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Free Trade Fact of the Day

Posted By Conn Carroll On May 20, 2008 @ 11:09 am In International | Comments Disabled

Ethanol is due its share of the blame of the global food crisis [1], but protectionism abroad is also a major factor. Before Speaker Nancy Pelosi further destroys American credibility on trade [2] she should consider what lack of free trade means to countries like Nigeria [3]:

The cause of the food crisis in Nigeria and Africa can be linked to inappropriate agricultural policies that have stifled the continent’s great agricultural potential. Over the years nothing has been done to address low yields–on the contrary, it seems as though government has gone out of its way to stifle production.

Nigeria at different times has banned the importation of various staples including wheat, rice, maize and vegetable oil. Such restrictions may indeed protect local industry for a short time, but it punishes consumers immediately and discourages production in the long run. Protectionism from competition and innovation allows local producers to hike up prices on lower-quality goods. Relaxing these restrictive trade practices will increase the availability of food and a fall in prices.

Unless crop yields increase, the reserves will in a short time be depleted. While importing staple foods could complement the present shortfall, many countries have counter-productive bans or restrictions on the export of such items. Aside from the fact that these do not actually stimulate local production, it protects it from competition. Lack of competition undermines innovation, raises prices and damages quality.


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

URL to article: http://blog.heritage.org/2008/05/20/free-trade-fact-of-the-day-53/

URLs in this post:

[1] share of the blame of the global food crisis: http://www.foundry.org/2008/05/02/the-ethanol-mandate-global-hunger-link/

[2] further destroys American credibility on trade: http://www.foundry.org/2008/04/18/american-leadership-on-free-trade-rip-april-10-2008/

[3] Nigeria: http://www.newtimes.co.rw/index.php?issue=13535&article=6451

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