President Donald Trump has now had during his first term – three rather large global trade wins.
“Donald Trump and European Union officials on Wednesday stepped back from a trade war as they struck a deal to work towards ‘zero’ tariffs, barriers and subsidies.”
That stage set – Trump then took it and delivered yet another masterful performance.
Trump arrived at these big victories – via a tactic many, many people decried.
Time and again – Trump has been proven correct.
Mister President: As you know, as we work our way to our ultimate trade adversary – China – there are so many other holes to address in our global trade patchwork quilt. To wit:
“India’s trade-distorting farm subsidies are already far in excess of the limits agreed to in their World Trade Organization commitments. Now India wants WTO members to look the other way while it increases subsidies further.
“With global commodity prices weakening, those subsidies are likely to damage farmers in other countries, tempt tit-for-tat reactions from their governments, and threaten the rules-based international trading system. To staunch that threat, agricultural trading nations should bring a WTO dispute-settlement case seeking an end to India’s abusive practices.”
We in the US are working our way to passage of our latest Farm Bill. As much as we conservatives loathe the Farm Bill – we can not loathe it in a vacuum. We globally trade our farm products – so we are subject to the terrible policies of nations the world over.
Terrible policies – like India’s massive and growing farm subsidies.
“New Delhi is backtracking on an agreement made in Bali just months ago.”
How Is India breaking the deal?:
“(T)he Indian government primes its farmers to enter the global sugar market with a whopping 5 million tonnes of subsidized exports.
“India’s federal government overnight announced a $1 billion funding package to kickstart significant sugar exports, in addition to a round of domestic industry assistance announced earlier this year.”
That’s no bueno. For us – or anyone else on the planet.
“The world’s largest sugar exporting nations are calling on their governments and the World Trade Organization to step in and wind back India’s plan to kickstart exports to bolster its ailing domestic industry.”
Trump should yet again apply pressure – to yet again get to his desired zero-zero-zero trade outcome. Zero tariffs – zero import limits – and zero domestic subsidies.
Because less government in trade – means MUCH more trade:
“The (Organization for Economic Co-operation and Development) OECD estimates that every 1 percent reduction in trade transaction costs adds $40 billion to the world trade, with 65 percent of these gains accruing to developing countries.
“The International Chambers of Commerce (ICC) has estimated that reforming customs and border procedures will add $1 trillion to global trade and create 21 million jobs.”
Fortunately, at least some Indians understand this.
“Finance minister Arun Jaitley on Tuesday underlined the need to blend subsidy with investment to enhance farm sector growth in the country, arguing that the model which sustains indefinitely only on subsidy will not be a sustainable model.
“‘Investments will make farm sector self-sufficient on ground. With much lesser subsidies, a self-sufficient farmer may be able to serve the cause of Indian agriculture much better,’ Jaitley said….”
Why is India ignoring the very sensible Jaitley – and instead dumping even more government money into domestic crops? From all appearances – domestic electoral politics. To wit:
“A general election is due by May next year and the federal government is looking for a political fix on the international market for the financial hardship faced by tens of millions of people in cane-growing families.”
This massive sort of government intervention – is awful. Both domestically:
“The (Indian) government has set a floor price for cane and farmers’ output has shot up from an annual average of 20m tonnes a year to more than 30m, which has left sugar mills deep in debt.
“Unpaid dues to farmers by sugar millers hit $4m in May, which is a significant sum considering 85 per cent of farmers own less than 2ha of land and earn $1500 a year.”
And on the international market:
“India’s search for a sweet solution to its domestic problem is souring the global trade.
“Earlier this year, the global market plunged towards $300/t in anticipation of India’s export push.
“That price is roughly 30% below the cost of production in Australia and it could fall even further on today’s news.
“The long term sustainable price for our growers hovers between $400/t to $450/t.”
So yet again we say – we need Trump’s zero-zero-zero solution. Zero tariffs. Zero import limits.
And – are you listening India? – zero subsidies.
We’ll happily get rid of our relatively infinitesimal Farm Bill – when the very many nations just like India get rid of their MASSIVE tariffs, import limits…and subsidies.
Mister President – if you would, please….