07-01-2004 07:30									#1
	"Peace Clause" on Agrisubsidies in WTO Expired Support Apolyton buy from Amazon

http://www.economist.com/agenda/dis...tory_id=2296891

So what's going to happen? Will the West give in and dismantle their agrisubsidies or will there be a massive trade war?

	07-01-2004 08:38									#2
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Ooooh this should be interesting. If the WTO could get Bush to back down on the steel tariffs it might be able to do at least something on this too, but that's probably too much to wish for

Well it should be fun to watched outraged first world farmers if this goes through. Nobody protests more annoyingly than subsidized farmers. Here farmers had rallies at the graves of politicians ancestors and threatened to desecrate them unless there was no free trade agreement with Chile (like there's all that much trade between Korea and Chile in the first place), they had to be smacked down by riot police. Idiots.

	07-01-2004 08:41									#3
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More like US vs France, something like that.

	07-01-2004 08:57									#4
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quote: Originally posted by Boshko Well it should be fun to watched outraged first world farmers if this goes through. Nobody protests more annoyingly than subsidized farmers. Here farmers had rallies at the graves of politicians ancestors and threatened to desecrate them unless there was no free trade agreement with Chile (like there's all that much trade between Korea and Chile in the first place), they had to be smacked down by riot police. Idiots.

I saw it in the news. what happen finally? does the Korean parliament approved the FTA?

	07-01-2004 09:03									#5
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Looks like it, haven't grabbed an English newspaper recently (they don't sell any anywhere in my town) but it looks like they'll go through since there aren't enough rural districts where politicians can be threatened into voting against it.

	07-01-2004 09:15									#6
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I hope this could be signed. I mean, is true, we are not like the biggest economic partners, but it will help to Koreans and Chileans products to arrive to America and Asia respectively.
Personally I'm happy cause I want a Korean car, and now they're going to arrive cheaper

It's amazing, thanks to all these FTAs Chile have better relations with countries far away like Korea, Japan or the EU, and cold distant relations with the other American countries.

	07-01-2004 09:18									#7
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I understand the nostalgic wish to preserve the small farmer, but in all reality the entity is a relic. Subsidizing small farms against agribuisness is like subsidizing blacksmiths agains steel mills.

Agribuisness groups are a hell of alot more productive than private farms, and on average there participants make more than they did privately, if you count the reinvenstment the company puts in updating equipment and such (this is just based off the accounts of two peanut farmers I know in Sufolk VA, so I am not claiming the authority of God on this one).

I hear alot of people *****ing about how this screw the third world farmer, but honestly they really can't be any more screwed than they were before agribuisness got there. Agribuisnes does reinvest in capital assets, so even if the people don't own the equipment at least their sand farms are producing something agian, which may not be good for them personally but it is for their reion as a whole.

But for those of you who hate corporations for whatever reason, except logic of course because then you wouldn't hate most, I will just agree to disagree with you now

	07-01-2004 09:35									#8
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Agribusinesses get subsidies.

	07-01-2004 09:54									#9
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Getting them and living off them are two different thing. If the government offeres you money would you say no?

	07-01-2004 09:58									#10
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quote: Originally posted by Urban Ranger Agribusinesses get subsidies.

And they shouldn't, because it is STUPID.

	07-01-2004 09:59									#11
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Economist is so lightweight.

(I agree with eliminating tarrifs and subsidies...it's just that there issue analysis is middlebrow.)

	07-01-2004 10:08									#12
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quote: I understand the nostalgic wish to preserve the small farmer, but in all reality the entity is a relic. Subsidizing small farms against agribuisness is like subsidizing blacksmiths agains steel mills.

Small farms aren't subsidized against agribusiness; corporate farms get lots of subsidies too.

quote: I agree with eliminating tarrifs and subsidies...it's just that there issue analysis is middlebrow.

The analysis doesn't matter, it's the story man. Mindblowing, isn't it? We could be on the brink of a trade war or the end of agrisubsidies.

quote: If the WTO could get Bush to back down on the steel tariffs it might be able to do at least something on this too, but that's probably too much to wish for

That's the thing, I don't see Shrub backing down. He lost too much over the steel tariffs with respect to the electorate. Farmers have an awful lot of power in this country, and their lobby already got what they wanted with the recent increase in subsides. He's trying a balancing act (see the withdrawal of support from Taiwan on the one hand and the tariffs on Chinese textiles on the other hand) and I think he's about to fall flat.

	07-01-2004 10:11									#13
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quote: Originally posted by Ramo Small farms aren't subsidized against agribusiness; corporate farms get lots of subsidies too. The analysis doesn't matter, it's the story man. Mindblowing, isn't it? We could be on the brink of a trade war or the end of agrisubsidies. That's the thing, I don't see Shrub backing down. He lost too much over the steel tariffs with respect to the electorate. Farmers have an awful lot of power in this country, and their lobby already got what they wanted with the recent increase in subsides. He's trying a balancing act (see the withdrawal of support from Taiwan on the one hand and the tariffs on Chinese textiles on the other hand) and I think he's about to fall flat.

