The Great Debate on Agriculture Continues

Agricultural reform is at the heart of the continuing Doha round of trade negotiations. Talks on trade liberalization resume on December 13.

The disputes between the US, EU and a collection of several developing countries focus on whether or not the EU and the US will reduce agriculture subsidies to domestic farmers. Both the United States and the European Union have vocal farmers’ lobbies, which support the continuance of agriculture subsidies. These domestic powers have applied pressure on their governments to resist these movements to reduce domestic subsidies.

Representatives and advocates for the developing world have argued that the continuance of agricultural subsidies in the developed world keeps world agricultural prices artificially low. Since many developing countries specialize in agricultural exports, they generally support a rise in world food prices, which would result in an increase in export revenue.

Arguments have been made against this assumption, notably voices for individual food security. The argument is that since many countries export the bulk of their agricultural crops, agriculture has become centered on the crop of export and less emphasis has been given to domestic food production for domestic needs. These countries import many of their foodstuffs in this move towards agricultural specialization. An increase in world food prices would make these imports more expensive, and possibly force the most marginal of the developing world’s poor into famine.

Never the less, the focus of the Doha round has been towards a greater liberalization of agriculture by removing agricultural subsidies which distort the market. The push in this direction has been supported by non-governmental organizations (NGO) activists, mainly from the developed world. But a new twist has emerged; some NGO activists have come out against the deal to be discussed in the next round of talks.

According to a report by the BBC’s Steve Schifferes, the development lobby is concerned about two points of the negotiations: one, that the developed countries will push too hard to gain full access to the markets of the developing countries for goods produced by the developed world, especially telecommunications, finance and other service sector industries. Two, that the poorest countries will loose the preferential access to western markets that they now enjoy as former colonies.

Activists want the developed counties to compensate these countries for loss of preferential treatment and the right to “designate ‘special products’ which would be exempt from trade liberalization rules.” The belief being that the gains for small counties in agriculture could be out weighed by losses in services and industrial goods.


BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4510194.stm

Everything old is new again.

Celebrity knitting 'sparks boom'

A boom in sales of wool and yarn is reported by a department store chain as knitting appears to have become the latest celebrity craze.

John Lewis said it sold 93,000 balls of wool last week - up 60% on last year.

Stars Sarah Jessica Parker, Julia Roberts, Uma Thurman and Madonna have been recently revealed as knitters.

John Lewis haberdashery buyer Lucy Wright said chunky knitwear was featuring on catwalks and knitting was "being referred to as the new yoga".

"We are seeing more customers buying wool to make jumpers, scarves and fashion accessories such as pom poms," she said.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/uk/4498878.stm

World Bank Approves $200M for Bangladesh

The Associated Press reported that the World Bank has approved $200M in development loans to aid Bangladesh. The funds would be used to reform the tax and banking sector.

This is an important step on the road to stability in governance and economic bounty for Bangladesh. Scholars have been saying for the past fifteen years that economic prosperity of a developing (and developed nation, for that matter) is dependent on the health of that country’s public sector.

Basically, it works like this:

A country has problems. The roads don't get paved, few of its citizens are educated and the government officials look to outside donors and companies for sources of revenue. They know that they can't get any money from their own people to fix these problems (and line their own pockets), so they tax, tariff and coerce monies from outsiders. Outsiders say, "hey these guys are ripping us off-they nationalize our property, they require bribes to get anything done, and at the end of the day we may not be able to get our money out!" So they take their business elsewhere. Jobs leave, and things go down hill.

Investors, donors and domestic business want the public sector to be transparent and accountable. They need faith that they can do business and unpredictable stuff (wars, nationalizations, capital controls, ect.) won't get in the way. To be able to give them that faith the public sector needs to provide rule of law and stability. Rule of law requires a bureaucracy and legal system (these people need a paycheck) and stability requires a whole list of stuff from regime sanity to food in the bellies of the very poorest.

This takes cash, ya'll.

Plus, the act of paying taxes (unpleasant though it maybe) develops a social habit of interacting with the public sector.

So good for Bangladesh.



See the article at: http://www.forbes.com/entrepreneurs/feeds/ap/2005/12/02/ap2365164.html