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DR-Cafta Strikes Again!
And a few more... the first report is what Florida is doing to create new business after DR-Cafta. The focus is all on what can be sold here in the DR.
http://www.sun-sentinel.com/busines...,0,7383924.story?coll=sfla-business-headlines
To contrast, the 2nd is a sad description of what has happened to Haiti's rice trade when the US started bringing in cheaper rice.
http://www.newsday.com/news/nationworld/nation/nyh-day2,0,1983566.story?coll=ny-nation-big-pix
It does certainly looks like we're being seen as a nice juicy ripe market for US goods - I have yet to see the DR do anything to explore or market trade opportunities into the US to make this a more balanced trade opportunity.
Somehow, reading these two articles together, I feel like Arthur Dent in The Hitchiker's Guide to the Galaxy, when he woke up and the bulldozers were just ready to demolish his house...
http://www.sun-sentinel.com/busines...,0,7383924.story?coll=sfla-business-headlines
To contrast, the 2nd is a sad description of what has happened to Haiti's rice trade when the US started bringing in cheaper rice.
http://www.newsday.com/news/nationworld/nation/nyh-day2,0,1983566.story?coll=ny-nation-big-pix
It does certainly looks like we're being seen as a nice juicy ripe market for US goods - I have yet to see the DR do anything to explore or market trade opportunities into the US to make this a more balanced trade opportunity.
Somehow, reading these two articles together, I feel like Arthur Dent in The Hitchiker's Guide to the Galaxy, when he woke up and the bulldozers were just ready to demolish his house...
It seems to me that most Dominicans would rather eliminate tariffs and pay 12 pesos/pound for imported rice than 20 pesos/pound for domestic rice. Even if that closes the Dominicn rice industry. I guess I haven't met too many rice farmers here on the North Coast or in the cities.
HOWMAR said:
Amen, Howmar. The benefits far outweigh the hardships that will fall on a few sectors. The general public will be able to buy all sorts of goods cheaper...which they will need to be able to do to offset the oppressive taxes that "Our Savior" Leonel has thrown on their backs.
Scandall
What goods Scandall and with what money? 
What I would like to see, is that our fearless leaders take this 'opportunity' and turn it into an opportunity. We talked in Environment about marketing the DR's organic produce for an example. The last think I want, is to become a dumping ground for products.
I think the idea should be to earn money for the DR with exportation of DR goods equal to what comes in from other places, and not to flood the place with consumer goods that most people cannot afford. While we're talking about rice (this goes for many other products...), if we're flooded with cheaper foodstuffs, can we be sure that it will be fair trade foodstuffs... I can see an opportunity in the making for the unscrupulous... Buy for example rice at 12pesos and sell here at 15pesos... Sounds good, and looks like a saving for the Dominican housewife, only if you don't know that the first price put a few farmers out of business and the 2nd price is there simply to drive a few Dominican farmer's out of business, in order to buy marketshare.
What I would like to see, is that our fearless leaders take this 'opportunity' and turn it into an opportunity. We talked in Environment about marketing the DR's organic produce for an example. The last think I want, is to become a dumping ground for products.
I think the idea should be to earn money for the DR with exportation of DR goods equal to what comes in from other places, and not to flood the place with consumer goods that most people cannot afford. While we're talking about rice (this goes for many other products...), if we're flooded with cheaper foodstuffs, can we be sure that it will be fair trade foodstuffs... I can see an opportunity in the making for the unscrupulous... Buy for example rice at 12pesos and sell here at 15pesos... Sounds good, and looks like a saving for the Dominican housewife, only if you don't know that the first price put a few farmers out of business and the 2nd price is there simply to drive a few Dominican farmer's out of business, in order to buy marketshare.
So you would rather continue "unfairtrade" of adding a 40% tariff to imported rice to avoid the possibility of price dumping? Granted Dominican rice producers either have to learn to compete or change their crop. If and when prices rise due to market conditions, they will have to readapt. For example. I can't understand how a melon can cost twice as much in the DR than in the northern US. There is obviously an unmet market right here driving up the price.Chris said:What goods Scandall and with what money?
