Monday, January 09, 2006


Random musings on globalization and rice

A great deal of the antagonism being generated towards globalization (defined broadly as the liberalization of markets) stems from the fact that there will inevitably be "winners" and "losers" arising from the process. Assuming that this liberalization of markets is carried out equitably across the whole spectrum of societies that compose this world of ours; that is, assuming that countries are allowed to specialize in those industries wherein they possess a comparative advantage while jettisoning those industries in which they don't -- then it would appear that the question of how one takes care of the "losers" ought ultimately to determine the success or failure of this entire enterprize. There are two important questions here. I would like to focus on the first (the "equitable" liberalization of markets)...

Although I don't even intend to scratch the surface here, the liberalization of the rice trade serves to highlight the complexities of this sticky unresolved problem of globalization. On the neighboring island of Hispaniola (as in various other locations throughout the Caribbean – during differing periods of our collective history), rice was a locally produced staple (I am old enough to remember the days when you could buy rice that was actually produced in Puerto Rico). Although it still remains so in some places, the panorama has changed dramatically from years past. In the late seventies and early eighties, Haiti was nearly self-sufficient in the production of rice. Eventually, its rice market was pried open under pressure from the international community and flooded with cheap subsidized imports from the US. The consequences were devastating for a country considered one of the poorest if not the poorest in the hemisphere. One could argue that the rich US farmer with a much wider range of economic alternatives benefited at the expense of the poor Haitian farmer with far less options at his disposal.

In 2002 the US Federal Agriculture Improvement and Reform Act of 1996 (known as the "freedom to farm" bill, which had called for the eventual elimination of US government income support to farmers) was replaced by the Farm Security and Rural Investment Act. This legislation put off many of the reforms contained with the "freedom to farm" bill and greatly expanded the level of government support to farmers. Contrary to US commitments during previous WTO trade negotiations to reduce its own agricultural subsidies, the new farm bill reportedly increased support for the agricultural sector by about 80 percent over the previous farm
legislation. (see * for a snap-shot of the rice industry in the US)

It is small wonder that some international agencies have characterized the
final text of the Declaration at the end of the WTO Hong Kong Conference
as a betrayal of development promises by rich countries. Here within our
own regional context, a similar sentiment was expressed recently by Caribbean farmers against what they claim will be an onslaught of imports of subsidized US rice and other commodities, consequence of the recently approved "Dominican Republic - Central America Free Trade Agreement". Complex issues indeed! Whither free trade? Is it not being applied equitably in all cases? Your feedback on the subject is welcome.


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