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Old 06-27-2003, 11:00 AM   #1
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3rd world development hampered by subsidies

This is a topic that I have been following for quite some time. Actually, it's one of the reasons I asked to be assigned to Africa when I signed on with Peace Corps...I want to get an on the ground look at what's going on. Anyways, I don't know if anyone else is interested in the balance of trade and the effect of tariffs and subsidies on third world countries, but I thought it might be a topic worth discussing. In my research, it seems that while many nations have followed the advice/demands of the US via the World Bank and the IMF and opened their economies, lowered their barriers, etc. they have been hit in two directions. First, their markets are flooded by US exports and secondly they are hampered by tarriffs that make it difficult and next to impossible to import their products into the US and European markets.

Here's an article from AllAfrica.com that deals specifically with Mali (of interest to me for obvious reasons).

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U.S. and European subsidies and tariffs "support injustice," Mali President Amadou Toumani Toure told the House International Relations Subcommitteee on Africa, Tuesday, summarizing written testimony that he presented for the record.

Toure said he was representing all African nations and the devastating effect of subsidies on Malian cotton illustrates the harm that agriculural subsidies - now totaling more that US$300bn in the United States and Europe - are causing to agriculture across the continent. "We have decided to pull the alarm bell."

Toure is the first Afican President or head of state to testify before the subcommittee. "We needed to bring some weight to this," said one member of the president's party. Agricultural issues, a key element in the political structure of a small group of powerful legislators, are not usually taken up by the Africa subcommittee.

But there is a crisis, said Toure. Agriculture subsidies that keep prices artificially low contribute significantly to the continued economic deterioration in Mali and other cotton-producers in Africa. There have been "serious consequences on our economies," he told the lawmakers in his written testimony. "Mali lost 1.7 percent of her GDP and 8 percent of her export receipts; Burkina Faso lost 1 percent of her GDP and 12 percent of her export receipts; Benin lost 1.4 percent of her GDP and 9 percent of her export receipts.
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Old 06-27-2003, 11:06 AM   #2
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your pm box is full ms. popular rebel

the U.S. administration is quite pathetic in their endorsement of free trade and coinciding application of domestic subsidies and tarriffs. it is nice to have a subcommittee formed but only time will tell what actions come about.

edit: how have past administrations been with domestic favoritism in trade? has there been a situation that is as dire as continental africa's is now?
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Old 06-27-2003, 03:06 PM   #3
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It's ironic that the US and Europe, two of the strongest advocates of free trade, are also the two places most likely to resort to proctionism. It seems that rich countries are determined to maintain their privileged position with little regard for people in less wealthy countries.

There have been some interesting developments about the Common Agricultural Policy (CAP) of the EU, which is sort of related to this. There's an article about it in today's Guardian: http://www.guardian.co.uk/internatio...985822,00.html
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Old 06-27-2003, 05:59 PM   #4
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Actually, I support agricultural subsidies. American and European farmers cannot compete against near slave labor, which is precisely what Africa and other third-world countries are! In the meantime, it will put American and European farmers flat out of business. Period. They cannot live on 2 cents an hour (a hyperbole) like Africa can.

If we want free trade, there are going to have to be global labor standards and global minimum wages. African nations are guilty of ineffective governments more than anything and nothing, not even ending farm subsidies, will change their standards of living until their governments are overthrown and replaced with effective, secular leadership, not autocratic military dictators who use Islam as a form of repression. Unfortunately, for the West, it is very profitable to keep the third world as cheap labor.

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Old 06-28-2003, 01:32 PM   #5
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Quote:
it will put American and European farmers flat out of business
And the subsidies are creating a situation where farmers in African countries in particular are unable to make enough money to survive. Is it acceptable that farmers in Africa can't make enough money to provide food for their family because the alternative would put US and European farmers out of a job?

It's amazingly hypocritcal that US and European leaders will use the WTO to smash any kind of protectionism used by poorer countries, but defend to the death their right to subsidise agriculture to the tune of billions of pounds per year. (Don't forget the CAP took up more than half the EU's budget annually.)