The story is fine. I just want to make sure that you learn to be discriminating with the Economist.

	07-01-2004 10:13									#14
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I don't think any candidate in an election year would be willing to take on a group as powerful as farmers...

	07-01-2004 10:25									#15
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But the consequence may be facing retaliatory trade restrictions by the developing world and thereby pissing off just about everyone else in the country.

	07-01-2004 15:33									#16
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quote: Originally posted by Ramo But the consequence may be facing retaliatory trade restrictions by the developing world and thereby pissing off just about everyone else in the country.

Which is why I predict stalling during the election year followed by quiet surrender afterward. Of course there will also be a tendency for weaker governments to "stay the course", which will allow for a lot of foot dragging and subsidies disguised as retaliation.

	07-01-2004 16:21									#17
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quote: Originally posted by TCO Economist is so lightweight. (I agree with eliminating tarrifs and subsidies...it's just that there issue analysis is middlebrow.)

I actually agree with that. Also it is spiteful and mean spirited. I've been an avid reader for many years, and this magazine has gone downhill, so I decided to quit.

	07-01-2004 16:26									#18
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Actually it is amusing that the Economist is advocating a policy that will lead to mass starvation. This will happen if the agricultural subsidies are slashed. The price to be paid for liberalism I guess.

	07-01-2004 16:41									#19
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Yeah allowing third worls farmers to compete is really going to lead to mass starvation.

	07-01-2004 17:03									#20
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I think the outright suppression of farming subsidies is stupid, because small non-competitive farm businesses provide externalities no corporate farming can provide. That is, small farms do prevent a big chunk of the territory to become wild, despite this land not being proper for competitive farming.

I'm all for cutting subsidies to competitive agribusinesses, but the few farmers taht remain should not have their subsidies cut.

	07-01-2004 17:13									#21
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quote: Actually it is amusing that the Economist is advocating a policy that will lead to mass starvation.

Not at all.
Currently First World agricultural subsidies make it much harder for Third World countries to export agricultural produce, therefore significantly increasing Third World poverty. Also, by keeping world market prices low they make it harder for Third World farmer to buy fertilizer, tractors etc. etc. that would allow them to increase their yield.

quote: small farms do prevent a big chunk of the territory to become wild

Exactly how is this a good thing?

	07-01-2004 17:27									#22
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There where a peace? I didn't notice. Surely the worlds banning of US beef has little to do with Mad Cow disease. Everyone's just out to grab market shares. There's a need for radical new thinking in agriculture in my humble opinion.

	07-01-2004 17:27									#23
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quote: Originally posted by Boshko Not at all. Currently First World agricultural subsidies make it much harder for Third World countries to export agricultural produce, therefore significantly increasing Third World poverty. Also, by keeping world market prices low they make it harder for Third World farmer to buy fertilizer, tractors etc. etc. that would allow them to increase their yield.

Maybe, but why would it help third world farmers to export their food to the first world? If they can get a better price there than at home would this not mean a rise in starvation?

Then it is possible that it is actually cash crops which are prevented from entering the first world. However it seems illogical that farmers should be enthused to switch from food crops to cash crops, when there are not enough food crops produced.

While this might make it possible for them to import fertilizer and tractors, likewise if third world debt was slashed they would be able to buy them equally. And it would be better if they began manufactoring their own tractors and fertilizer. Granted fertilizer has dual purposes (chemical weapons), and they would probably be prevented from this because of this.

A remarkable situation, really.

	07-01-2004 17:41									#24
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quote: Originally posted by Tripledoc Maybe, but why would it help third world farmers to export their food to the first world? If they can get a better price there than at home would this not mean a rise in starvation?

The price of food in third world countries is artificially depressed by the export subsidies of western food producers - this makes it less economically viable to produce food in the third world.

What would happen if trade in agriculture were liberalised is that the price of food in the west would fall (which would probably mean less is produced) and in the third world it would rise (meaning more would be produced) - however this rise in prices in the third would would be dwarfed by the rise in incomes as third world farmers gain access to international markets.

By scrapping subsidies third world farmers (probably the poorest segment of world population) will be made significantly better off, but so will consumers in the west as our food prices drop

It really is a win-win situation
If we in the west ploughed a tenth of the money saved by scrapping agricultural subsidies into things like Malaria or AIDs vaccine research then it's quite possible that the living standards of much of the poorest in the third world would rise 2 to 3 fold (which would benefit us as well because of all those richer export markets)

quote: Originally posted by Tripledoc While this might make it possible for them to import fertilizer and tractors, likewise if third world debt was slashed they would be able to buy them equally.

So you are suggesting that their debt should be forgiven but that we should still deny them the ability to earn enough cash to finance development?
Surely you can see this makes no sense!

