HARVESTING POVERTY

The Unkept Promise

Published: December 30, 2003


There is a deceiving sense of timelessness to the stillness of rural life.
The jungles of Mindanao offer few clues as to whether it's the early 20th
century, or the early 21st. Nor do the highlands of Guatemala, the Mekong
Delta in Vietnam or the cotton-rich plains of the Sahel in West Africa. But
these disparate regions are very much of the present, stitched into the
quilt of global commerce. World trade links us to them, as surely as it
links London, Tokyo and New York.

In an effort to understand that relationship, we visited some of the
poorest nations in the world in the last six months. We listened to 12-year-
old Arnel Mamac's parents on Mindanao, the Philippine island besieged by an
Islamist terrorist group, tearfully say they often don't let him walk to
school because they fear he may not have the energy to make it on an empty
stomach. In a cotton-growing village in Burkina Faso we saw a school with
two rooms, but because of a lack of funds, only one classroom was finished.
Most unsettling, to an American, is the realization that our nation's
agricultural policies — its protectionist trade barriers and the billions
in subsidies doled out to its own farmers — contribute mightily to the
hardships felt by poor farmers in the developing world.

The club of rich nations that wrote the rules of global trade has been
aggressive in dismantling barriers when it comes to industrial goods and
services, in which they hold a comparative advantage. But they refuse to do
the same when it comes to agriculture. Politically powerful farm lobbies in
Japan, Europe and the United States are not willing to face global
competition on fair terms. So agriculture remains the hypocritical asterisk
to our fervent free-trade and free-enterprise creed.

It's bad enough that a country like Japan, which became wildly prosperous
thanks to the willingness of the outside world to buy its exports,
maintains 500 percent tariffs on imported rice. Or that the American
Congress would overrule science to decree that the catfish from Vietnam,
which found popularity among American consumers, is not a catfish after all
and cannot be marketed as such.

Worse, the developed world funnels nearly $1 billion a day in subsidies to
its own farmers, encouraging overproduction, which drives down commodity
prices. Poor nations' farmers find they cannot compete with subsidized
products, even within their own countries. In recent years, American
farmers have been able to dump cotton, wheat, rice, corn and other products
on world markets at prices that do not begin to cover their cost of
production, all courtesy of the taxpayers.

The rigged trade game is not only harvesting poverty around the world, but
plenty of resentment as well. In the Philippines, a former American colony,
our agricultural trade policy is seen as a plot to perpetuate imperialism.
In Vietnam, a nation that was able to start reducing rural poverty only
when it deviated from its Marxist orthodoxy and allowed entrepreneurs to
have access to global markets, an exasperated seafood exporter told us, "We
are made to wonder if you wish us ill, as much in the present as you did in
the past."

In Burkina Faso, we heard a cotton farmer tell colleagues that America's
bizarre cotton program can be explained only by the fact that President
Bush is a cotton farmer. He was wrong. It is some leading members of
Congress responsible for the $180 billion 2002 farm bill who are cotton
farmers, or who blindly follow the dictates of the so-called King Cotton
lobby.

The idea that our agricultural protectionism harms poor nations is hardly a
fanciful one held only by aggrieved third world farmers. Just about any
multilateral economic or development agency you can think of has issued
reports railing against rich nations' farm subsidies. The World Bank
estimates that an end to trade-distorting farm subsidies and tariffs could
expand global wealth by as much as a half-trillion dollars and lift 150
million people out of poverty by 2015.

The urgent need to address globalization's imbalances, and restore the
credibility of the free-trade system, has never been as apparent as it was
in the raw weeks and months immediately following the Sept. 11, 2001,
terrorist attacks. That November, at Doha, Qatar, the members of the World
Trade Organization committed themselves to a new round of trade talks
focused on the elimination of farm subsidies that are so harmful to the
developing world.

The year 2003 was to be crucial in this endeavor. A deadline of last March
was set for the 146 W.T.O. members to agree on a framework to proceed on
the subsidy question, with substantive agreements expected by a September
meeting in Cancún, Mexico. Neither happened.

