One final note on l’affaire Roquefort, in which outgoing-President Bush raised tariffs on imports of French Roquefort cheese to 300%. I have generally been disappointed by the quality of debate in the blogosphere on this issue. As I have argued many times on this blog, trade policy is not understood very well through the prism of either political science or economics. If you want to understand trade policy outcomes (not the underlying theory), it’s best to think in terms of political economy.
The Roquefort tariff was first addressed by FP Passport, whose analysis hinges on the likely political impact:
The last thing Obama wants right now is to get into a trade war with France overTurning to economics, after a first attempt, the Economist followed with a scathing post:
a last-minute decision by his predecessor, particularly when he's looking for
French cooperation on far more pressing issues.
While the measure hurts producers (and consumers) of a large number of
scrumptious products, the greatest casualty is Roquefort cheese. Yes, while
Europeans will be relishing delicious bleu cheese, Americans can eat
hormone-injected beef with a side of stale freedom fries. The asymmetry of the
quality has predictably inspired ridicule for the duties in France.
Beyond that superficiality, the Roquefort duty in particular is poorly
targeted and hardly just. A village of 600 people will have to face the most
severe consequences of a single European anti-trade policy. The banning of the
cheese is a symbolic measure that will do little to affect France’s economy as a
whole. Instead, it serves to provoke Europe unnecessarily and to reinforce
accusations of American jingoism.
Both analyses are incomplete. Passport’s international politics framing would be a suitable analytical point for other issues, but trade policy rarely moves so fast, and it would be extremely unlikely for the US to hike tariffs for no reason. This is especially true given Mr. Bush’s predilection for free trade. The Economist correctly identifies that the tariffs were enacted as a WTO-legal retaliatory measure in response to the EU’s banning the import of American hormone-treated beef. But they are wrong to hastily conclude that the Roquefort tariff is “poorly targeted.” As I wrote recently, the WTO is in many ways a mercantilist institution, and retaliatory sanctions (tariffs) are the only punishment it can authorize in disputes. Countries which are given WTO permission to apply sanctions have an incentive to make them symbolic, painful or, if possible, both. In doing so, the offended country hopes to harness the affected domestic producers in the offending country to pressure their government to make the sanctions go away (ideally, by complying with the WTO ruling.)
For many reasons, I do not want to discuss the specifics of this particular tariff. But this is the best framework with which to view this issue. Essentially, it’s rigging a purposefully inefficient outcome with the hope of forcing a more efficient outcome (i.e. freer trade in both European cheese and American beef) than the previous equilibrium (free trade in European cheese only.) Juicy as it may be, I doubt we can draw many conclusions about Mr. Bush’s free trade record from this incident or tie it to France’s opposition to the Iraq War.
Alors...
1 comment:
I agree with your conclusion whole-heartedly, assigning geopolitical motivations for the move other than the one given may be irresistibly tempting, but probably wrong.
Nevertheless, though this is not made explicit, I think what motivates at least the Economist post you criticize is the assumption that this retaliation will be not only laughably ineffective, but counterproductive as well. That may be what they mean by "poorly targeted", not just economically, but politically. Those 600 farmers may elicit pity, but they probably aren't powerful enough to alter French trade policy. And among the broader French population, l'Guerre Roquefort has apparently inspired a rally around the flag effect of solidifying support for the beef ban.
After this minor debacle dies down, then, trade policy will remain unchanged and the Roquefortians will be worse off. Under those assumptions, the Roquefort policy is inefficient, while neither painful enough or symbolically powerful to compel the desired result.
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