Free Trade Fact of the Day
Conn Carroll /
The New York Times reports today that at least 29 governments, including China, Norway, and South Korea, have drastically limited the amount of food their people can export. These protectionist measures have only worsened the global hunger crisis by driving up the price of food for poor nations. Heritage scholars Brett Schaefer, Ben Lieberman and Brian M. Riedl explain why trade barriers are a a major cause of hunger world wide:
Although developed countries generally maintain low trade barriers, their highest trade barriers tend to apply to agricultural products and other goods that developing countries export. They also tend to subsidize disproportionately the goods that compete with developing countries’ products.
The combined effect of these policies is to reduce global economic growth by billions of dollars annually. According to the World Bank: Recent estimates show that the global costs of trade tariffs and subsidies would reach about $100 billion to $300 billion a year by 2015. About two-thirds of the costs are estimated to come from agricultural tariffs and subsidies.
Such policies have a double impact. They erect barriers that impede farmers in developing countries from exporting their products to markets in developed countries, and they raise the prices for consumers in developed countries without transferring any of the price increase to poor farmers. This reduces incentives for agricultural production in poor countries, reduces incomes for farmers in those countries, and impedes the ability of people in poor countries to weather situations like the current food crisis.