Don't get too optimistic about

Don't get too optimistic about Cancun

Freer trade in farm products is important to poor countries. It is a key part of the ongoing "Doha Round" of trade negotiations. But these negotiations are not going well. Jacob Levy is not optimistic about a breakthrough at the Cancun meeting of ministers this September. Find his thoughts here, in this New Republic column: "Unequal Protection".

And it is good for us:

"Agricultural protectionism--the combination of quotas, tariffs, and subsidies for farm products--may be the purest example of destructive special-interest politics ever created. Rich countries--with a few exceptions, such as Australia--burden their own populations three times over. The policies cost taxpayers directly--the atrocious 2002 U.S. farm bill is slated to cost $180 billion over ten years. (Worse, annual unbudgeted "emergency" farm spending during the late 1990s accounted for a great deal of the spending boom that squandered much of the predicted budget surplus long before the first Bush tax cut took effect.) In return for their largesse, taxpayers get the privilege of paying higher prices as consumers (and, of course, inflated prices for basic foodstuffs hit the poorest proportionately hardest). And, by locking up an excess of labor and capital in an agribusiness sector that couldn't turn an honest profit on its own, agricultural protectionism inhibits productivity growth, preventing shifts in employment and investment to more productive parts of the economy."

But, while advocating free trade, the current administration has repeatedly adopted schemes that inhibit trade:

"The administration has allegedly been pursuing a strategy of capitulation to protectionist interests in the short term in order to build political capital for the big fights down the road: eventual ratification of the accords from the Doha round and for a Free Trade Area for the Americas (FTAA). But there is neither theory nor evidence to support the idea that ratification will go more smoothly because of three years of surrender. Every quota, tariff, and subsidy organizationally strengthens the special interest that it benefits, not only keeping employment in those sectors artificially high compared to more productive uses of the same labor, but also entrenching the sector's dependence on the protective measures. The steel industry, for example, won't be any less hostile to the FTAA than it otherwise would have been; but the organized steel lobby, dedicated to protecting the least competitive American steel producers, will be stronger than it would have been. Conservatives occasionally attempt to initiate a political spiral in their favor by "defunding the left"--cutting government spending to those groups, such as Legal Services, that lobby or sue for further government spending--and by privatizing the federal workforce, which undercuts the political power of government employees' unions. Whatever its ethical implications, the idea makes tactical sense--and is precisely the contrary of the strategy the administration has been pursuing on trade."

What are the odds that the administration will stand up to special interests now and try to free up trade?

"Unfortunately, the six months before the Iowa caucuses are the period in which the president is least likely to feel political pressure on the issue. Indeed, one can almost guarantee that Democratic presidential candidates--some out of conviction, some out of electoral imperatives, and some who are unable to distinguish between the two--will be calling for more "help for America's farmers," and will condemn Bush for any tentative moves he might make toward openness."

The whole thing is worth reading. I learned about this over at The Volokh Conspiracy.