Wednesday, November 26, 2003

Oh Really?

Will Australia get a good deal on Agriculture?

Agriculture is a key part of this agreement for both sides. Australia has stressed to the US that we are seeking a good deal that includes sugar, beef and dairy, and we will be pressing for the earliest possible opening-up of access to the US market.

The exact details of how agriculture will be dealt with are still being negotiated, but it is worth noting that the US was able to cover agriculture comprehensively in its negotiations with Mexico under the North American Free Trade Agreement (NAFTA), and in its recently concluded FTA with Chile. While these agreements have transition periods of 5 to 10 years and even longer for eliminating tariffs and quotas for some products, Mexico is already benefiting from the removal of tariffs and quotas for most of its agricultural exports to the US.
[My emphasis]

DFAT, "Australia-United States Free Trade Agreement, Frequently Asked Questions"

Report Finds Few Benefits for Mexico in Nafta

As the North American Free Trade Agreement nears its 10th anniversary, a study from the Carnegie Endowment for International Peace concludes that the pact failed to generate substantial job growth in Mexico, hurt hundreds of thousands of subsistence farmers there and had "minuscule" net effects on jobs in the United States.


The report seeks to debunk both the fears of American labor that Nafta would lure large numbers of jobs to low-wage Mexico, as well as the hopes of the trade deal's proponents that it would lead to rising wages, as well as declines in income inequality and illegal immigration.

Though sorting out the exact causes is complicated, trends are clear. Real wages in Mexico are lower now than they were when the agreement was adopted despite higher productivity, income inequality is greater there and immigration has continued to soar.

"On balance, Nafta's been rough for rural Mexicans," said John J. Audley, who edited the report. "For the country, it's probably a wash. It takes more than just trade liberalization to improve the quality of life for poor people around the world."

The Carnegie findings strike a much more pessimistic note than those of a World Bank team that concluded in a draft report this year that the trade accord "has brought significant economic and social benefits to the Mexican economy."


The Carnegie report argues that the growth in manufacturing resulting from the trade agreement was largely offset by lost employment among rural subsistence farmers, who were adversely affected by falling prices for their crops, especially corn — a problem intensified by the Mexican government's decision to lower tariff barriers to American-grown corn even more rapidly than the agreement required.

"This is a trade pact which opened the U.S. economy to Mexico very profoundly, including years when the United States experienced its best growth in decades," Ms. Polaski said. "Yet we can't see a clear net increase in jobs in Mexico. You'd expect strong growth. You wouldn't have expected to need a magnifying glass to find it."

The trade agreement also reinforced and magnified changes in Mexico's rural economy — brought on by a broad array of other policies — that are damaging the environment, according to Scott Vaughan, an economist who recently left Carnegie to head the environmental unit at the Organization of American States. For example, he contends that the agreement has accelerated the shift to large-scale, export-oriented farms that rely more heavily on water-polluting agro-chemicals and use more irrigated water compared with producers of similar crops for the Mexican market.

Celia Dugger, New York Times, 19 November

No comments: