Among the many positive attributes of the United Nations, and I think there are many, I wouldn't normally include a penchant for free trade. Sure it's an international body and by its very nature is on the leading edge of political globalization, but when it comes to commerce, like most government funded bureaucratic oriented institutions, my impression of the UN is that it favors public regulation and oversight. It was for this reason that I found some of the official comments made at the UN summit on the global food crisis held this week in Rome to be both surprising and a bit heartening.
The participants at the summit of course argued over the multitude of contributing causes to the current problems resulting from the recent run up in the prices for basic foods which, as noted elsewhere in this blog, imposes a more egregious penalty on poor nations whose populations must spend a far higher percentage of their incomes on basic necessities. These causes include increasing demand by the growing (both in numbers and in wealth) populations of India and China, the energy policies of nations such as the US which are using subsidies and government mandates to move agricultural product from food source to the raw material for bio-energy production, as well as localized weather phenomena that affect local food supplies.
But the number one cause zeroed in on by many of the participants, including UN Secretary General Ban Ki-moon, was the refusal of governments to allow free trade in the import and export of food supplies. As quoted in a report from Reuters, Ban complained that "[s]ome countries have taken action by limiting exports or by imposing draft controls." He argued (correctly I might add) that this "distorts markets and forces prices even higher."
Similarly, while defending his country's bio-fuel policies, Brazilian president Lula da Silva decried what he described as "intolerable protectionism" -- a phrase I never thought I'd hear said in a positive vein at a UN summit. Succinctly stating the case that I think would be made by most rational economists who study international trade theory, Lula da Silva went on to state that "[s]ubsidies create dependency, breakdown entire production systems and provoke hunger and poverty where there could be prosperity. It is past time to do away with them."
While it is encouraging to hear such sound economic analysis providing the framework for a UN summit, I hope that the august members of this body remember that these comments apply equally to other goods involved in international trade, not just the food supply. The next time there is reason to decry the impact of the globalization of commerce at an environmental or labor oriented confab, it would be helpful if these same international governmentalists keep in mind their own arguments to the effect that protectionism, whether through government mandates, trade restrictions or subsidies, distorts markets, causes higher prices, breaks down entire production systems, and provokes poverty where there could be prosperity. Strong but wise sentiments.