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Agriculture & trade blocs

by Jerome a Paris Wed Nov 16th, 2005 at 11:18:31 AM EST

Back to the diaries (edited for formatting)

I wanted to write a long diary, but it's beyond me tonight, so I thought I'd just provide a neat map in today's Le Monde (click for bigger version):

Agriculture and trade bloc descriptions below:


G20 - emerging markets asking for an opening up of the markets of the developed world

Cairns Group - countries with very competitive agricultural sectors and strongly pro free trade in that sector (one third of world ag. exports)

US and EU - the traditional protectionists

G10 - highly protectionist countries - and significant importers - keen to protect what remains of their agriculture

G33 - weak ag. countries who ask for specific protections as a  total opening of the market scould devastate their economies.

The accompanying article in Le Monde flags various points:

  • the WB estimated that a full opening of ag. markets would have a net global benefit of 182 billion $ by 2015. However, this would be unevenly spread:

  • the big winners would be exporting countries like Australia, Brasil, Argentina, which subsidise the agriculture little, and are highly specialised, and competitive, in a few products (beef, milk, sugar, wheat);

  • the big markets (US and EU) would see losers amongst producers unable to cope with competition, and winners amongst consumers, who would see lower prices (or amongst the distribution chain, if lower import prices are captures there...)

  • the non competitive third world would likely be a net loser, as they would lose their preferential access to Europe. The volumes are too small to be significant in any case, except in very specific cases like cotton producers in central Africa which would benefit from an end to export subsidies form the big 2. After losing out to China on textile, these countries would now lose to Brasil or Australia on the agricultural front...

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the WB estimated that a full opening of ag. markets would have a net global benefit of 182 billion $ by 2015.

If that is indeed the figure calculated by the World Bank (WB?), 182bn$ for the entire world over a decade seems marginal, almost negligible.

Can you confirm the number?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 03:12:33 AM EST
In fact a World Bank study offers the figure of $300 billion a year.

Abolition of tariffs, subsidies and domestic support programs would boost global welfare by nearly $300 billion per year by 2015, says a new World Bank research study, Agricultural Trade Reform and the Doha Development Agenda.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 03:20:36 AM EST
[ Parent ]
The WB study can be downloaded as a pdf file here.

The study referred to in Le Monde is from May 2005; this is a new one (November 2005).

No, I haven't read it. But here's an idea: what if the WB thought the May study was wimpish with only $18.2bn gains a year, and that world opinion might legitimately ask what all the fuss was about for so little gain? And what if the November study (with new, improved $300bn a year!!!) came out just in time to bolster the free trade case at the Hong Kong talks?

(Of course, this is just idle snark, because the World Bank is an extremely serious etc etc...)

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 03:43:13 AM EST
[ Parent ]
Well, the number are not so different (see my comment below) - but remember that journalists are easily confused between speed and acceleration of wealth creation...

The political agenda on the trade talks is obvious. Also obvious will be France's role as the scape goat for failure.

Tony Blair said that he would "do anything" to make the round succeed. Why isn't he then giving the silly French their stupid 2 billion euros if that's all that blocks a 300 billion per year windfall? They can then be blamed for being cheap while he is statesmanlike. Win-win...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Nov 15th, 2005 at 03:49:31 AM EST
[ Parent ]
Perhaps Bliar hadn't yet read the $300bn number the WB has now come up with!

In fact I think (like you) there's a lot of grandstanding going on. That includes Bush's offer, which I haven't seen much examination of (for the moment, in the real world, his record is of increasing US farm subsidies), and Bliar's attitude too. No one really believes the Doha Round will introduce global agricultural free trade. The question is what political capital can be made out of the following blame game., that's all.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 04:20:56 AM EST
[ Parent ]
I wouldn't be surprised if that is his policy, even if it doesn't work, you're right it puts forward to the accession nations that Britain wanted a deal, (both on trade and the budget), and frames France as being recalcitrant. I do think that it's more to do with Blair's view on `his legacy' rather than truly about a deal.
by ------- on Tue Nov 15th, 2005 at 07:00:49 AM EST
[ Parent ]
Well, the article in Le Monde (linked to in the diary above) does say 182b$ by 2015, and says this comes from a WB study, but they must obviously be wrong. Maybe they focused on a specific detail, I have not investigated yet...

They also mention 0.4% of world GDP as a gain; which fits with 180b$, but would imply that it is indeed a yearly figure - and thus we get to be in the same ballpark for what can only be a very rough estimate.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Nov 15th, 2005 at 03:43:29 AM EST
[ Parent ]
I hate to refer to my own diary on comparative advantage so argue that the huge shifts in capital, resources and labour that will be needed in many countries in order to achieve this 0.4% gain may not be worth it... Unless the 0.4% is used for investment and not consumption.

How about contributing the 0.4% gain towards the goal of 0.7% in development aid?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Nov 15th, 2005 at 03:52:44 AM EST
[ Parent ]
Yes, it seems too marginal a gain to be worth the ruckus. Even if you take the !new! WB figure of $300bn p.a., that takes us to something like 0.66% of global GDP, which still seems slight.

Ploughing the gain into development aid: you'd need to persuade the Cairns Group nations to cough up, because they would be the ones in fact making the extra money.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 04:30:44 AM EST
[ Parent ]
Yes, Le Monde does seem to have cited the number in a misleading way, i.e. it should be $182bn per annum, not over ten years.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 03:57:06 AM EST
[ Parent ]
Now, thanks to Jérôme's presence at a Wolfowitz press conference, we know that the boss* is using the $300bn number for how much the world stands to gain. Nice to see he's well briefed.

Sorry the WB report beats me for the moment, it's 450 pp long and it ain't easy to see quickly where they got the extra money from to build up from $182bn to $300bn.

*of the World Bank, natch...

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 15th, 2005 at 11:34:59 AM EST
A good analysis of free trade can be found at Angry Bear.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Wed Nov 16th, 2005 at 06:26:41 PM EST
Good link, thanks.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Nov 17th, 2005 at 03:05:08 AM EST
[ Parent ]


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