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Free trade bandwagon loses its steam
The Age (Australia) ^ | 6. December 2005 | Tim Colebatch

Posted on 12/05/2005 6:56:18 AM PST by 1rudeboy

IN THE next six months or so, the world has to agree on a new set of rules to reform global trade. Yet as trade ministers prepare for a critical meeting in Hong Kong next week, their ultimate choices could be between no reform at all, or reform that barely moves the goalposts.

That prospect might seem odd to Australians, who are used to governments promoting free trade regardless of public opinion.

But that is not the attitude of governments in most of the World Trade Organisation's 150 member countries. They approach trade negotiations as opportunities to gain market access, not to give it.

And so, after four years of talking, the WTO's Doha round negotiations have failed to bridge a chasm on the central issue of trade reform: how to cut tariffs on farm produce so that low-cost farmers in countries such as Australia get access to the high-cost markets of Europe, Japan, Korea, Taiwan and the US.

A valuable new book edited by World Bank economists Kym Anderson and Will Martin,

Agricultural Trade Reform and the Doha Development Agenda , shows how unbalanced trade rules are now.

In the rich countries, tariffs on manufactures now average just 3 per cent, yet tariffs on farm produce average 22 per cent. On some, they are astronomical: 94 per cent on sugar to the US, 153 per cent on beef to Europe, and 693 per cent on wheat to Japan.

Export subsidies are banned in manufacturing, yet thrive in agriculture. OECD farmers receive a staggering $A320 billion a year in subsidies. Anderson, an Adelaide economist, and Martin estimate that almost two-thirds of all potential gains from full trade liberalisation would come in agriculture.

Removing all trade barriers, say Anderson, Martin and Dominique van der Mensbrugghe, would lift the world's output by $US287 billion ($A385 billion), as resources move from high-cost producers to low-cost producers, allowing far more to be produced.

On their numbers, all countries gain, although the big winners would be countries scrapping high farm protection — Europe, Japan, Korea and Taiwan — as cheap imported food frees up money for consumers and governments to spend on other things.

Australia would be another winner, with a 1 per cent rise in national income. That's not much, but at least it's more than the 2.4 billion people in low-income countries would get.

John Howard, who keeps telling us trade reform is the cure for global poverty, might take note: the World Bank estimates that complete free trade would lift the incomes of the world's poor by just $A9 a head. It would give more income to the 24 million people in Australia and New Zealand than to the 720 million in sub-Saharan Africa. Of course, that's just modelling, based on assumptions that could be wrong: such as assuming that elderly European, Japanese and Korean farmers whose farms become unviable will find jobs doing something else.

Real-world outcomes can be very different from those in models.

The WTO's members are not flocking to the free trade banner. There has been real progress in some areas, but unless ministers can bridge the chasm on farm tariffs, that too could be lost.

There have been two big steps. The European Union independently reformed its farm subsidies so they do not act as price supports, began slashing its sugar and cotton subsidies, and offered to scrap export subsidies.

On tariffs, however, the EU's proposal would exempt up to 175 types of farm products from change — enough, say Australian officials, to block any real market opening.

Second, key developing countries such as India and Brazil have flagged that they are willing to cut manufacturing tariffs if the EU, Japan and Korea agree to genuinely open their agricultural markets.

But EU trade commissioner Peter Mandelson insists that he has offered everything he can under the mandate given him by the 25 EU governments. The EU right now cannot even agree on its budget. A second round of farm reforms could be beyond it.

Back when the WTO was known as the General Agreement on Tariffs and Trade, it was seen as the only international body that worked. But that was so because the EU and US decided the outcomes, and everyone else had to accept them.

The WTO no longer works that way, as developing country ministers showed at Seattle (1999) and Cancun (2003), when they refused to be railroaded into supporting the developed countries' agenda.

The question now is whether the WTO can work at all. If not, the trade game now is every man for himself.

And China, with its undervalued currency, will keep winning.

Tim Colebatch is economics editor.


TOPICS: Business/Economy; Editorial; Foreign Affairs; Government; News/Current Events
KEYWORDS: doha; freetrade; wto
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To: Logophile

Your answers...

1- "Slave Labor" means prison labor, both in China and North Korea (which marks many of its goods as Made in China for sale in the West).

2- China's labor force numbers approx. 760 million. There are approx. 6.8 million people in Chinese labor camps and an unknown but significant number in North Korea.

3- Is slave labor more productive than free labor? Who knows. Certainly, the labor cost of such a workforce is close to zero. And you can't compete with that.


