The AP reports that the WTO meeting in Japan has ended without progress on reducing or eliminating farm subsidies and tariffs.
Japan, which has a 490% tariff on foreign rice, shows no interest in levelling the playing field. Agriculture minister Tadamori Oshima "[wonders] whether creating the same market rules for agriculture as for industry will really contribute to the happiness of people around the world." India also supports the status quo because "650 million people [in India] are dependent for their livelihood on agriculture," according to Commerce Minister Arun Jaitley.
I can at least understand where Japan is coming from - given the continuing static nature of Japan's economy and the LDP's huge dependence on the rural vote, mobs of unemployed farmers would be the government's worst nightmare.
India's problem, on the other hand, is that government intervention in the domestic agriculture market has made a huge mess of things, with tons and tons of grain rotting away in government depots while millions starve. The citizens of India would benefit immensely from both reductions in first world tariffs and less government intervention in the domestic market. 650 million farmers! Now that's a big interest group.
The rate of growth of the world economy over the coming decades will depend to a large degree on the extent of trade liberalization - the greater the liberalization, the greater the growth (the biggest driver of poverty reduction). The US did its part to set things back last year when we implemented the Steel tariffs and new farm subsidies - hopefully the rest of the world will do as we say and not as we do.
Unfortunately, we do seem to be doing more talking than doing these days.
Posted by Stephen Bronstein at February 17, 2003 04:34 PM