Monday, September 22

As expected WTO talks in Cancun failed. The Angry economist has some good comment on this. I agree with him that fair trade is a 'good thing'. I do think this is a rather simplistic view of the situation. There are too many other issues that have nothing to do with what is good for trade for these negotiations to ever be successful.

Does the developed world want to be dependant on the third world for food? Take Zimbabwe, which went from being a large exporter of food to economic basket case in record time, thanks to Bob. True, there are more then enough countries too make the failure of any one country as insignificant event, but large scale disruptions of trade in the event of a major war or natural disaster would be catastrophic. Can Japan strategically really afford not to grow its own food, with neighbours such as China and North Korea?

Food subsidies are inefficient, granted. But you're paying for more then just food.

It seems very reasonable that the developing world should give up the Singapore issues, but this too is not as simple. From the developing worlds view trade barriers for the protection of local industry is by no means a bad thing. An established industry can easily destroy a small developing industry in a developing country, on the odd chance that they might become competition.

Fair trade is a good deal. It is just not a deal that can be made now. The American approach of striking bilateral trade agreements between countries or groups of countries is perhaps the way to go for the time being.

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