Before the unexpected break over the holiday, William Burton made a comment that the Bush’s efforts really stuck it to the developing world because it limited itself to manufactured goods. Brad DeLong’s post today on the effect of NAFTA on agriculture in Mexico.
By and large, I’m for prying open markets throughout the world. In agriculture this has to happen slowly for developing countries to survive and this is an example of why. Opening up world agricultural markets quickly, as the administration is trying to do with manufactured goods, would hurt developing countries’ populations. The United States, save sugar, is a very efficent producer of agricultural products and would overrun many of the developing economies. That doesn’t mean we shouldn’t open up such markets, just that it will take longer.
Opening manufactured goods up would be a huge boon for developing nations especially given textiles are included. The United States is at a comparative disadvantage for manufactured goods that are relatively low skill. Are workers cannot afford to work for the low wages that provide modest incomes in other countries and so they do much, much better through free trade. Worse, in the long term, developing too protected of an industry means that industry becomes irrelevant when barriers do fall.
Who does poorly is Europe and Europe is also the chief barrier to the further opening of agricultural markets. This is a second reason the administration is pursuing the right policy. Bundling all three markets together means certain death. Taking them separately means a good chance for a deal.
So, yes, I’d like to see the administration decrease trade restrictions in those areas as well, but this agreement will benefit many developing countries if it is successful.
ArchPundit