Arnold Kling  

21st Century Trade Barriers

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Two stories that have been discussed recently about new variations of protectionism. One concerns the European Union's ban on genetically modified food. This issue will be taken to the World Trade Organization by the U.S., along with other countries, including Argentina.

Some 23 percent of Argentina's farm land is sown with genetically modified seeds and about 95 percent of the soy crop in the world's No. 3 soy producer is genetically modified.

Several other countries have expressed their support for the WTO complaint, including Australia, Chile, Colombia, El Salvador, Honduras, Mexico, New Zealand, Peru and Uruguay.

The ban on genetically-modified foods also affects Africa, which is reluctant to import such products for fear of losing trading privileges with the EU. Among other things, the controversy pits the Congress of Racial Equality, an American organization founded in the era of Civil Rights activism, against the radical environmentalists.

CORE is using [a forthcoming demonstration] as an opportunity to confront Greenpeace activists about their opposition to infrastructure development projects in the developing world, opposition to genetically modified foods and the group's opposition to the use of the chemical DDT to kill malaria-ridden mosquitoes, particularly in Africa.

Another trade issue is outsourcing white collar work overseas, using the Internet. As this story indicates, the state of New Jersey is considering outlawing the practice for government work.

After a state contractor hired agents in Mumbai (formerly known as Bombay) to handle telephone inquiries from welfare clients, the New Jersey state senate last fall unanimously passed a bill prohibiting such outsourcing for state contracts. The bill remains in a state assembly committee.

For Discussion. How is the use of an offshore call center any different from the state government's purchase of pencils manufactured overseas? Why should one be outlawed and not the other? Is it better public policy for government agencies to "buy American" or to search for the best combination of price and quality, regardless of the country of origin?

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CATEGORIES: Trade Barriers

COMMENTS (4 to date)
Eric writes:

It's funny how your view on protectionism changes when it's your job being "outsourced".

All those BMW and Lexus driving IT guys are worried about outsourcing to India now? This Chevy driving mechanical engineer doesn't have much sympathy!

It's called global competition. You IT guys better get used to it.

As for New Jersey, what's more important, high wages or low taxes? You might be preserving a few high wage jobs at the expense of the next "big thing", which could be choked off by high taxation.

On the other hand, most of New Jersey's economic growth comes from being a low cost alternative to New York (i.e. STEALING JOBS!). Kind of ironic, huh? Anyway, slightly high costs isn't going to hurt when New York is raising taxes 25%.

David writes:

Hey Eric. Calm down! I'm a Lexus driving IT guy and I'm not against offshore sourcing. In fact, I run a software company in Russia that does just that. :)

Brian writes:

Suppose the difference between using a local call centre and a Mumbai call centre for the life of the service interval is X present value dollars. I think X is something relatively easy to measure. We need to compare X to a measure of the cost to the local economy of unemployment and loss of the on-the-job skills acquisition opportunity. Do economists know how to measure this?

Jim Glass writes:

"How is the use of an offshore call center any different from the state government's purchase of pencils manufactured overseas?"

Easy. There's not a state employees' union of pencil makers employed by the NJ state government that delivers votes, campaign workers and money to state legislators.

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