Wednesday, April 05, 2006

How would you feel if you paid more in tax than someone who earned 15 times more than you?

In my opinion improving the terms of trade is the simplest and best way to help the developing world. As I have suggested before, capitalism can be a poor countries best friend. Therefore the latest developments in the Doha trade negotiations don’t look good. The EU won’t budge on their agricultural subsidies and the US are beginning to call their differences with the EU ‘irreconcilable’ and it looks like both the US and the EU will favour improved bilateral deals with targeted nations rather than agreeing a significant Doha deal.

Doha was supposed to reduce farm subsidies and improve trade conditions with the developing world. Ben provides an incite into what bilateral trade looks like in practice. In January 2006 the US imported goods worth nearly $3 billion from France and almost $ 0.2 billion in goods from Cambodia. How much tariffs did they charge on each of these? Actually it was about the same amount, $30 million (Cambodia paid slightly more). They traded 15 times more goods with France than Cambodia but collected about the same nominal amount in tariffs. This is what international trade injustice looks like.

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