An update on recent technical problems and more from the admin: https://forums.penny-arcade.com/discussion/250292/on-technical-difficulties-mod-coverage-and-other-things/p1?new=1
Options
Deleted
Andrew_Jay
Registered User regular
Registered User regular
-
Andrew_Jay on
0
Posts
I think they should just go all free trade with each other, and tariff the US and EU crops.
Pssh. I wouldn't go as far to to congratulate anyone for the talks being a failure (thus far). This is one of those situations where everyone is losing (except for the agribusinesses in the United States and Europe). And they really were a failure when George W. Bush lost his trade authority last year.
Heh. I find your statement and avatar to be in conflict.
Seriously, I think the WTO is going to find itself having a harder time now that the World Bank and IMF aren't as powerful as they used to be.
Friedman wouldn't exactly be in favour of farm subsidies...
I agree with the sentiment. I was always very pro free trade untli the George Soros' of the world started messing with entire economies.
I read something once that apty described the past situation (I think its improved somewhat). We used to push countries specifically, to open their financial markets and allow their currency to float. This seems like a good idea in general, but in practice it often led to countries having their financial markets and currency collapse. The thing is, the economies in many countries (especially some African countries) is just incredibly small compared to the US.
I was reading that some country (Botswana I wanna say) had a GDP roughly equal to a middle class town of 30,000 people in the US. So when forced to open up their markets to global influence they were like a plastic toy boat in an ocean.
How are they in conflict?
Friedman would be all for total free trade. The EU and US don't want free trade, they want trade that best benefits them.
Agreed. Plus, generally, the really poor countries want to export agricultural products, which there isn't a big demand for in other poor countries.
Actually they want to have competitive prices within their own markets and/or equivalent ones. Cotton farmers in India have a high suicide rate thanks to the amount of debt they go into trying to compete with the south.
You misunderstand me. I was responding to small countries getting free trade agreements with eachother. I understand and support their desire to be able to sell their products to larger economies, like ours.
I think that they'd be quite happy tariffing the shit out of our crops while being able to actually sell their stuff in their own countries and in other developing countries, tariff free.
No, but it would give them a stronger case at the negotiating table to demand a reduction in farm subsidies in the US and EU.
http://www.npr.org/templates/story/story.php?storyId=93081721
Here's the third part of it, aired this morning.
That would make the price of food in their countries skyrocket. Their farmers might like it - as industries always like government protection whether it comes in the form of subsidies, tariffs, or quotas - but their general populace would get screwed. You gotta understand most of these countries are poor; people can't afford even small increases in price without having their survival threatened. And the tariff would cause more than just a small increase, especially at the levels you seem to be recommending.
As a matter of principle, unless your country is the price-setter for a good on international markets, government protection of that good is going to cause far more harm than good to that country, even if it improves the industry in question. In macroeconomic terms, the damage to consumers is significantly higher than the benefit to the industries.
Furthermore, our goal should be to reduce and eliminate trade protection across the board. Setting up tariffs usually draws retaliation from the competing country and results in trade wars, which reduce everyone's standard of living.
Exactly. Absent the US suddenly giving up subsidies (haha), this is the only viable near term strategy I can see for making real free trade happen.
Two points. One, you need to understand that in many/most of these countries, agriculture is the backbone of their economy. When that industry is being systematically destroyed by unfair foreign competition (i.e. dumping via subsidies) it's going to have very real effects on the well being of that economy of that country as a whole. Their infrastructure is being demolished.
second, "our goal" is not the goal of the USA. They're interested in getting the most favorable rules possible, and they won't give up crop subsidies until they've been forced to. The only way I can see this happening is with developing countries teaming up against the the US and EU. Which is exactly what I reccomend. And then use that bargaining power to force real free trade. This is what they're trying to do. With Brazil leading the pack.
It's a "damned if you put tariffs, damned if you don't" sort of situation. What I am trying to tell you is that you'd be more damned if you did, than you would be if you didn't.
The reason is that tariffs would hurt the country in the short-run. The moment they implement tariffs, the price of their food is going to skyrocket. Whereas they aren't going to realize the benefits of industry protection for years, maybe decades, because industries - especially agriculture - take a long time to develop. What are they going to do until then? You gotta realize most of these countries are poor as hell; they don't have the extra wealth to absorb the blow of an increase in the price of essential goods. If the price of food increases a lot of people would starve to death.
Furthermore, tariffs and subsidies by their very nature cause deadweight losses. The US is a wealthy country so they can afford the DWL; the others can't.
Yes, they'd have more bargaining power. Just not nearly enough to tip the scales.
The only solution to this situation is for the US and EU to come around and reduce their subsidies. Sad and hopeless, but true. Answering subsidies with tariffs is just going to make them increase their subsidies in retaliation. We don't want trade wars here.