Certainly the government of several African countries is far from "ideal" but that is not a justification for the West's protectionism. Agricultural subsidies in the West clearly do nothing to impact on the structures of government in Africa, so I don't see why the fact that oppressive governments exist in Africa is a justification for Western agricultural subsidies. No, removing subsidies won't magically mean that every African person has an improved standard of living, but it would certainly make a difference.

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Old 06-28-2003, 03:37 PM   #6
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Quote:
Originally posted by FizzingWhizzbees
And the subsidies are creating a situation where farmers in African countries in particular are unable to make enough money to survive. Is it acceptable that farmers in Africa can't make enough money to provide food for their family because the alternative would put US and European farmers out of a job?
I think that if you put U.S. and European farmers out of a job that they will not have enough money to provide food for their family, lose their homes, and end up homeless.

Quote:
It's amazingly hypocritcal that US and European leaders will use the WTO to smash any kind of protectionism used by poorer countries, but defend to the death their right to subsidise agriculture to the tune of billions of pounds per year. (Don't forget the CAP took up more than half the EU's budget annually.)

Certainly the government of several African countries is far from "ideal" but that is not a justification for the West's protectionism. Agricultural subsidies in the West clearly do nothing to impact on the structures of government in Africa, so I don't see why the fact that oppressive governments exist in Africa is a justification for Western agricultural subsidies. No, removing subsidies won't magically mean that every African person has an improved standard of living, but it would certainly make a difference.
But that's it. I don't think it will make a difference at all. Period. Since Africa is starving as much as we are told, why don't they sell their crops to each other? You know, as much as the U.S. and the West, in general, is hated, people are constantly begging for us to throw money at them. You can't have both ways.

I think that their governments are so ineffectual that it doesn't matter. Read in my AIDS thread--the third article. That may shed some light as to why Africa has no money.

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Old 06-28-2003, 03:51 PM   #7
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Why do European and US farmers deserve protection from losing their jobs if it is at the expense of farmers in poorer countries?

I'm not begging for the US and W. Europe to "throw money" at Africa. I'm asking that they allow African countries to trade with the US and the EU on equal terms. I'm asking that they be treated fairly. As a seperate issue, I do believe wealthy Western nations should be doing more to assist extermely impoverished countries, notably through forgiving their debts, but this isn't about throwing money at Africa, it's about allowing them to trade with the West.
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Old 06-28-2003, 04:37 PM   #8
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But it isn't equal terms! The cost of living in the West is *far greater* than that of Africa. The U.S. and Europe, under *no* circumstances, can compete with near slave wages.

I disagree with free trade on the grounds that we are all not playing with the same ground rules. Unless you want the U.S. and Europe to stop food production--and it *will* happen with prolonged free trade with such nations--then, by all means, support this. Then, when Africa gets plunged into more civil war or drought-induced famine, we'll see what an utter mistake that was.

I agree that Africa needs help, but this is *not* the way to do it.

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Old 06-28-2003, 05:25 PM   #9
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The fact that it's more expensive to live in the West means it's okay for governments to subsidise agriculture to the tune of $1 billion per day? And at the same time, African countries aren't allowed to place any kind of tarrifs on imports to prevent the West flooding their markets with cheap goods and forcing their producers out of business and consigning more people to desperate poverty. (If anyone wants more info on this, Oxfam have a good paper about the impact of US cotton imports on African economies, which I've just remembered is one of the key points in the article Sula posted. Anyway, the report is at: http://www.oxfam.org.uk/policy/paper...tton/index.htm

When I talked about 'equal terms' I wasn't talking about how much it costs to produce items in the West compared to what it costs in Africa. I was talking about the fact that if the West can impose massive tarrifs on exports of poorer countries then it is WRONG that those countries are forbidden to place tarrifs on Western imports.

In your previous post you talked about people demanding that the West "throw money" at Africa. Yet allowing African countries to trade fairly with the West wouldn't involve "throwing money" at Africa, yet it could raise the standard of living of many African people. Trade barriers currently cost African countries in the region of $100 billion per year, which is twice as much as they receive in aid each year.