	07-01-2004 17:52									#25
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quote: Originally posted by el freako What would happen if trade in agriculture were liberalised is that the price of food in the west would fall (which would probably mean less is produced) and in the third world it would rise (meaning more would be produced) - however this rise in prices in the third would would be dwarfed by the rise in incomes as third world farmers gain access to international markets.

A rise in income in the third world would mean a rise in inflation. Since 60 percent of international trade is denominated in dollars this would artificially strengthen that currency, making it possible for the west to buy more for less output themselves. Seems like highway robbery to me.

Also as you say the basic problem is that overall agricultural production would not rise. Instead it would create greater interdependency between the first world and the third world. This would effectively mean a return to the economic principles of the Roman empire.

	07-01-2004 17:56									#26
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Tripledoc you are remarkably lacking in knowledge of basic economics.

quote: Maybe, but why would it help third world farmers to export their food to the first world?

What you're missing is that subsidies are often bit enough that they're a good bit higher than what it costs to haul the food to the third world. This means that First World farmers can export their food to the Third World for less than it costs to grow it. Third World farmers have a hard time competing with this which has kept Third World farm incomes horribly depressed for decades.

quote: If they can get a better price there than at home would this not mean a rise in starvation?

The problem isn't that there isn't enough food to go around, its that some people don't have enough to buy it. The solution isn't to get farmers in the Third World to grow more food staples, (although removal of subsidies would help with this since it'd reduce the import of artificially-cheap US wheat, corn, etc.) its to raise farm incomes in the Third World, which reduction of First World subsidies would do MASSIVELY.

quote: And it would be better if they began manufactoring their own tractors and fertilizer.

Why?
It makes sense to build things where its cheapest to do so not have everything produced everywhere.

quote: Granted fertilizer has dual purposes (chemical weapons), and they would probably be prevented from this because of this.

What?
That's a very strange claim.

	07-01-2004 18:04									#27
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quote: A rise in income in the third world would mean a rise in inflation.

There might be some small local effects in which prices rise a bit due to people finally getting enough to live on half-way decently which would allow wages to go up a bit. But this is hardly a bad thing and is the inevitable result of rapidly increased prosperity.
Also increased income would allow Third World countries to become more stable socio-politically which would probably do a lot to reduce sources of inflation rooted in bad government.

quote: Since 60 percent of international trade is denominated in dollars this would artificially strengthen that currency

First of all, the denomination in which international trade is conducted has absolutely zero effect on the strength of any currency. I don't know how you came up with such a bizarre idea.
In any case, a reduction of First World agricultural exports and an increase in imports from the Third World would tend to weaken First World currencies.

quote: Also as you say the basic problem is that overall agricultural production would not rise.

So? There's plenty of food to go around. That's not the problem in the least.

quote: Instead it would create greater interdependency between the first world and the third world.

Which is a good thing. Yay Comparitive Advantage!

quote: This would effectively mean a return to the economic principles of the Roman empire.

Wha???????
How so?

	07-01-2004 18:08									#28
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quote: Originally posted by Tripledoc A rise in income in the third world would mean a rise in inflation.

A rather daft statment, why should a rise in income in of third world farmers be more likely to translate into higher inflation than a rise in income anywhere else?

quote: Originally posted by Tripledoc Since 60 percent of international trade is denominated in dollars this would artificially strengthen that currency, making it possible for the west to buy more for less output themselves. Seems like highway robbery to me.

Again you are making assumptions with a huge hole in your logic.
When your income rises do you save all of the increase?
Third world farmers are even less likely to do so - which means that they will buy more goods, many of them from the west, the exchange rates will not rise noticeably - but trade will.

quote: Originally posted by Tripledoc Also as you say the basic problem is that overall agricultural production would not rise.

I did not say that at all - why should the rise in production in the (now richer) third world be equal to the fall in production in the (also now richer) west?

quote: Originally posted by Tripledoc Instead it would create greater interdependency between the first world and the third world.

And why would this be a bad thing?
Why are you against giving the poorest section of humanity the chance to make themselves richer?

quote: Originally posted by Tripledoc This would effectively mean a return to the economic principles of the Roman empire.

that is the worst load of rubbish that you have yet spouted!

	07-01-2004 18:10									#29
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quote: Originally posted by Boshko The problem isn't that there isn't enough food to go around, its that some people don't have enough to buy it.

If as you say that there is no starvation is true, then this might have something to do with how the current system is working. So if it ain't broke why fix it?

It does not make sense. If people can't afford it, then the price would adjust itself. Are you suggesting that food is produced which is not consumed?

	07-01-2004 18:18									#30
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quote: If as you say that there is no starvation is true

There's starvation but there is more than enough food to go around. The problem is that the people who need it aren't getting it.

quote: If people can't afford it, then the price would adjust itself.

Why in the world would it do that? If people have no money why would prices magically drop to zero to ensure that they got the food they needed? Demand means nothing in the market when you have no money to demand with.

quote: Are you suggesting that food is produced which is not consumed?

Definately, there is in fact food overproduction on a quite large scale.