don't try explaining to Mr. Long how two branches of the American government,
conveniently enough, can simultaneously maintain that his fish are two different
creatures.)
Antidumping cases
involve allegations that imports are being sold more cheaply than they are back
home or below cost, practices rightly banned by trade laws. But too often,
domestic industries allege dumping in an attempt to shield themselves from
legitimate competition.
In this case, the
Commerce Department had no evidence that the imported fish were being sold in America more cheaply than in Vietnam, or
below their cost of production. But rather than abandoning the Mississippi catfish farmers to the forces of open
competition, the department simply declared Vietnam a "nonmarket"
economy. The designation allowed it simply to stipulate that there must be
something suspect going on somewhere that Vietnamese
farmers must not be covering all the costs they would in a functioning market
economy. Tariffs ranging from 37 percent to 64 percent have been slapped by the
department on Vietnamese catfish.
Hence Mr. Long's
hardship. Prices along the Mekong crashed, as
the exporters who buy his fish moved to protect their margins. Many farmers are
refusing to sell at a loss. Faced with the prospect of losing their investment,
they might be shocked to learn that our Commerce Department says they do not
operate in a free market.
The other shoe is
expected to drop as early as tomorrow, when the United
States International Trade Commission, an administrative
agency in Washington,
decides whether the American catfish industry was indeed hurt by unfair
competition. Such a finding would make the tariffs permanent.
There is usually
a decided home-field advantage in these proceedings, but Vietnam's cause has been taken up by a
half-dozen senators from both parties, led by John McCain, Hanoi's former prisoner. He considers this
case not only naked protectionism but also a betrayal of the nation's strategic
commitment to use trade to encourage change in a Communist society.
Senator McCain is
right. The catfish war is an obscure story here, but it is front-page news in Vietnam.
Washington's solicitousness on behalf of a few thousand domestic catfish
farmers has stirred a great deal of anti-American resentment in Vietnam, a
country of 80 million, resurrecting images of an imperial bully. One lawyer on
the case compares the Vietnamese public's strong interest in the catfish saga
with Americans' obsession with the Lewinsky scandal.
This all saddens
Nguyen Huu Dung, the general secretary of the Vietnam Association of Seafood
Exporters, who said in a recent interview, "Our nation has a heavy
history, and we try to forget it, try something new based on a spirit of
cooperation and free trade, but now we are made to wonder whether you wish us
ill, as much in the present as you did in the past."
We urge the
International Trade Commission to listen to Senator McCain and his colleagues
and decide this case on its merits. If not, Vietnam will become yet another
case study in the way the United States, Europe and Japan are rigging global
trade rules so they remain the only winners.
July
20, 2003 (NYT)
HARVESTING POVERTY
The Rigged Trade
Game.
Put simply, the Philippines got taken. A charter
member of the World Trade Organization in 1995, the former American colony
dutifully embraced globalization's free-market gospel over the last decade,
opening its economy to foreign trade and investment. Despite widespread worries
about their ability to compete, Filipinos bought the theory that their farmers'
lack of good transportation and high technology would be balanced out by their
cheap labor. The government predicted that access to world markets would create
a net gain of a half-million farming jobs a year, and improve the country's
trade balance.
It didn't happen. Small-scale farmers across the Philippine
archipelago have discovered that their competitors in places like the United
States or Europe do not simply have better seeds, fertilizers and equipment.
Their products are also often protected by high tariffs, or underwritten by
massive farm subsidies that make them artificially cheap. No matter how small a
wage Filipino workers are willing to accept, they cannot compete with
agribusinesses afloat on billions of dollars in government welfare.
"Farmers in the United
States get help every step of the way,"
says Rudivico Mamac, a very typical, and very poor, Filipino sharecropper,
whose 12-year-old son is embarrassed that his family cannot afford to buy him a
ballpoint pen or notebooks for school.
The same sad story repeats itself around the globe, as poor
countries trying to pull themselves into the world market come up against the
richest nations' insistence on stacking the deck for their own farmers.
President Bush deserves credit for traveling to Africa
and trying to focus attention on that continent's plight. But meanwhile,
struggling African cotton farmers are forced to compete with products from
affluent American agribusinesses whose rock-bottom prices are made possible by
as much as $3 billion in annual subsidies. Sugar producers in Africa
are stymied by the European Union's insistence on subsidizing beet sugar
production as part of a wasteful farming-welfare program that gobbles up half
its budget.
Instead of making any gains, the Philippines has lost
hundreds of thousands of farming jobs since joining the W.T.O. Its modest
agricultural trade surpluses of the early 1990's have turned into deficits.
Filipinos, who like referring to their history as a Spanish and American colony
as "three centuries in the convent followed by fifty years in
Hollywood," increasingly view the much-promoted globalization as a new
imperialism. Despair in the countryside feeds a number of potent
anti-government insurgencies. Leaders who hitched their political fortunes to
faith in the free market have grown bitter.
They include Fidel Ramos, who was Washington's
staunch ally when he managed the Philippines' economic opening as
president in the mid-1990's. Now, Mr. Ramos blames rich nations' unfair trade
practices especially their "hidden farm subsidies
and other tricks" for much of the suffering in the
countryside. Given how long the world's economic powers have been trying to
persuade the rest of the world to embrace a more open global economy, Mr. Ramos
said in an interview, he was taken aback by their unwillingness to level the
competitive playing field. "Poor countries cannot afford to be on the
short end of this deal for long," he said. "People are in real need.
People are dying."
Mr. Ramos's plea could have emanated from any number of
countries in the developing world, home to 96 percent of the world's farmers.
It is a plea that needs to be heeded, before it is too late.
The United States,
Europe and Japan
funnel nearly a billion dollars a day to their farmers in taxpayer subsidies.
These farmers say they will not be able to stay in business if they are left at
the mercy of wildly fluctuating prices and are forced to compete against people
in places like the Philippines, who are happy to work in the fields for a
dollar a day. So the federal government writes out checks to Iowa corn farmers to supplement their
income, and at times insures them against all sorts of risks assumed by any
other business. This allows American companies to then profitably dump grain on
international markets for a fraction of what it cost to grow, courtesy of the
taxpayer, often at a price less than the break-even point for the impoverished
third-world farmers. If all else fails, wealthy nations simply throw up trade
barriers to lock out foreign commodities.
The system is
sold to the American taxpayer as a way of preserving the iconic family farm,
which does face tough times and deserves plenty of empathy, but it in fact
helps corporate agribusiness interests the most.
By rigging the
global trade game aga