Untangling the Knots of Protectionism

In the months leading up to the votes on Trade Promotion Authority (TPA), President Bush had to buy off powerful domestic constituencies with tariffs on steel and, more recently, increased subsidies for agriculture. Now that he has TPA, the President has wisely reversed course and proposed a far-reaching plan to use the Doha round of trade talks to eliminate the majority of world-government support for agricultural products by 2010. The agricultural proposal, in conjunction with TPA, will hopefully enable the administration to undo years of European Union and U.S. protectionist policy. This will provide benefits to taxpayers, consumers, and developing countries trying to build credible agricultural export markets.

The Doha agricultural proposal, which includes the scrapping of agricultural export subsidies over the next five years and cutting global farm tariffs to fifteen percent by 2010, is the administration's answer to the European Union's mid-term review of the Common Agricultural Policy (CAP) that recommended a shift away from protectionist policies in Europe.

The TPA (or "fast-track" as it is more commonly known) will allow President Bush to aggressively negotiate the deal with greater credibility than previously anticipated, in the knowledge that he will not have to fear drastic changes from Congress on any agreement.

The agriculture proposal was a surprising turn-around from the farm bill the president signed two months ago. That bill -- reminiscent of the more lavish indulgences of European socialism -- increases agricultural spending by more than $80 billion in the next ten years.

President Bush cannot continue to be swayed by agricultural interest groups. Comprehensive agricultural trade liberalization, such as that being proposed, is essential for four reasons.

One, agricultural policy in the developed world has, for the most part, been anti-trade and anti-development. The worst culprits are the European Union and the United States, who for more than half a century have increased spending for their farmers under the guise of income stability for small farmers and the preservation of the rural way of life. This has not only caused a loss of credibility of the industrialized world in the eyes of developing countries -- countries that want to enable their own development through the creation of sustainable agricultural export markets -- but also undermines the developing world's belief in the free trade system in general.

Two, the notion of protectionism is distinctly anti-consumer. Consumers ultimately pay for protectionism twice: through increases in taxation to pay for protectionist measures such as subsidies and through inflated prices of goods made from the protected products. For instance, it is estimated that the average American taxpayer will pay more than $600 for the increases in the farm bill alone.

Three, agricultural subsidies constitute wasteful and indulgent government spending, especially when there are more pressing spending needs, such as education, healthcare, and more recently homeland defense. The EU can also ill-afford its agricultural spending excesses as it attempts to expand. Extravagant, protectionist spending will be almost impossible to justify. European taxpayers will already be paying heavily in the short run for the poorer newcomers and will thus expect Eurocrats to tighten their purse strings in other places.

Four, protectionist agricultural policies in the United States do not contribute to a positive rural redevelopment policy and preserve a dying way of life. As of 2001, seven percent of farmers were producing eighty percent of farm goods. Farming assistance is going, in the most part, to wealthy corporate farmers and not to the more than two million small farms in the United States. Over the past five years, it is estimated that the wealthiest ten percent of farmers received an average of almost $300,000, whereas the other ninety percent only received an average of $1,100 each.

In light of its recent poor performance in trade matters, particularly the pork-laden farm bill and steel tariffs, the administration must not use the Doha agricultural proposal as mere rhetoric. Bush must lead the world community, by example, toward freer and fairer agricultural trade policy. Congress was right to give the president TPA, and he must not disappoint the American people with imprudent trade policy.