World Grain - October 2008 - 6

from the editor-in-chief

Trade must not become
victim of politics

ondering the long-term consequences
of recent exceptional volatility of grain
and commodity prices often leads to
questions being asked about the virtues of
economic globalization and even to challenges of the value of trade itself. It is not
just in this year's election politics in the
United States that trade has become a central
issue. Thoughtful economists, including a
few who have shifted from being ardent advocates of liberal trade to questioners of its
value, have started asking all sorts of questions about positions that for years escaped
even minimal challenge. No industry has a
greater stake in the outcome of the current
debate about trade - whether it will continue to serve the ultimate purpose of helping
to assure an adequate supply of food - than
does the industry that deals in and processes
grain. This industry stands proud as an advocate of liberalized trade, helping to prove the
case for trade expansion over many centuries
that go back quite literally to the beginning
of history.
Trade liberalization has been the winner
in past arguments over its standing on the
basis of a number of advantages. Most basic
is the view that opening trade benefits both
exporting and importing countries, the former primarily by boosting the economy and
the latter by providing goods and services at
the lowest costs. Considering the way that
buoyant exports have been a mainstay of the

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present-day U.S. economy when other sectors are floundering, it seems remarkable
that politicians seeking election could cast
doubts on trade's value. Even though export
demand might contribute to cost upturns in
a situation like that experienced in the past
year, millers and food manufacturers in
general are aware that without global markets, domestic production of essential crops
would be drastically curtailed.
Political attacks on trade are being used to
identify a culprit at a time of rising income
inequality and growing concern over job status. Competition provided by low-wage nations becomes the target of trade critics looking to blame the failings of the economy on
trade agreements and government officials
charged with failing to secure concessions.
These arguments are usually made without
acknowledging the role of new technology in
minimizing the need for manufacturing jobs.
Offers to step up training are dismissed as
having little substance when attacking trade
has gained widespread appeal.
In responding to these scary challenges,
the grain industry is best served by asserting
that many of the current economic problems
are due not to the failure of trade, but to the
shortfalls of previous steps to eliminate barriers to open and, yes, free trade. Delving
into current trade issues, a highly instructive
point may be made by examining the global
rice market. Rice prices were the last of the

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grains to post dramatic advances, but when
this market started rising, its course was
breath-taking. Rice's moves reflected the way
restrictions on trade, including limits on both
exports and imports, have curtailed the availability of rice through normal channels. The
restrictions on exports imposed by a number
of countries, especially in Asia, have sent a
message to farmers deprived of participating
in the buoyant global market.
The point made with respect to rice, which
has applicability to the entire supply chain, is
that supply and trade must grow together in
order to offset market tightness. Trade agreements that offer significant benefits to participating countries are essential to ending
excessive restrictions on global commerce.
Too much of the global trade in commodities
is governed by nations and institutions best
described as "having only one foot in the
modern age." It is through trade that these
nations become a part of the modern world,
where unfettered commerce offers advances
for the poorest of nations, while providing
the developed countries with solid gains
that are only realizable by pursuing this very
course. This is the way to assure that success
in global trade is not a threat to domestic
well-being but will benefit all nations and all
peoples.
Morton I. Sosland
Editor-in-Chief

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World Grain - October 2008

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