The High Cost of Agricultural Protectionism by Rich Countries Harms Free Trade
BYLINE: Malcolm Cook
Last year was a bad one for free trade. The Doha Round was supposed to make agriculture the |centrepiece of negotiations to assuage the deep frustrations of developing countries. But, instead of breathing life into free trade in food, rural protectionism in rich countries seems to have killed the Doha Round - and, with it, potentially the whole multilateral trading regime.
Agriculture has always presented the greatest challenge to free-trade doctrine and its promise of empowering the poor, for it is one of the most distorted areas of global trade. In 2004, Organisation for Economic Co-operation and Development (OECD) countries spent more than four times their official development aid budgets on support for domestic farmers.
In 2000, the World Bank estimated that OECD agricultural protectionism cost the developing world $20 billion in welfare losses annually. Most galling, agriculture is a small and declining part of these "rich club" economies, and the richer and larger they are, the less significant agriculture is and the more resources are wasted on rural |welfare.
The practical challenge comes from agriculture's two advantages that insulate the rural sector from global market forces and turn even the most urbane, liberal politicians into its defenders. First, farming is geographically concentrated and farmers vote on agricultural policy above everything else, greatly enhancing the power of their votes - something that few, if any, urban consumers do.
Second, protectionists have developed populist, but logically questionable, arguments that agricultural staples cannot be treated as tradeable commodities subject to competition. Domestic farmers are portrayed as irreplaceable defenders of the social fabric. On top of this, farming is presented as analogous to the military. Just as no government should outsource national security to untrustworthy foreigners, nor should any government permit the national food supply to rely on the supposed vagaries of foreign |production.
We accept paying a high and inefficient cost for national defence against what are often unknown enemies. Agricultural protectionists, through the language of food security and food self-sufficiency, claim that the same holds true for food.
Japan has long been the paragon of rich-country agricultural protectionism. Its electoral system heavily favours rural voters. Farmers are well organised politically, and the Ministry of Agriculture, Forestry and Fisheries (MAFF) has been a fierce defender of agricultural protectionism. Food security arguments resonate well in Japan, owing to memories of shortages during World War 2 and its aftermath. …