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

"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."

There is our "free trade"


2 posted on 12/05/2005 7:09:14 AM PST by stephenjohnbanker
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To: 1rudeboy
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.
[...]
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.

The grain production in Japan will be eliminated and in case of any disruption of trade, Japanese people will STARVE!

3 posted on 12/05/2005 7:09:27 AM PST by A. Pole (Professor Kirke: Its all in Plato! Dear me, what do they teach them in the schools nowadays?")
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To: stephenjohnbanker

Where?


4 posted on 12/05/2005 7:10:58 AM PST by 1rudeboy
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To: stephenjohnbanker

We can't have free trade if our trading partners don't respect the free market.


5 posted on 12/05/2005 7:25:01 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: Ace of Spades

"We can't have free trade if our trading partners don't respect the free market."

You have it all wrong. Free trade works as long as I can buy cheap stuff and my portfolio climbs.
The rest of it is all details. / < sarcasm>


6 posted on 12/05/2005 7:27:10 AM PST by brownsfan (It's not a war on terror... it's a war with islam.)
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To: 1rudeboy
The WTO's members are not flocking to the free trade banner.

Blame the Asian Merchantilists.

7 posted on 12/05/2005 7:29:56 AM PST by Last Dakotan
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To: brownsfan

That's right. Buying (unnecessarily) expensive stuff and a falling portfolio are not only ideals, but evidence of patriotism. /sarc


8 posted on 12/05/2005 7:32:07 AM PST by 1rudeboy
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To: brownsfan

"You have it all wrong. Free trade works as long as I can buy cheap stuff and my portfolio climbs.
The rest of it is all details. / < sarcasm>"

I just love that mentality. Those cheap prices are great until our paychecks start dropping along with them.


9 posted on 12/05/2005 7:33:12 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: 1rudeboy
but unless ministers can bridge the chasm on farm tariffs, free movement of persons that too could be lost.

Anything to wipe out our borders and interfere with the sovereign governance of our country is AOK with the "free traders".
10 posted on 12/05/2005 7:33:13 AM PST by hedgetrimmer
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To: Ace of Spades

So we should screw the people with low wages now, and avoid the wait?


11 posted on 12/05/2005 7:35:39 AM PST by 1rudeboy
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To: hedgetrimmer
You are master of the non sequitur. I bow before you.
12 posted on 12/05/2005 7:38:45 AM PST by 1rudeboy
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To: Ace of Spades

Please don't make sense here. It rubs the anything for a buck communist chinese supporters the wrong way.


13 posted on 12/05/2005 7:42:08 AM PST by em2vn
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To: stephenjohnbanker

Free Trade in its current form is an absolute scam.

Trade agreements are bilateral between two nations, and should remain that way.

One nation wishes to gain access to anothers markets, it should earn them...

Our biggest failure as the world's superpower has been in the area of trade.

Instead of using it to rid the world of despots and improve liberty around the world, we have burned the opportunity wholesale.

With large multinational organizations with no accountability, we export our wealth wholesale, to nations that execute political dissenters wholesale...

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


14 posted on 12/05/2005 7:43:10 AM PST by HamiltonJay
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To: 1rudeboy
WTO talks are supposed to be a "development round," and migration has an enormous role to play both in raising global living standards and reducing global income disparities.

Should the guest worker solution be applied in Europe and North America in the hope of avoiding the social frictions that come with permanent settlement? Or is dependence on such a foreign underclass without political rights morally corrosive, a modern form of bonded labor, of non-chattel slavery?


The "free traders" at the WTO push 'migration' at the Doha round. The "free traders" refuse to enforce sovereign borders because it creates a "barrier to trade". The "free traders" are casting the world into chaos.
15 posted on 12/05/2005 7:43:12 AM PST by hedgetrimmer
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To: hedgetrimmer

Who/what are you quoting? Are you on the proper thread?


16 posted on 12/05/2005 7:44:50 AM PST by 1rudeboy
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To: Ace of Spades

START??????

Better wake up to reality... it takes 2 incomes per househould just to match in real dollars what 1 did 30 years ago.


17 posted on 12/05/2005 7:44:52 AM PST by HamiltonJay
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To: em2vn

Ever notice that arguing with a free trader is like arguing with a communist? They're so convinced of their own righteousness that there's no point.


18 posted on 12/05/2005 7:45:38 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: A. Pole

" The grain production in Japan will be eliminated and in case of any disruption of trade, Japanese people will STARVE!"

