Thursday, June 16, 2005

Wolfowitz isn't a dumb guy 

The decision to make Paul Wolfowitz head of the World Bank is looking better for us free-market types, butthis won't go well with the EU.
On a tour of a cotton-processing factory in Burkina Faso, Wolfowtiz said the World Bank would have a "strong voice" at the Doha trade talks to make a case for wealthy nations to reduce agricultural subsidies worldwide.
Developing countries complain they are pushed out of the market by the subsidies rich nations pay their cotton farmers, and argue the huge subsidies to U.S. cotton producers -- which at $4 billion are larger than the whole Burkina Faso economy -- are the cause of a collapse in cotton prices.

"The key to tackling the problem of cotton subsidies, which obviously hurts farmers here in Burkina Faso and in other poor countries ... is to tackle agricultural subsidies across the board (in the Doha trade round)," Wolfowitz said.

"We will have a strong voice in favor of reducing subsidies worldwide," he said.
His words come as Oxfam chides the US and EU for subsidizing overproduction of agricultural goods.
Rich countries are dodging the commitments they�ve made to reduce subsidies that hurt poor farmers overseas. At the same time, they�re forcing poor countries to open their markets to unfairly subsidised produce. This duplicity threatens to turn the whole round of �development� talks into a farce.
The data on this is mixed, though. Countries that open up to trade seem to grow faster on their own, even if the other side does not reciprocate. But there is less good evidence on whether or not labor policies improve and that income inequality is reduced. I still argue that a rising tide that in fact lifts all boats is a good in and of itself, regardless of what it does to a Gini coefficient.

Still, the thought that Oxfam and Wolfowitz would side together on this would certainly not have been the vision Wolfie's detractors had last spring when he was tapped for the post.