81 posted on 12/05/2005 10:55:51 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: hedgetrimmer
Because the "free movement of persons" is part of the GATS and will be negotiated at the Doha this month,...

I suppose, then, that you can prove to us where illegal immigration didn't exist prior to GATT? As a conservative, you undoubtedly supported Reagan. Did illegal immigration exist under his watch? Did he not create a pathway for 3 million illegals to become legal?

Maybe you should find an immigration thread to vent on instead of always coming to trade threads to sell your nonsense.

82 posted on 12/05/2005 10:58:59 AM PST by Mase
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To: stephenjohnbanker; HamiltonJay
No, it is NOT.

Is too!!

Federal Reserve, page 110

The bulk of that "NET WORTH" is tied up to PAPER appreciation in their homes..

Incorrect. Unless the protectionist definition of bulk is 21%?

not to mention, that most folks have taken nearly every ounce of equity out of it as well.

Incorrect. Since owners equity in real estate is nearly 57%.

83 posted on 12/05/2005 10:59:22 AM PST by Toddsterpatriot (The Federal Reserve did not kill JFK. Greenspan was not on the grassy knoll.)
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To: 1rudeboy

Just as suspected. Numerous calls for government intervention, regulation and control of the economy. Price controls, subsidies, rationing, limited choices, increased taxes just a few of the gifts of protectionism. When you look at the economy is the absence of the science of economics, that leaves only emotions as your guide.


84 posted on 12/05/2005 11:02:38 AM PST by FFIGHTER (Character Matters!)
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To: Mase

And the overwhelming majority of that is paper value on RE appreciation, which is NOT guaranteed. 8 year market cycles on average... when interest rates go up, and tax write offs disappear.. you will see housing values decline (which they already are doing in much of the nation)... and you will see lots of that 50 TRILLION go up in smoke...


85 posted on 12/05/2005 11:05:46 AM PST by HamiltonJay
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To: Toddsterpatriot

57% hahahahaahahah.. not remotely in the Single Family Home... Most folks, other than retirees who are free and clear are nowhere near 60% equity position.


86 posted on 12/05/2005 11:06:47 AM PST by HamiltonJay
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To: HamiltonJay
Better wake up to reality... it takes 2 incomes per househould just to match in real dollars what 1 did 30 years ago.

That little factoid is difficult to hide.

87 posted on 12/05/2005 11:11:26 AM PST by Jigsaw John
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To: Toddsterpatriot

That includes seniors whose homes are paid off. If you cut that off at age 50, the numbers would shock you.


88 posted on 12/05/2005 11:12:53 AM PST by stephenjohnbanker
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To: HamiltonJay
and you will see lots of that 50 TRILLION go up in smoke...

With homeowner equity only accounting for 21% of our net worth, just how bad is your housing crash going to be? When was the last time we had a year over year decline in aggregate real estate values in this country?

Family net worth has doubled in the past decade. Your vision of a society creating fantasy wealth out of debt just can't be proven - other than you saying it is so.

89 posted on 12/05/2005 11:13:18 AM PST by Mase
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To: Jigsaw John

Yea, they can spin all they want, but they can never address that one... so they usually ignore it.. or try the whole "standard of living" spin.


90 posted on 12/05/2005 11:15:07 AM PST by HamiltonJay
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To: HamiltonJay

The Feds also came out with a study that said 50 % of economic growth was real estate related.


91 posted on 12/05/2005 11:15:22 AM PST by stephenjohnbanker
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To: Mase

You really didn't address Hedgetrimmer's remarks. I don't think that he must restrict his remarks to a thread of your chosing. Currently immigration and trade are inseparable issues. I find his post to be apply placed. If,however,as it appears, you support open borders without any restrictions for the expressed purpose of depressing wages, then I would seriously question your conservative credentials though I better understand your seeking to drive someone from expressing an opinion that differs from yours.
It seems that you find President Reagan's error in dealing with illegal immirgration to be an error worthy of repeating. He certainly was a giant of 20th century American politics but he wasn't without error. In fact I would think that over the course of the interceding period since his administration one would see just how his illegal immigration policy helped lead to the dire situation we are now in with illegal immigration.


92 posted on 12/05/2005 11:19:06 AM PST by em2vn
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To: HamiltonJay
Most folks, other than retirees who are free and clear are nowhere near 60% equity position.

Hmmm...that's a far cry from "not to mention, that most folks have taken nearly every ounce of equity out of it as well".