The March deadline came and went with no accord. Even more disappointing,
on the eve of the Cancún gathering, American negotiators switched sides.
Despite Congressional support for gargantuan agricultural subsidies, Robert
Zoellick, the United States trade representative, had taken an aggressive
position on the need for reform. But suddenly, Mr. Zoellick and his team
joined hands with the more recalcitrant Europeans against much of the rest
of the world.

There was a time when the European Union and the United States could
jointly dictate terms to the rest of the World Trade Organization, but not
any more. Washington's betrayal of its free-trading principles outraged not
only the poorest countries, but also some food-exporting allies such as
Australia. The developing world lashed back. At Cancún, Brazil, India and
China created a formidable bloc of 22 nations that rightly opposed
proceeding on anything else until some of the more outrageous farm
subsidies had been addressed.

Hence the current stalemate. Negotiations meant to inject fairness into
global trade are on life-support, thanks mainly to the appalling absence of
American leadership. The Bush administration could have joined forces with
the likes of Australia and Brazil at Cancún. Our trade representatives
could have worked to overcome both the narrowest interests of the American
farm lobby and the developing world's own self-defeating protectionism.
Instead, the United States meekly aligned itself with a group of countries
scared of fair competition.

For all the hand-wringing about a trans-Atlantic rift over Iraq this past
year, President Bush stood shoulder to shoulder with Jacques Chirac of
France on a matter that is far more pressing to the billion or so people on
earth trying to get by on $1 a day. Together, they formed a veritable
coalition of the unwilling. Despite their post-9/11 promises, the United
States and the European Union defiantly refused to give up their economic
weapons of mass destruction: their trade-distorting farm subsidies.

More rational agricultural trade policies would actually be a boon to many
American farmers because their high-tech equipment and large, fertile
acreage would make them winners in a more open competition. But there would
be losers both here and abroad, and we visited some of them as well, to
understand all sides of the story. Ronnie Hopper in Texas, Hubert Duez in
France and Koushi Seiwa in northern Japan were all smart, gracious, hard-
working farmers. But as appealing as they are as individuals, they have
been given an unfair advantage by nostalgia-driven policies that are
indefensible on economic, and even moral, grounds.

In a rational global marketplace that conformed to our stated values and
commitments to the rest of the world, consumers would forgo Mr. Hopper's
cotton, Mr. Seiwa's rice and Mr. Duez's sugar, and buy from others who are
now being shut out of the global economy.

This does not mean that rich nations ought to halt their rural development
programs. But farmers must be weaned from payments that merely reward them
for overproducing crops on which they would otherwise lose money. Such
madness is no longer sustainable. Besides proving so costly for taxpayers
and for the developing world, there is too glaring a gap separating
American and European agricultural policies from the entire logic of the
global trade system. Now the developing world is demanding consistency, a
fairer playing field.

The Bush administration, which has been so proudly proactive in Iraq, could
jump-start reform with a sweeping unilateral gesture. The ideal starting
point would be the dismantling of the most wrongheaded market distortions,
our astronomical cotton subsidies and our sugar quota system, which props
up domestic sugar prices by restricting imports. But instead of moving in
that direction, the president, ostensibly a free-trading Republican, signed
the most trade-distorting farm bill in history.

The dutiful Mr. Zoellick may travel the world saying all the right things,
but his boss does not seem to appreciate the degree to which trade is
integral to broader economic and foreign policy, and to the projection of
American power around the globe. Does President Bush sit down with Mr.
Zoellick, Condoleezza Rice and his top cabinet officials for far-ranging
discussions on farm subsidies and the Doha round of trade negotiations. He
should.

Next year's election offers little hope on this score. Democratic lawmakers
were among the strongest supporters of the 2002 farm bill, and most of the
candidates vying for the Democratic Party's presidential nomination seem to
have turned against the Clinton administration's belief that freer trade is
a win-win proposition for rich and poor nations alike.

Trade frictions may grow worse, therefore, before we stop harvesting
poverty around the world with our farm programs. It could take a threatened
collapse of the global rules-based trading system for the political balance
of power from Washington to Tokyo to shift decisively against the coddled
farm lobbies. But until we start chiseling away at our farm subsidies, the
promise of trade will remain a promise unkept for many of the world's poor.

Copyright 2003

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