Tuesday, July 29, 2008

WTO Collapse: Proof of a Multipolar World

Yesterday I mentioned that the WTO talks were on the ropes thanks to China and India, and today they're finished.

It's not new that agriculture is a major stumbling block - for example, wheat subsidy issues have been contentious between the US and EU (particularly France) and the US is infamous for corn and especially cotton subsidies. Coupled with the different cost of living in different markets, it often becomes difficult for farmers growing certain products to compete with foreign produce even domestically, let alone internationally. Case in point, the town of Gilroy, an hour south of Silicon Valley, has historically been the garlic growing center of the U.S. and they have a garlic festival every year. For the last few years most of the garlic has been brought in from (say it with me) China, because even after the transport costs, it's cheaper. Incidentally, I assume that the Swedish government must subsidize Ikea for them to be able to compete so effectively with furniture producers overseas. I think every new piece of furniture I've ever bought has been from them, and I have no complaints.

None of that is so shocking What's new here is that a) WTO talks actually break down over such issues and b) that China and India are partly responsible for the breakdown. Interestingly enough, the billionaire everyone loves to hate (George Soros) states explicitly not that he welcomes this new multipolarity, but rather that the loss of American dominance can only mean decreased geopolitical stability. The Brookings Institution has made the ominous argument that multipolarity should be welcomed by the US - so long as it can be structured within frameworks like, for example, the WTO.

2 comments:

Mike said...

Too bad about Doha.

I'd love to see both the US & the EU get rid of their farm subsidies.

There's also the tariffs we put on
agricultural imports like Brazilian ethanol and sugar.

Some folks say that one of the best ways to help poor countries would be to open our borders to their produce.

The Economist had a good article about Dona within the past couple weeks.

Thomas Paine Jr. said...

Opening borders to developing countries' produce would be a great idea. Trade does more to build economies (and allies) than NGO dollars. There are several current examples in Africa where China has clearly figured this out. But the Doha breakdown can't be good news for global food prices either. Incidentally, ever wonder why in soda we have "high fructose corn syrup" and not just sugar? We have big tariffs on sugar because we don't grow it in the US, and it's the big ag companies that have lobbied for it, not the remaining small family farmers. Contrary to what Coolidge's secretary said,
what is good for GM (or ADM) is often, but not always, good for the country.