Re: subsidies and world trade …

I believe you are somewhat off the mark with ideas on production, subsidies and notion of restricting free trade in certain instances (Leather International, July, p10).

As global animal populations and leather supplies dwindle, it is even more important that liberal market forces operate to help level income gaps.

Artificial trade barriers do not stimulate trade. They stunt trading potential and give poorer countries even less of a chance to enter the global market, much less compete in it.

African countries want to sell their grains, produce, leather, hides or whatever to Europe and the United States. They produce most of these items more economically than developed countries but can’t sell them on world markets because of America’s or Europe’s generously subsidised industries, agriculture being the enduring example.

The solution is not to cocoon emerging countries with subsidies until they can support themselves. It is to remove the cosy protective ‘shells’ engineered by developed countries; then emerging or hopeful African nations will have a chance to operate in a fairer market to buy/sell/trade/export their way out of their subsistence state.

Subsidies have their roots more in politics and votes than in trade and cost the US and European consumer dearly in higher prices.

Besides this, unfettered exporting and trading gives legitimate, stand-on-your-own-feet credibility to a country. By contrast, subsidies, import or export tariffs etc, perpetuate the spoiled brat, thumb-sucking image.

It is unrealistic to believe that Zimbabwe’s Robert Mugabe, for example, would use any funds generated from import or export tariffs, whether related to finished or raw materials, for anything except his own pocket. Even if this is an extreme example, pocket lining is a growth industry and, if you find such a noble fellow who puts his fellow flock before his pocket, please let me know.

It is not correct that subsidies create jobs, generate new employment opportunities or stabilise prices in any industry. It is, of course, true that subsidies act to retain certain jobs, and often help to keep inefficient sectors afloat on a temporary basis.

Production, trade and the industrial cycle will always gravitate to low-cost labour, less regulated markets. All firms strive to keep their costs down. But it should be like this because developed countries have the benefit of technology, the most advanced tool so far that helps them to compete with low-cost labour countries.

If artificial barriers that protect certain goods (or services) and industries proliferate, it will be catastrophically more difficult, not easier, for embryo markets to break into the global trading elite and, in their turn, evolve into the countries who have the fresh ideas, skills and high technology advantage.

Suzanne Swan