What I would like to see, is that our fearless leaders take this 'opportunity' and turn it into an opportunity. We talked in Environment about marketing the DR's organic produce for an example. The last think I want, is to become a dumping ground for products.
I think the idea should be to earn money for the DR with exportation of DR goods equal to what comes in from other places, and not to flood the place with consumer goods that most people cannot afford. While we're talking about rice (this goes for many other products...), if we're flooded with cheaper foodstuffs, can we be sure that it will be fair trade foodstuffs... I can see an opportunity in the making for the unscrupulous... Buy for example rice at 12pesos and sell here at 15pesos... Sounds good, and looks like a saving for the Dominican housewife, only if you don't know that the first price put a few farmers out of business and the 2nd price is there simply to drive a few Dominican farmer's out of business, in order to buy marketshare.
In Haiti, many of the 'cheaper' imported goods ended up going up to their old prices. The local importers and/or retailers decided that the consumer was used to paying the old price anyway.
Until a few years ago, the Aritibonite rice-growing region was relatively prosperous, and people from that area rarely migrated to the cities or the DR. Now there is a mass exodus because it's not worth growing rice anymore.
The DR rice and chicken industry are likely to suffer the same fate as those in Haiti.
Now tell me who are the winners and losers here?
Until a few years ago, the Aritibonite rice-growing region was relatively prosperous, and people from that area rarely migrated to the cities or the DR. Now there is a mass exodus because it's not worth growing rice anymore.
The DR rice and chicken industry are likely to suffer the same fate as those in Haiti.
Now tell me who are the winners and losers here?
They were prosperous as long as there was a 40% inport tariff on imported rice. The Haitian market fell apart once that tariff was reduced to 3%.Chirimoya said:
Yes the growers and farm workers were the losers. The winners were the Haitian consumers. Should the consumer continue to overpay the open market price simply to keep an industry alive? If waste and inefficiency weren't so rampant, how can it be that rice can be grown and transported to the DR for about 60% of what it costs to grow rice here. Certainly it isn't the farm wages causing the high price. The answer is that the Dominican farmer doesn't care about efficiency as long as he has tariff protection against imports.
Simply the Law of Supply and Demand. If in fact prices do rise (or fail to fall), then Dominican producers can try to compete. Which will have the result in higher supply yielding lower prices in the longrun. The system of artificial price controls just doesn't work, as evidensed by the failure every Socialistic economy (excluding some oil producers). Do you think that General Motors would ever solve its present financial difficulties if the US government were to say we will tariff every import so that you can raise the price of your automobiles 40%? Downsizing, retooling and efficiency is the only longterm solution.Chirimoya said:
HOWMAR said:
Are you reading with your eyes closed? I'm comparing and contrasting opening a market such as rice under DR Cafta. It is not an 'either/or' or 'neither/nor' situation. If you have not figured it out yet, we're the little guy in this situation. Usually, the little guy loses. So, I'm hoping against hope that our fearless leaders will turn this into an opportunity, which it can be if they act.
HOWMAR said:
Unfair dumping as illustrated in the Haiti article is certainly not competition. It is simply unfair trade practice from the big guy that makes the little guy lose. No amount of competing will change this. At the end of the day it is the Dominicans that lose when the market is bought, the farmers are out of business and the prices rise again. I repeat, we're the little guy here.
HOWMAR said:
Neither can I. Unless the melon is imported. I paid 151 pesos for an imported California cauliflower just recently (Yes, I know, it was a good cauliflower and I don't regret one bite of it...) Surely we can supply our own food here instead of buying from California?
We're a small economy. All the comparisons with GM or similar companies that could buy and sell the DR in one stock transaction does not make any sense to me... Something about apples and pears... Chicken and rice farmers do make sense to me.
I just saw your sentence that the Haitian consumers were the winners. Huh?
Chris has already said it, but what happened in Haiti is that it wasn't until the Artibonite rice producers were well and truly consigned to history, that the prices went up again.
