Stiglitz- Making Trade Fair

Why don’t we replace Wolfowitz with Stiglitz as President of the World Bank?
I think he’d do a much better job.

Anyhow, Stiglitz Making Trade Fair Proposals:

1. all developed countries should follow the “European Initiative” to unilaterally lower tariffs against developing countries
-I agree, tariffs should be lower not higher on products from developing countries

2. allow a single cross-industry rate for-revenue-tariff in developing countries to provide job security and revenue for infrastructure investment
-a low for-revenue tariff in developing countries seems reasonable, as long as it is eventually lowered as the country develops

3. all developed countries should reduce agricultural subsidies; ie. abolish subsidies to farmers with incomes over $100,000, cap subsidies to any one farmer at $100,000
-the USA, Nippon, and Europe, need to reform and reduce their agriculture subsidies; I’d go with a higher ie. $200,000 cap (as a transition step)

4. all developed countries should reduce or abolish water subsidies, subsidies for cotton, sugar, and other agricultural products
-water subsidies is a huge problem, especially in the western USA; we got people farming on desert land because of artificially low water prices, people need to know the real cost of that water, so let’s phase out water subsidies over the next few years
-we’re spending way too much on cotton, sugar, and other agri subsidies, also federal disaster relief insurance should be priced to farmers based on the risk of disaster for the farm, and the whole subsidy system is due for some simplification; also what if we pooled our subsidies with the NAFTA countries so that Mexican farmers could benefit from the same level of subsidy?

5. all developed countries should remove escalating tariffs against developing countries; ie. reduce higher tariffs on industrial products to be no more than on raw materials
-this is just ridiculous! The concept of escalating tariffs seems somewhat imperialistic to me, tariffs on developing country products should not disincentive them from developing industry and manufacturing

6. the USA should open up to free trade in shipping; allowing developing countries to undertake unskilled-labor-intensive service of shipping
-shipping seems to me to be a more domestic function, but maybe a partial liberalization of shipping would be worth a try

7. all countries should liberalize the movement of labor; allow more unskilled-workers to more easily seek jobs in different countries
-liberalization of labor markets should proceed slowly to give countries time to adjust to increasing labor movements. Also, such liberalization has some security concerns. The USA could make immigration cheaper and less complicated and possibly expand the cap. Meanwhile it could create a new guest-worker program with Mexico and possibly extend it to Canada and some Central American countries.

8. all developed countries should facilitate the transfer of remittances to developing countries; allow foreign workers cheaply send back money, the USA is already doing so
-other developed countries need to get with the program, workers should be able to send money back to their home country without losing much of their earnings

9. developing countries should use safeguard tariffs more often; temporary tariffs to help country adjust to “surge” in imports
-especially since developing companies lack the infrastructure to transition into new industries or to improve efficiency as quickly as developed countries

10. establish an international tribunal to judge that safeguard tariffs are imposed only when there is a casual link between the import surge and the industry’s problems
-would this be part of the WTO? Maybe an overhauled WTO could have one.

11. have a single standard for unfair trade practices that applies both domestically and internationally; accusations of predatory pricing must show there was a reasonable prospect of attaining sufficient market power for long enough to recoup losses
-cheap imports can help the economy as long as the country can adjust

12. establish an international tribunal to judge whether a country is guilty of dumping or other unfair trade practices, preventing countries from wrongly accusing other countries
-would this be the same tribunal that deals with safeguard tariffs? Under WTO?

13. establish an international tribunal to judge whether a trade restriction based on safety, health, quality concerns is legitimate; allow reasonable labeling of products
-this sounds kind of like what the WTO has according to Singer, except giving a bit more understanding for health, quality, safety, environmental concerns

14. revise or abolish rules of origin; don’t restrict free trade agreements to only products with majority of inputs produced in the same country
-if part of the product was produced in a country outside the trade agreement, wouldn’t a tariff have been levied on that part of the input when it was imported
into the country making the final product anyway? No need to double tax.

15. avoid bilateral trade agreements; such agreements often don’t expand trade, give preference to one country over others, hurting opportunities for multilateral agreements, and more lopsided against the developing country
-I’ve never thought of bilateral trade agreements as a bad thing before. I’ll need some time to think it over… Stiglitz’s argument is compelling. Maybe congress shouldn’t ratify the bilateral agreement with Colombia. I suppose a closer and more cautious look into the specifics of such agreements is worthwhile.

16. establish an international tribunal/panel to judge whether a bilateral trade agreement leads to more trade diversion than creation and, if so, not allow it
-would this tribunal be under the WTO? I don’t think the tribunal/panel should have power to penalize countries, but maybe offer recommendations

17. have a true development-oriented trade agenda:
focus on unskilled-labor-intensive services and migration,
focus on circumscribing bribery, arms sales, bank secrecy, tax competition to attract businesses,
increase transparency in trade negotiations,
improve enforcement by allowing developing countries, at least, to sell enforcement rights so that smaller countries will be able to enforce trade violations too
-sounds good. I particularly like the idea of letting small countries sell enforcement rights. Score one for the little guy!

18. domestically, provide more progessive income taxation, better adjustment assistance, stronger safety nets, better macro-economic management, raise minimum wage/EITC, more investment in technology and education, increase grant aid to developing countries
-these sound good too, but how would they be implemented? Increasing the EITC would help boost bottom incomes and progressivity (but not so much as to mess up work incentives). Adjustment assistance and safety nets is a little more complex; we can give unemployment/income insurance (careful not to give too much), job training programs (expensive), I don’t know too much about it. Investing more in technology and education is a must. As far as helping out developed countries, why not give 1% of our GDP to foreign countries as grant aid and direct investment. Maybe we could have a “Marshall Plan” for Latin America… take that Hugo Chavez!