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Old 06-28-2003, 05:36 PM   #10
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Well, if subsidies are removed, it will be the end of U.S. and European farming. That's a fact.

If Africa has enough agricultural production to export to other nations, it must certainly have enough to feed itself. But, as we can see, that is not really the case. I doubt that removing subsidies will do anything, except hurt domestic production.

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Old 06-28-2003, 05:39 PM   #11
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What about the fact that US and European countries flood African markets with extremely cheap products and so undermine local African economies? Is that also justifiable because it protects American and European agriculture?

By the way, you might like to have a look at Oxfam's report on this subject, that gives very in depth details of how making trade between the West and Africa fairer would help the people of Africa. You can find the report at: http://www.maketradefair.com/stylesh...cat=6&select=1
(It is rather long, but even the introduction gives you some basic information. )
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Old 06-28-2003, 07:12 PM   #12
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hmm. I should know more about this than I do, because I'm studying African/Latin American history. But I'll give this a shot anyway...basically, my understanding is that whatever nation is the most economically powerful wants free trade--Britain in the 19th century, the US (maybe other european powers too, I dunno) now. The powerful nations advocate it even though there's an imbalance in the goods being traded, agricultural products being of less value than manufactured goods, and even though in most cases they've used protectionist measures in the past. Because of course, it works in their favour this way.

I think some people feel there's a national security reason for keeping farmers active, in case war breaks out in some nation that supplies the bulk of our food, or a leader is elected somewhere who's hostile to north americans or whatever. At least, some people in an economics class I took a few years ago felt that way.

I don't really have a problem with price floors for agricultural goods, but I do feel that the subsidies are questionable when you look at how much money goes into them. I remember a paper I wrote for a bio class from a million years ago, and the discussions on how essentially farmers are paid to let fields lie fallow, and that they supposedly fill in wetlands or something to get more money. Maybe (and admittedly I know little about this) the subsidies should be conditional on their planting trees or replenishing the ground somehow. I don't know how that'd be enforced, exactly, but it seems that there could be a more creative and productive solution to the problem.

Finally, I really feel for labourers in third world countries, who have an alarming lack of technology...I mean, Jamaica, people reaping with machetes and so on. It seems like a losing situation for Western farmers and third world farmers both. (Also saw a film on a region in Mexico, of which I forget the name...same deal there, except it was another crop...though that film was really dated. Hopefully things are better there now.)
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Old 06-28-2003, 07:22 PM   #13
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Government subsidies have already been slashed considerably over the past twenty years. Farmers have large debt and their per-bushel prices are down to 1960s levels, not even factoring in inflation. I can assure you that most farmers are already near bankruptcy and ending subsidies will only hasten that end.

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Old 06-28-2003, 07:40 PM   #14
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Maybe I worded that wrong...I don't think subsidies themselves are wrong, just maybe that we should question the extent of them. But you're saying they've been slashed and I don't doubt that. I haven't done any reading on this in 2-3 years, and then I only came across it as a part of another topic...

I have a couple friends whose aunts/uncles have lost their dairy farms in Vermont, and come to think of that I know of dairies in RI that have closed within the last few years too. That doesn't directly relate to this thread because you can't easily import milk products from third world countries certainly, but it's part of a larger trend and such a traumatic thing and something does need to be done. I think subsidies are part of the answer, certainly, but as things stand I think something new should be tried, not only to deal with the third world imports issue but also the changing face of farming in the US due to internal factors, where farms are getting conglomerated into these huge things, and so on.
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Old 06-29-2003, 12:53 PM   #15
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Melon,
Since you support subsidies and protectionism on the part of rich Western countries, do you think poorer countries such as those in Africa should be allowed to place tarrifs on Western imports in order to prevent such imports flooding their markets and destroying local businesses?

Also, I don't know what's happened to US agricultural subsidies, but EU subsidies have been increasing ever since they were brought in - there's only recently been proper discussion of the level of subsidies in the last week or two.
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