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"The Rigged Trade Game"
Source: The New York Times, July 20, 2003. In September 2003, a large group of developing nations staged a protest by walking out of the World Trade Organization (W.T.O.) meetings in Cancun, Mexico. Delegates from 146 countries had met in Cancun to discuss how trade liberalization could benefit poorer nations. As noted in Chapter 31, the theory of comparative advantage suggests that international trade increases the world's production possibilities frontier. Based on this philosophy, the W.T.O. has encouraged developing countries to open their markets to industrial goods from abroad. The United States has been a big supporter of free trade. As the text points out, the past four presidents (George W. Bush, Bill Clinton, George Bush, and Ronald Reagan) were all advocates of free trade. Yet, many of the post-industrial economies—including the European Union, Japan, and even the United States—have been reluctant to apply this lesson to agricultural products (see box entitled "Farm Subsidies and the Poorer Nations" on page 771). This editorial piece is from a New York Times series entitled "Harvesting Poverty" (see www.nytimes.com/harvestingpoverty for the whole series). Focusing on the example of the Philippines, the article shows the impact of unfair trade practices on poor farmers overseas. The article informs us that the U.S., Europe, and Japan spend almost one billion dollars each day subsidizing their farmers. Recall that chapter 3 addressed the impact of agricultural subsidies and tariffs on market mechanisms. Subsidies act as a price floor, creating a surplus of agricultural goods on the world market. Tariffs placed on agricultural imports prevent farmers from other countries from selling their goods to us at low prices. While prices are kept artificially high at home, our excess farm products are dumped overseas at cheap prices; local farmers abroad cannot compete. Questions for Discussion:
"Ending Tariffs Is Only the Start"
Source: The New York Times, February 28, 2006.
"A Global Culture War Pits Protectionists Against Free Traders"
Source: The New York Times, February 5, 2005. Despite the conclusion of international trade theory that free trade has many economic benefits, in practice it remains difficult to implement. Chapter 31 reviews many of the arguments that have motivated advocates for protectionism. The essay by Alan Riding on the "global culture war" adds another dimension. Global markets are creating a global culture. One advantage is enriched cultural diversity, as those of us in the United States are introduced to new foods, new music, and new ideas from around the world. But because so many of the world's largest corporations are based in the U.S., global culture is frequently American culture. American movies, television shows, music, and fashion are now accessible around the world. And people all over the world seem to want access to our exports. However, some advocates of cultural diversity argue that the result is a worldwide cultural homogenization. Everywhere you travel you can eat at American fast food restaurants, drink American soda, hear American music, and see American television shows (perhaps dubbed into another language). But are movies and music the same as food and soda? Is cultural production different than other kinds of goods and services? Is there a social interest in having diverse voices reflected in artistic and cultural "products?" The fight against cultural homogenization is being waged most fiercely, according to the article, by representatives from France and Canada. Drafting a trade agreement that allows the free flow of ideas and culture while preventing large multinational movie studios and record companies from squeezing out smaller films and musical artists is proving to be difficult. Questions for Discussion
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