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NATIONAL CENTER FOR POLICY ANALYSIS
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Rich Countries: Tear Down These Trade Walls
Daily Policy Digest

Trade Issues / Trade, Tariffs and Protectionism

Thursday, August 29, 2002
By some estimates as many as 2.8 billion people live on less than $2 a day. Some 800 million people -- including more than 150 million children -- are undernourished, with 1.1 billion lacking access to safe drinking water and 2.4 billion lacking improved sanitation.

Direct aid from rich nations has shown its flaws, prompting leaders of some poor countries to put greater emphasis -- correctly -- on trade.

But industrialized countries stifle economic progress in developing countries with trade barriers in the form of discriminatory tariffs and duties placed on goods entering the country, as well as subsidies and tax breaks favoring producers in developed countries.

  • The $190 billion Farm Security and Rural Investment Act of 2002 -- which authorizes federal price supports for commodities and supposedly expands agricultural trade -- actually undercuts support of freer trade in the Doha round of trade negotiations, where the U.S. is seeking to reduce agricultural subsidies and tariffs worldwide.
  • The increase in subsidies to U.S. agriculture may invite retaliatory tariffs by other countries.
  • The World Trade Organization and European Union countries argue that farm subsidies are currently three times higher in the U.S. than in Europe.
  • With subsidized crops flooding poor countries, farmers there cannot compete domestically and the result is greater poverty.
The European Union is also guilty of agricultural trade barriers and protectionism. Overall, such interventions on the part of wealthy countries cost poor countries $100 billion a year in lost income, by World Bank estimates -- more than twice the amount they receive in developed-world aid each year.

If the rich nations are truly serious about helping poor nations, they'll tear down these walls right now.

Source: Pete du Pont (National Center for Policy Analysis), "Lessons Up Close for Summit in Africa," Washington Times, August 28, 2002.

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