December 18, 2005EconomyForeign Affairs

Beyond Europe’s farm subsidies

India would benefit more from lowering its own tariffs

This is an archived blog post from The Acorn.

Amid all the brinkmanship, posturing and drama in Hong Kong, where trade ministers of the world are gathered to attempt a deal and save the Doha round of multilateral trade negotiations, the issue of EUs agricultural subsidies has remained as a major bone of contention. As far as India is concerned though, getting Europe to cut its agricultural subsidies is not as important as lowering its own tariffs. Arvind Panagariya’s essay in this month’s Foreign Affairs magazine makes this argument in considerable depth. Those looking for an easier read can consult Tim Harford as he explains why those with the bananas cannot ship them.

This month’s Foreign Affairs also carries a fine essay by Jagdish Bhagwati, who argues that despite all the pessimism most of the obstacles — including the stand-off on agricultural subsidies — are in the policy zone’ and can be overcome by appropriate policy decisions.

Unlike on agriculture and manufacturing — where India can achieve much more by doing its home work — it needs to focus its offensive on getting developed countries to open up their services sectors. And instead of defending its own tariffs on the import on industrial goods, India would be better off defending against the inclusion of non-trade related issues (like intellectual property rights, labour standards, investment, etc) into the WTO agenda.

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