Obama signs trade bill, negotiations continue
- By Mitchell Blatt
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E-mail China.org.cn, July 2, 2015
Beyond tariffs, Canada also has a supply management system that includes price controls. Prices are fixed by marketing boards that consist largely of self-interested farmers, and farmers are guaranteed incomes. It's a great deal for dairy farmers, who have a median annual income of C$250,000 (US$199,808).
For consumers, it's not such a good deal. Some studies have found that Canadians pay three times as much for their dairy and poultry products as they would if Canadian agricultural products faced competition. In effect, marketing boards act as cartels funneling money from the country's millions of citizen consumers to a very small number of established farmers.
Canada's supply management system is not good for new farmers, either, as production quotas impose harsh burdens that protect existing farmers from local competition. This in turn hurts food processors by forcing them to purchase expensive materials. Canada thus exports a low percentage of its food products, proving that protectionism ultimately does more to hurt than protect.
Many governments' insistence on slavishly protecting local agriculture from foreign competition is self-defeating. Everyone has to eat and would benefit from lower prices. If a country's agriculture industry is inefficient, as Japan's is often said to be, the country should rely more on agricultural imports from abroad. A country's local economy would be better served by firms doing what they are good at. They would have more money to purchase food from other countries that excel at farming.
One of the reasons why farmers exert undue influence is because they organize institutions that serve only their own interests. Farmers have not formed organizations that fight for the ability of diverse groups of individual consumers to save money on food. Instead, like businesses in other industries, they put money into political causes that defend their profits.
Earlier this year, Republican presidential candidates in the United States flocked to the Iowa Ag Summit, which was sponsored in part by an agriculture industry-funded interest group that lobbies for a government mandate that ethanol made from corn be used in gasoline. Most of the candidates kowtowed, expressing their support for corn-based ethanol. Only Ted Cruz decried a government ethanol mandate, citing his anti-government beliefs.
The TPP's potential ability to remove some barriers to agricultural trade will certainly make food a little bit less expensive, but it will only tip the scale a little bit. As is always the case in negotiations, each move triggers countermoves. Sometimes, however, it seems like the parties involved are just negotiating against themselves.
The author is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/MitchellBlatt.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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