Free Trade

Professor Jagdish Bhagwati of Columbia has a note about the twin barriers to freer global free trade being the US and India. He has a point, although how he doesn't include India's neighbor to the north, I don't know. He exaggerates to make a point, and that's okay here.

He theorizes that the US refusal to end its agricultural subsidies has triggered India's resistance to endorsing the Doha Round, because of fear that its subsistence farmers would be wiped by subsidized U.S. exports. This in turn hamstrings the government of Dr. Manmohan Singh, an economist by training and an orthodox, free trader. So, we are hurting one of our supposedly stronger allies. Ever heard this before? Typical U.S. issue-by-issue foreign policy.

The constituencies aligned in favor of ending agricultural subsidies, especially corn and other grains, are many and varied: those concerned about obesity and the links to high fructose corn syrup, to those concerned about the impacts of high intensity fertilization on dead zones in the Gulf of Mexico, all the way to orthodox economists and deficit hawks. Yet, the relatively few, but powerful Midwestern senators and representatives carry the day, and everybody pays.

Neither political party wants to spend the political currency to take on the problem of agricultural subsidies, but the benefits from addressing this issue, in spite of some near-term dislocations, would be substantial for our economy and for the economies of our trading partners.