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Free Traders, Not Free Booters

We have noted in the past that we at Contra Celsum are free traders.  We support free trade not because we think there is something magical or messianic about goods and services being freely traded.  Rather, our position on free trade is an extension of the fundamental rights of private property ownership and the command, "Thou shalt not steal".  People's property is theirs to sell or exchange as they see fit.

Naturally, this is not an absolute right.  The use of one's property must be in accordance with the other nine commandments.  If one sells a good or service, whilst bearing false witness about the quality or nature of the service, theft has occurred, for example. Free trade must take place in the context of honesty and integrity, of true weights and measures.

For the past thirty years or so New Zealand has moved pretty steadily in the direction of free trade.  Part of trade being free is that exported goods are not subsidized by the State, thereby enabling sale at an artificially low price for the buyer.  Any such arrangements constitute theft--first of all from taxpayers whose property is extorted by the State to fund the subsidy, and secondly, it constitutes theft from competitors elsewhere in the world.

Traditionally, agriculture has "enjoyed" the greatest subsidies and barriers to free trade.
 This is the result of a number of factors (for example, the over-representation of rural constituencies in legislatures; the emotion that surrounds the production of food, without which the voters could not live, and so forth).

Recently, the World Trade Organisation (WTO) has agreed that all agricultural subsidies will be removed.  In the medium term this will facilitate more global food production at lower prices.  It will also turn out to be a huge boost to New Zealand agricultural industries, since this country has removed agricultural subsidies a long time ago, yet has had to complete globally with food producers which continued to receive handouts from their respective governments.

A World Trade Organisation ministerial conference held in Kenya and attended by New Zealand Trade Minister Todd McClay has agreed on the WTO Nairobi package, which will eliminate the ability of WTO members to subsidise their agricultural exports.  That is an outcome successive New Zealand governments have sought for decades, with trade envoys identifying agricultural subsidies, along with tariffs, as one of the biggest obstacles to free trade.  [NZ Herald]

Agriculture has been one of the most tendentious areas in international free trade agreement negotiations.  One of the reasons has been the level and extent of agricultural subsidies still in effect.

A survey by the Worldwatch Institute last year showed New Zealand's largely subsidy-free status was not the norm - and that the top 21 food-producing countries paid out an estimated US$486 billion ($722 billion) in farming subsidies in 2012.  China paid US$165 billion in 2012, mostly to support rice and wheat farmers, with Japan paying US$65 billion, the European Union more than US$100 billion and the United States $30 billion.

The decision by the World Trade Organisation will prove to be a tremendous fillip to NZ's agricultural exporting industries.  It is a great step forward, not just for us, but for the rest of the world in the medium term.  In time, food will  be produced more efficiently, competitive pressures will rise, and the cost of food will fall.