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Free Trade Fact of the Day

Posted By Conn Carroll On April 28, 2008 @ 4:21 pm In International | Comments Disabled

On April 10, 2008 House Speaker Nancy Pelosi (D-CA) destroyed over 30 years of U.S. leadership on free trade [1] by gutting Trade Promotion Authority to kill the Colombia Free Trade Agreement. With riots breaking out all over [2] the world [3] due to high food prices (in part caused by Democrat ethanol mandates [4]) George Mason University economist Tyler Cowen explains [5] how trade could help alleviate hunger:

Rising food prices mean hunger for millions and also political unrest, as has already been seen in Haiti, Egypt and Ivory Coast. Yes, more expensive energy and bad weather are partly at fault, but the real question is why adjustment hasn’t been easier. A big problem is that the world doesn’t have enough trade in foodstuffs.

The damage that trade restrictions cause is probably most evident in the case of rice. Although rice is the major foodstuff for about half of the world, it is highly protected and regulated. Only about 5 to 7 percent of the world’s rice production is traded across borders; that’s unusually low for an agricultural commodity.

So when the price goes up — indeed, many varieties of rice have roughly doubled in price since 2007 — this highly segmented market means that the trade in rice doesn’t flow to the places of highest demand.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/04/28/free-trade-fact-of-the-day-37/

URLs in this post:

[1] House Speaker Nancy Pelosi (D-CA) destroyed over 30 years of U.S. leadership on free trade: http://www.foundry.org/2008/04/18/american-leadership-on-free-trade-rip-april-10-2008/

[2] all over: http://www.npr.org/templates/story/story.php?storyId=89631333

[3] the world: http://afp.google.com/article/ALeqM5inStpZmpyc8ZTMcT0n_kgEoHbOcA

[4] in part caused by Democrat ethanol mandates: http://www.foundry.org/2008/04/23/morning-bell-the-ethanol-disaster-lesson/

[5] explains: http://www.nytimes.com/2008/04/27/business/worldbusiness/27view.html?_r=1&oref=slogin

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