Free Trade is a Two-Way Street

Mr. Watkins begins with the dreadful reality that America in 2001 spent $4 billion subsidizing a few thousand of its big cotton growers, when the market value of the U.S. cotton crop was only $3 billion. Surplus U.S. cotton helped smash the global market for eleven million African cotton growers who earn perhaps $300 per year apiece for their hand-hoed crops. Oxfam rightly deplores the big increase in U.S. farm subsidies passed in 2002. 

But Mr. Zoellick proposes to cut U.S. trade-distorting farm subsidies in half during the current World Trade Organization Doha Round of negotiations, with the ultimate goal of eliminating farm subsidies and tariffs completely. He believes he can get congressional approval for this as part of global farm subsidy disarmament.

Unfortunately, America could not get Europe to agree on a farm subsidy phase-out in the WTO’s Uruguay Round, and American farmers became disillusioned about their chances for real farm trade liberalization and despaired of any opportunity to help supply Asia’s growing farm product demand. Hence the backward step with U.S. farm subsidies in 2002.

But the prospects for freeing farm trade are much brighter in the WTO’s current round, not least because the EU is taking in Poland, Hungary, and Romania. Those big countries are capable of foundering the EU budget with huge increases in farm output unless the EU’s subsidies are radically reined in.

If Oxfam wants to raise world market prices for African cotton growers and Brazilian sugar farmers, it should support the Bush administrations’ efforts to liberalize farm trade.

Oxfam, unfortunately, seems to want more trade barriers. Mr. Watkins complains about how America is forcing corn exports on Mexico under the North American Free Trade Agreement (NAFTA). He says Mexico should be allowed to protect its traditional two-hectare corn growers.

But farm imports are one of the most important benefits of NAFTA for Mexico—and for its people and environment. Mexico is dry. Little of its land can support high-yield crops. Thus Mexican food has been expensive for the 90 percent of Mexicans who don’t farm. Worse, satellite photos now show Mexico’s peasant farmers are slashing and burning an additional three million acres of scarce, species-rich forestland per year in their efforts to grow more low-yield corn and beans.

Even with Mexico’s traditionally high corn price supports the typical Mexican subsistence farmer might sell only $400 worth of corn per year. His only real hope to improve the lives of his family and to educate his children has been to abandon his two hectares on the cooperative farm (he can’t sell the land) and walk to Mexico City with only the shirt on his back and no urban skills. Under NAFTA, Mexico should export more fruits, vegetables and sugar to the United States, commodities that can support more good jobs than Mexico’s arid cornfields.   

Remember that the world will demand nearly three times today’s farm output by 2050, to provide high-quality diets for its all kids and pets. Nor should we forget the Third World’s urban poor, who are often unable to afford high-quality or nutritionally adequate diets because of inflated food prices created by farm trade barriers.

America and Europe have certainly been guilty of ambivalence about the international impacts of their farm subsidies. But America has also been leading the world toward freer markets, freer societies, and increased human well-being for two centuries.