The World Trade Organization (WTO) seems on the verge of approving an agreement with India to allow the Trade Facilitation Agreement (TFA) to move forward. The TFA is to be applauded. It will make a useful contribution toward helping goods move across borders more efficiently, which will tend to increase trade and promote economic growth.
The problem is not with the TFA, but rather with the high price that the global community seems ready to pay for it. India has asked that it be allowed to exceed the level of domestic agricultural subsidies to which it agreed twenty years ago in the Uruguay Round negotiations. For the first time in history, those talks led to limits on the ability of countries to use trade distorting agricultural supports. Those subsidies had been rampant, often leading to surplus production that depressed crop prices in global markets. Farmers who were being subsidized generally were happy enough with that arrangement, but it was a very different story for unprotected farmers in other countries. Many of the world’s farmers are quite poor to start with. Government-driven decreases in commodity prices make them even poorer.
Read more at http://www.cato.org/blog/india-tosses-out-wtos-agricultural-subsidy-disciplines
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