Saturday, December 17, 2005

Down but not out

You may have noticed this soapbox has been pretty silent this week. Econblogger has been indisposed by some nasty but curable throat infection. However I have some energy to react to some nasty but curable developments at the WTO.

The usual activist activity outside the Ministerial meeting in Hong Kong has escalated somewhat with direct clashes between riot police and protestors, especially from South Korea. Whew, those fellows from Korea have developed rallies and demonstrations to a martial art form. Forged over decades of confrontation with dictators, unfortunately this gets harnessed over the issue of protectionism. They do have a cause for concern, as the bulk of their rice farmers will not be able to compete at current world prices for rice. However as I have repeatedly argued, profits and losses are essential to the reallocation of resources towards more efficient uses. Very little can be accomplished by all this activitist activity, of course; but as publicity stunts they are unparalleled global news-getters. On a positive note, the level of violence appears to have toned down compared to Seattle and Cancun. Maybe this has to do with Hong Kong's excellent security measures?

The talks themselves are turning out according to expectation: an exercise in futility. I got a suggestion: give up getting any big agreements out of eliminating subsidies. As Anderson and Martin have argued, the bulk of the distortions in agriculture anyway emanate from tariffs. Many developing countries are net food importers (like the Philippines), and may likely lose anyway from removal of subsidies. Of course some sensitive crops, farmed by the poor in the developing world, may need a faster timetable of subsidy removal - cotton being a prime candidate.

Perhaps I am being too pessimistic: the Hong Kong Ministerial is laying groundwork for more talk, talk, talk, talk. Which is what you do when action is unpleasant. Not good, when a Ministerial Meeting is the decision-making organ of the WTO, and comes around every couple of years. Too bad, when the action is supposed to benefit the poor - the entire thrust of the Doha round of talks.

Oh well. The cause of trade liberalization is down for the count, but not out, not by a long shot. That's what I like to think. Now back to bed.

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