FREE BUT FAIR
BY WALTER CRONKITE
The twin ideals of free trade and fair trade are having a rough time in this very political year. They are dividing both political parties and generating a fog of hypocrisy all around. These thoughts are prompted by a preliminary ruling by the World Trade Organization against the United States, in a suit brought by Brazil. At immediate issue are American cotton subsidies, but the ruling could affect subsidies for other crops, such as corn, wheat and rice. It has brought cries of alarm and outrage from farm-state legislators, and an implied threat by our chief negotiator that, if the ruling stands, it "would have a negative effect on how officials see the WTO and free trade in general."
This country has been paying subsidies to its farmers, in one form or another, since Herbert Hoover and the early days of the Great Depression. Their purpose then was to prevent rapid, destabilizing rises in agricultural prices or plunges that threatened farms and markets at a time when the specter of economic catastrophe hung over the nation. But once awarded, such handouts have proved extremely hard to end.
Today, the United States is the largest food exporter in the world, thanks in part to the more than $22 billion it spends to subsidize its farmers -- most of which goes to agricultural corporations, or "agribusinesses." Subsidies, of course, permit American farmers to pocket high profits on their products while exporting those products at prices far lower than farmers in other nations can sell theirs. The practice devastates both the farmers of poor nations and their markets.
One of the long-standing goals, or hopes, of free trade has been fairer trade -- the parallel effort to help developing nations out of the rut of poverty. And in recent years there have been serious efforts to end or to at least reduce the unfair advantage of the rich nations over the poor. There has been some success. Some limitations on specific crop subsidies have been agreed to. But Brazil has claimed that the United States exceeded its limit on cotton subsidies -- a charge denied by American negotiators. And the Americans insist that the issue should not be the subject of a ruling but of negotiations.
The American position is not helped by the fact that Brazil got its figures from the U.S. Department of Agriculture, or by the record of the Bush administration. President Bush did two things shortly after gaining office: He unilaterally raised tariffs on steel, and he increased agricultural subsidies to record amounts. The steel-tariff hike was rescinded last year only under the threat of a trade war.
Actually, America is not the biggest bully on the block. Together, the rich nations (mainly Japan, the United States and those of the European Union) spend some $300 billion a year on agricultural subsides. The American expenditure is by far the smallest. But because we are the biggest exporter, we also are the biggest target.
This presidential election year has coincided with some hard economic times and high unemployment in this country, which, for many Democrats, discredited another aid to developing nations. The practice of outsourcing, which Democrats decry and Republicans occasionally defend, actually has been a substantial aid to a number of poorer countries, supplying jobs where none existed and at wages previously unavailable -- in spite of the fact that those countries undersell American workers and cost jobs here at home.
The Democrats began using the "free, but fair trade" slogan. However, the word "fair" is defined differently in Detroit than in Bangladesh. Have we Americans (along with other rich nationalities) come to consider the advantages resulting from our overwhelming economic power as nothing more than our due?
There seems to be a sense of entitlement shared by American workers and business leaders, liberals and conservatives, Republicans and Democrats. But in spite of its cost, free trade also has been the driving force behind huge increases in American exports that have greatly helped both American farmers and manufacturers. So it is more than a little ironic that free trade should now be in such bipartisan trouble here.
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© 2004 Walter Cronkite
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