Wednesday, August 6, 2008

Free Trade and Farm Subsidies -- Obama vs. McCain

The EU is one of the slowest to extend true free trade to Africa, and has been very resistant to reduce its farm subsidies in particular.

Unfortunately, the EU has also taken to making sure the tariff barriers to outside countries go over higher as they integrate more new countries like Poland into the EU itself. In France and Germany, there is ridiculous fears over "Polish plumbers" taking away jobs, so the EU tends to deal with this by making sure tariffs on goods coming from outside the EU are high.

Contrast this with the US, which recently was pushing for a global reduction in tariffs on farm goods, as well as a global reduction on farm subsidies, which in this country overwhelmingly favor the small number of large corporate farms and NOT, as their supporters would have you believe, the small family farms.

In that respect, support for the most 2008 Farm Bill was a vote in favor of a bill where 80% of the money goes to the top 20% wealthiest corporate farm interests. It was more about courting those wealthy farmers in Indiana and Illinois and Iowa than about really helping hard-pressed small farmers. And it certainly wasn't about helping feed people outside of the United States!

Don't take my word for it, Google "Farm Bill 2008" and follow the links and decide for yourself. But here's one essay from economist Greg Mankiw I found instructive:

It it worth noting that McCain voted against this pork-fest, and Obama voted for it.

Similarly, there is a debate in this country over switching to ethanol and away from gasoline as a means to achieving the dual goals of emitting less CO2 and also sending less money to those lovely Saudis, Iranians and Venezuelans who dig us so much. Not to mention just spending less money on filling up one's car!

Brazil has gone from having 3% of their new cars being flex-fuel in 2003, to 70% of their new cars being flex-fuel in 2006! Brazil has done this by investing heavily in cheap, plentiful sugar-based ethanol, so Brazil has now effectively achieved the elusive goal of being energy-independent.

But, because of the corn-growing ethanol lobby here in the U.S., there is a huge tariff on the import of sugar-based ethanol that amounts to 54 cents a gallon! This is not about helping the American consumer -- rather, it is all about protecting the Iowa and Illinois corn ethanol farmers from competition. Again, as with the farm bill, Obama sides with the giveaway for Illinois and Iowa farmers over lower ethanol prices for all Americans. Google "sugar ethanol tariff" for the relevant links.

My point is, and I know I've wandered all over the place in getting here, is that the tariffs and protectionism of the sort favored by both the EU and Senator Obama do NOT favor the customers that are supposedly being protected, nor do they favor the exporters in Africa, Brazil and elsewhere who simply want to get access to the big markets in the EU and the U.S. The best way the U.S. could help African nations grow and prosper is to drop all the ridiculous tariffs we have on the very export goods that African nations send our way.

In this respect, the U.S. is better than the EU, but that's not saying much at all. We still need to be far better than we've been thus far. Sadly, for all his rhetoric Senator Obama stands squarely in the way of lowering tariffs on African goods exported to the U.S., whereas old white Senator McCain has been a staunch opponent of tariffs against foreign goods, and an equally strong foe of the giveaways to the bloated farm lobby here.

This was cross-posted at

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