They always seem to assume that everything will be perfect. When you degrade or destroy a nations ability to feed itself you place that nation at grave risk. Of course the profiteers could care less.


19 posted on 12/05/2005 7:46:49 AM PST by dljordan
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To: HamiltonJay

What was that, exactly? 4-room house, no garage or a/c, and a 12" b/w TV?


20 posted on 12/05/2005 7:46:55 AM PST by 1rudeboy
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To: 1rudeboy

Yea, a 4 room house no garage or A/C and a 12" B/W? Uh... where were you in the 70s? You better go brush up on your time reference my friend.


21 posted on 12/05/2005 7:48:18 AM PST by HamiltonJay
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To: HamiltonJay

No need to tell me, my wife and I both work. It's getting to be that even double-income families can't afford to own a home. You would think something's gotta give.


22 posted on 12/05/2005 7:49:08 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: Ace of Spades

What makes your comment doubly ironic is that your typical protectionist not only bases his or her argument on pure emotion, but shares much in common with the political Left.


23 posted on 12/05/2005 7:49:24 AM PST by 1rudeboy
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To: 1rudeboy

Lets talk about the Doha round. Do you claim farm tariffs are the only topic on the table?


24 posted on 12/05/2005 7:49:41 AM PST by hedgetrimmer
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To: 1rudeboy

You just wait 15 years, Chief. Then you preach to me the virtues of free trade.


25 posted on 12/05/2005 7:50:19 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: 1rudeboy

Yes, I got called a liberal! Woohoo! Now I need a "Go back to DU" and I'll have bingo.


26 posted on 12/05/2005 7:51:18 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: HamiltonJay
The only reference that I'm interested in is your idea that your individual standard-of-living has not increased since the 1970's? What's your reference point?
27 posted on 12/05/2005 7:53:15 AM PST by 1rudeboy
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To: 1rudeboy

"What makes your comment doubly ironic is that your typical protectionist not only bases his or her argument on pure emotion, but shares much in common with the political Left."

What makes your free trade argument amusing is that it's based on half-truth and shortsightedness.

I am not a protectionist, just a realist. A large part of China's workforce is slave labor. How exactly do you plan to compete with that?


28 posted on 12/05/2005 7:53:34 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: Ace of Spades

I must've missed the FR rule that specifies that you are entitled to refer to your opponents are "communist," yet I cannot.


29 posted on 12/05/2005 7:55:40 AM PST by 1rudeboy
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To: 1rudeboy

Probably the same one that allows you to refer to your opponents as liberals or DUmmies. Get over it.


30 posted on 12/05/2005 7:57:21 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: 1rudeboy

Household incomes in real dollars have been virtually flat since 1970... this is in spite of the fact that in 1970 the typical household was 1 income, and now it is 2 income.

Department Of Labor will gladly back up what I have said.



31 posted on 12/05/2005 7:58:37 AM PST by HamiltonJay
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To: 1rudeboy

I look forward to the day when free traitin' will be discarded upon the rubbish heap of history; and the advocates of that misguided policy will be accorded the disrespect they've earned.


32 posted on 12/05/2005 7:59:51 AM PST by neutrino (Globalization is the economic treason that dare not speak its name.(173))
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To: Ace of Spades
Probably the same one that allows you to refer to your opponents as liberals or DUmmies.

Where did I do that? And does the following comment sound familiar?

"Ever notice that arguing with a free trader is like arguing with a communist?"

33 posted on 12/05/2005 8:00:06 AM PST by 1rudeboy
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To: neutrino

Ah, a "true patriot" chimes in.


34 posted on 12/05/2005 8:01:07 AM PST by 1rudeboy
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To: HamiltonJay

My wife and I have been treading water for the past 3 years. We have had small cost of living increases but inflation, raising health care insurancea, and now gas that is about 30+ cent a gallon more today then this time last years we are just staying where we were. And the sad part is when we look at many of our friends we are happy to be doing that.


35 posted on 12/05/2005 8:01:23 AM PST by TXBSAFH ("I would rather be a free man in my grave then living as a puppet or a slave." - Jimmy Cliff)
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To: 1rudeboy

Yep, I said it and I mean it, so get over it. Did I hurt your feelings?


36 posted on 12/05/2005 8:01:44 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: HamiltonJay

And has you standard of living increased, or decreased?


37 posted on 12/05/2005 8:02:32 AM PST by 1rudeboy
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To: Ace of Spades

No, not at all. I was simply trying to determine whether your attention span is measured in seconds or minutes.


