Monday, September 9, 2013

The Fault of Free Trade?

'The cry of the people.' During a recent march, protesters equate free trade agreements and multinational corporations with slavery.
Protesters in recent weeks in support of Colombia's struggling small farmers aimed much of their anger at one target: the Free Trade Agreement with the United States, which they say has opened the gates to imports and pushed down crop prices.

The FTA did reduce tarrifs and remove other barriers to imports of foods and many other products. However, in the case of agricultural products, the tariff reductions have barely begun - making it very doubtful that US imports are to blame - yet - for Colombian farmers' hardships.

On beans, for example, tariffs are to be phased out over a decade, at 10% per year. For milk, the phase-out period is 15 years, for rice,19 years. Since the treaty went into effect only last May, tariffs have barely changed. Many crops also have grace periods, during which tariffs are not reduced at all, and the agreement includes safeguards for Colombian farmers in case imports skyrocket.

And, the import statistics also cast doubt on the idea that free trade is to blame. Potato farmers have perhaps been the most vocal protesters - but last year's official potato imports totaled only 1 percent of Colombia's potato production. In the case of milk, imports constituted only 3 percent of domestic production. Can those tiny amounts really depress prices much?

In contrast, estimates suggest that contraband imports, primarily from Ecuador, are much greater and have much more impact.

But the idea that imports from the U.S. haven't yet hurt Colombian farmers doesn't mean they won't. In fact, they will, and Colombia will have to deal with many thousands of destitute farmers who will migrate to cities and live in poverty and misery.

On the other hand, free trade agreements do bring cheaper consumer products. But are those really beneficial if they mean cheaper junk food and

By Mike Ceaser, of Bogotá Bike Tours

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