The first is that placing a tariff on imports has the exact same effect as taxing your exporters. That seems a little crazy at first, but makes sense when you think about it. In very simple terms, if people in a foreign country buy your good in their currency, then you have to buy one of their goods with that currency (or trade it with a bank or individual who will). If there's a tariff on buying their goods, then your efficient export industry have to pay more to buy foreign goods because of the tariffs on them, in order to protect the inefficient industry that the tariff is designed to protect.
He also explains the reasons underpinning fair trade very well, and gives the lie to many of the myths which surround globalisation.
- Is it bad for the environment? No.
- Does it make poor people poorer? No.
- Do people work in worse conditions than they did before multi nationals arrived. No.
All that got me thinking about the current Doha round of world trade talks, started in 2002 and currently reaching the make-or-break point in Geneva. In Ireland, we stand to gain in cheaper food and greater spending power by reducing the subsidies which we give to our farmers. But won't it make food more expensive? Mean that there's less at a time of international crisis? Cripple farmers economically?
Not really. There was a striking statistic in Thursday's Irish Times; the average full time farmer in Ireland makes a little over €43,900, about €12,000 more than the average industrial wage. Meanwhile, farmers in poor countries, who are already suffering because we cut our foreign aid (disgracefully) in the recent mini-budget, lose out. Our food would not be more expensive, because we would no longer be spending half the EU's budget subsidising our inefficient farming industry, and could instead spend that money on buying cheaper food from poorer countries, with the added bonus of helping those poor farmers and their countries to develop. If that doesn't happen, it will because of vested interests and not the interests of our countries, international ethicacy or common sense.