38 posted on 12/05/2005 8:03:42 AM PST by 1rudeboy
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To: Ace of Spades

Oh don't worry it will, even if this rude fellow doesn't want to believe it will.

He wants to cite "standard of living" as sign of growth.. instead of REAL WEALTH.

Problem with that is, is that most of America's "standard of Living" today is on DEBT... where 30 years ago that sort of credit access didn't exist. So we are barely treading water, but borrowing even more in terms of real dollars... and he thinks this is a good thing, and a sign of great things.

We have no real wealth, but hey, we've got a 42" plasma... aren't we doing so much better than our parents? In a single word "NO". Families in the 70s had debt on 2-3 primary things.. HOUSE and CARS... maybe a Durable Good from Sear's... That was it. Now nearly EVERYTHING is bought on credit.... a savings rate on -2.2%....

The only thing proping it up at this point is paper value in Real Estate.. which has already turned nationally (though not as much as its going to)... And when interest rates go up, money supply tightens, winfall appreciations get taxed (which is coming), etc etc etc.. you are going to see some serious "give" across the board.


39 posted on 12/05/2005 8:07:48 AM PST by HamiltonJay
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To: HamiltonJay

"Instead of using it to rid the world of despots and improve liberty around the world, we have burned the opportunity wholesale.

With large multinational organizations with no accountability, we export our wealth wholesale, to nations that execute political dissenters wholesale..."

Lemme guess....you have traveled overseas more than once. One rarely gets that kind of wisdom from the average untravelled Joe .


40 posted on 12/05/2005 8:08:06 AM PST by stephenjohnbanker
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To: 1rudeboy
"Ever notice that arguing with a free trader is like arguing with a communist?"

It appears to be true, given the techniques they use to defend their position were honed by Saul Alinski.
41 posted on 12/05/2005 8:09:03 AM PST by hedgetrimmer
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To: 1rudeboy

Honestly, decreased, because I got wise to debt living, and live within my means now. As well as more and more income going to health care, energy and general inflation.. it has flatlined or declined since 2001.

You don't build wealth on debt... citing "standard of living" when its being payed for by debt is a fools errand. But, hey... enjoy the errand.


42 posted on 12/05/2005 8:10:38 AM PST by HamiltonJay
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To: 1rudeboy

You realize all you're doing is proving my point, right?


43 posted on 12/05/2005 8:12:33 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: hedgetrimmer

And demonstrated by you in reply #15.


44 posted on 12/05/2005 8:14:51 AM PST by 1rudeboy
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To: Ace of Spades

Point? You actually have one?


45 posted on 12/05/2005 8:15:28 AM PST by 1rudeboy
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To: HamiltonJay

I suspect you're right. There's going to be quite a wild time in this country when we find we've been living beyond our means. I think of what happened to Japan when their real estate bubble burst and I shudder.


46 posted on 12/05/2005 8:15:49 AM PST by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: 1rudeboy
And demonstrated by you in reply #15.

Not really. Nothing personal in my comment at all, unless you think "free trader" means 1rudeboy and no one else.
47 posted on 12/05/2005 8:27:17 AM PST by hedgetrimmer
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To: Ace of Spades

"I just love that mentality. Those cheap prices are great until our paychecks start dropping along with them."

Another poster said it very well: It's like watching someone cut their own throat in slow motion.

It's a reflection of our "don't worry about the future or R&D, just make a profit this quarter" business environment. We are so taken by instant gratification, that when the impact hits, people will be totally confused.


48 posted on 12/05/2005 8:29:24 AM PST by brownsfan (It's not a war on terror... it's a war with islam.)
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To: 1rudeboy

"That's right. Buying (unnecessarily) expensive stuff and a falling portfolio are not only ideals, but evidence of patriotism. /sarc"

I know you are anti-union, and somewhat confused. That's ok, I can be patient with the challenged.
And how will you weather the storm when your domestic customer base shrinks? Can you expand your markets to China where the average wage is a fraction of what it is here? I wonder.


49 posted on 12/05/2005 8:33:06 AM PST by brownsfan (It's not a war on terror... it's a war with islam.)
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To: Ace of Spades; 1rudeboy
Ace of Spades in 1993:

You just wait 1 year; no, 5 years; no, wait, 10 years; no, really, in 15 years, Chief, that NAFTA agreement is really going to kill our economy and cause a massive loss of wealth and incredible unemployment. Then you preach to me the virtues of free trade.

50 posted on 12/05/2005 8:39:16 AM PST by Mase
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