In defense of the Cancun Summit

Alex Magno laments the passing of the Cancun summit of the WTO and rails against the protectionist agenda of Philippine agriculture. He writes:

In order to maintain present policies covering rice and corn, including quantitative restrictions on imports, we have exchanged policies that removed all protection on the more efficient sections of our economy. It is a no-win situation with grim strategic implications. While our otherwise competitive sections crumble under intense competition, subsidies for our most uncompetitive sections drain our ability to invest in the broader economy.

Subsidies in our most inefficient agricultural sectors could have been diverted instead to, say, improving our educational system to reinforce our highly competitive services sectors or to cure the infrastructure gap that discourages investment in manufacturing which employs more and creates more value while using less land and water.

This is an irrational set-up. It will not only produce an economic disaster in the long term, it inflicts misery on many of our people today.

The irrationality persists because of sentimentality and ideology. The militant farmers groups must admit this as a matter of honesty. They must admit it is the irrationality of our own economy and not some foreign conspiracy that is to blame for the crippling poverty that plagues our people.

By refusing dramatic changes in the composition of our national economy, we are merely postponing the resolution of our structural problems and inviting an economic cataclysm down the road.

Instead of confronting the real problem, militant groups are marching in the streets urging our government to withdraw from the WTO. That distracts us from the real issues.

The inspiration for the WTO is inherently valid. It seeks to establish a regime of rules that will ensure fairness in global trade. It has failed in its vision not because a regime of fair rules is wrong but because nations could not do what is right because of the power of domestic constituencies that clamor for protection and subsidies � as well as the power of economic superstitions that grip the most conservative sectors resisting change driven by rationality.