57% hahahahaahahah.. not remotely in the Single Family Home...

If you say so. You've been so accurate on this thread so far. LOL!!

93 posted on 12/05/2005 11:22:41 AM PST by Toddsterpatriot (The Federal Reserve did not kill JFK. Greenspan was not on the grassy knoll.)
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To: Mase
I suppose, then, that you can prove to us where illegal immigration didn't exist prior to GATT?

GATT makes all (im)migration legal under the mode 4 rule. The idea of "free movement of persons" grants all the third world countries access to remittances, which were pretty much nonexistent before the GATTs and the WTO. Remittances are the WTO's giveaway to "poor countries" so they will sign FTAs with "rich countries". Its a huge scam, inextricably tied to "free trade" no matter how you deny it. Just ask Ghana and Bangladesh. They are the shining stars of the Doha round and they are demanding their "fair share" of the looting of the American economy.
94 posted on 12/05/2005 11:25:17 AM PST by hedgetrimmer
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To: HamiltonJay; stephenjohnbanker
Most folks, other than retirees who are free and clear are nowhere near 60% equity position.

When these retirees die, who will they be leaving this incredible amount of wealth to? There is going to be a massive transfer of wealth from one generation to the next in this country. If Congress repeals the death tax, that transfer will only increase in size -- as it should.

95 posted on 12/05/2005 11:26:46 AM PST by Mase
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To: FFIGHTER
Numerous calls for government intervention, regulation and control of the economy

Exactly the role of the WTO.
96 posted on 12/05/2005 11:27:21 AM PST by hedgetrimmer
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To: stephenjohnbanker
That includes seniors whose homes are paid off. If you cut that off at age 50, the numbers would shock you.

I doubt it.

97 posted on 12/05/2005 11:29:59 AM PST by Toddsterpatriot (The Federal Reserve did not kill JFK. Greenspan was not on the grassy knoll.)
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To: HamiltonJay

>>>We are squandering God's providence and grace.. and there will be a price to pay for it.<<<<


Worth repeating bump


98 posted on 12/05/2005 11:31:20 AM PST by investigateworld (Abortion stops a beating heart)
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To: em2vn
Currently immigration and trade are inseparable issues

Why, because you say so? LOL

If,however,as it appears, you support open borders without any restrictions

And, other than your hyper-active imagination, you would get this from where?

for the expressed purpose of depressing wages

I support depressing wages? Hardly. The facts prove real wages for all workers have increased since NAFTA was passed. How do you explain that?

then I would seriously question your conservative credentials though I better understand your seeking to drive someone from expressing an opinion that differs from yours.

Yes, this is what you guys are all about isn't it? Trying to prove that protectionists are the real conservatives. I suppose real conservatives vote for candidates like Pat Buchanan while those who support free trade vote for candidates like Reagan and Bush. I like to think that a real conservative can get more than 0.004% of the popular vote however.

...one would see just how his illegal immigration policy helped lead to the dire situation we are now in with illegal immigration.

We do see it. Deport all illegals and build a wall. No argument from me. Of course, if we did that, what would hedgetrimmer have to complain about?

99 posted on 12/05/2005 11:42:54 AM PST by Mase
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To: Ace of Spades
2- China's labor force numbers approx. 760 million. There are approx. 6.8 million people in Chinese labor camps and an unknown but significant number in North Korea.

So, according to your figures, slaves account for 0.89% of all workers in China. That does not sound like a serious threat.

3- Is slave labor more productive than free labor? Who knows. Certainly, the labor cost of such a workforce is close to zero. And you can't compete with that.

I would argue that free economies are more productive than less-free economies. That is one reason the Soviet Union no longer exists. And it is a reason why China will have a difficult time surpassing the United States as an economic power. (Assuming, of course, that the United States remains free.)

As for competing with slave labor, that should not be a problem. The labor costs of slavery are not quite zero: slaves have to be housed, fed, and guarded. Otherwise, the slaves will die or escape, and the slave masters will have to find new slaves. Unless the new slaves are employed solely as unskilled labor, they have to be trained just as a free worker must be.

Moreover, labor costs are not the only variable; output and quality are crucial. There are few incentives for a slave to work as hard or as carefully as a free worker. And even if it were possible to force a slave to work hard, he cannot be forced to innovate. That is, a slave will do exactly what he is forced to do; he is not likely to do more of his own accord.

100 posted on 12/05/2005 11:46:09 AM PST by Logophile
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