Friday, October 3, 2003

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Your weekend reading

Arvind Panagariya has an excellent essay in Foreign Policy that points out the true costs and benefits from free trade. You should read the whole thing, but here's what Panagariya says about who benefits from the removal of agricultural subsidies:

Ironically, the major beneficiaries of widespread agricultural liberalization would be rich countries themselves, which bear the bulk of the cost of the subsidies and protection, and their domestic consumers.

He also makes a cogent point about which group of countries are protectionist:

On average, poor countries have higher tariff barriers than high-income countries. For instance, rich nations’ tariffs on industrial products average about 3 percent, compared to 13 percent for poor countries. Even in the textiles and clothing sectors, tariffs in developing nations (21 percent) are more than double those in rich countries (8 percent, on average). And while textiles and clothing are subject to import quotas in rich economies, such restrictions are due to be dismantled entirely by January 1, 2005, under existing World Trade Organization (WTO) agreements....

Traditionally, rich economies such as the United States and the EU have been quick to engage in antidumping initiatives—erecting trade barriers against countries that allegedly export goods (or “dump” them) at a price below their own cost of production, however difficult it may be to quantify such a charge. But developing countries have been learning the same tricks and initiating antidumping measures of their own, and now the number of such actions has converged between advanced and poor economies. For example, according to the “WTO Annual Report 2003,” India now ranks first in the world in initiating new antidumping actions, and third (behind the United States and the EU) in the number of such actions currently in force.

Give it a look.

posted by Dan on 10.03.03 at 11:36 PM


Agribusiness subsidies actually hurt 3rd world countries? Barriers are greater there? - Wow, I do have to read the whole piece.......maybe Panagariya can prove that black is actually white. Comparing tariff barriers for nations with unfinished goods with a nation like the US is just simplistic and bad analysis. Instead of recommending the article, perhaps you'd like to weigh in on the conclusions?

posted by: Dan on 10.03.03 at 11:36 PM [permalink]

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