By this time, the Haitian farmers were in no position to compete. Rural prosperity in Haitian terms is very relative. There are no safety nets for farmers as in stronger economies. No credit, no welfare, no nothing. You swim or you sink. A couple of months without income is not something you can recover from. You leave your fields, head for the shanty towns of Port-au-Prince or the building sites of Santo Domingo if you are to have any hope of surviving and keeping your family alive.
Granted, the Haitian example is extreme, because it takes place in the ultimate fragile economy. At least the DR has a little more power, but not much. Within the DR, we can be sure that it is not the interests of the weakest that will be put first.
By this time, the Haitian farmers were in no position to compete. Rural prosperity in Haitian terms is very relative. There are no safety nets for farmers as in stronger economies. No credit, no welfare, no nothing. You swim or you sink. A couple of months without income is not something you can recover from. You leave your fields, head for the shanty towns of Port-au-Prince or the building sites of Santo Domingo if you are to have any hope of surviving and keeping your family alive.
Granted, the Haitian example is extreme, because it takes place in the ultimate fragile economy. At least the DR has a little more power, but not much. Within the DR, we can be sure that it is not the interests of the weakest that will be put first.
Very true, but, the Dominican economy has the ability to support a market for a product if it is a competitive product. Why do Dominican farmers continue to plant a crop that has to be protected from competition. Because it has that protection. These farmers are not poor share-croppers for the most part. If they had to alter their crops to compete. so be it. How anybody can justify planting a crop year after year that requires price supports, while at the same time there are crops where the demand isn't being met baffles me. When the supermercado owner tells me that he can't get products such as melons or bananas due to shortages, year after year, you have to wonder. The Dominican farmer would rather continue producing an uncompetitive crop with artificial pricesupports than adapt to the true market.Chirimoya said:
HOWMAR said:
This holds true for American farmers, they are heavily supported with taxpayer's money, and still will be after DR-CAFTA. It would be very difficult for DR Farmers to compete with American farmers on an even playingfield, and will be even harder after DR-CAFTA, when the tariffs are gone but the subsidized Anmerican farm products are given free access.
True, but why shouldn't the Dominican consumer benefit from the American subsidy to the American farmer. Should I as a Dominican consumer feel some sort of duty to support the Dominican farmer and pay higher prices? I'm sure most Dominican consumers would rather put their pesos to other use, rather than help keep the inefficient farmers in business.bob saunders said:
HOWMAR said:
Yes, it does not seem reasonable. But we must remember that this whole globalization thing in its current form, is not so very old. People who do business and farmers are perhaps used to looking at their competition on the next corner or the next rice mill or the next chicken processor and not perhaps at the global competition that becomes a reality with free trade agreements. It must be crazily confusing if one is suddenly dumped into a world market that one simply does not understand and never had to think about. And again, we are a small economy. To change acres of land into another crop takes money, skill, vision and the ability to find a market for the crop. To grow a crop economically against other subsidised crops takes some doing.
HOWMAR said:
Riceland cannot be changed into melon or banana land overnight. Bananas are mostly exported - Unless you have a tree in your backyard or travel to road stalls, there is nary a banana to be seen in the supermercados. And if there was, would the average Dominican consumer pay the price that it takes to grow the fruit for the local market? And in the quantity necessary to get into the black on the balance sheet?
This is where the large economies have an advantage. They have the luxury of a lot of research possible on new crops, a lot of 'agricultural extension offices' from universities and a lot of money to put into new development, and most of all a lot of money to create their market. Farmers/Food Producers from developed economies are usually very heavily subsidised. There is no way that a country like the Dominican Republic can compete with a subsidised 1st world market. It is simply not possible. Nals had a post recently where he was talking about 'economies of scale'. I don't know if I agreed with his premise in that thread, but in growing, the economies of scale do not exist for us to compete, unless we plant hundreds of acres of one product and create and nurture our market. We can however feed ourselves quite handsomely.
I say again, there simply has to be opportunities with DR-Cafta, even in farming/agriculture. That is where I hope the DR Leaders will go to Florida as the Florida leaders are doing, and investigate with open eyes. See what they are short of and when - and make some plans. As we've seen, it is easy to sign an agreement. It is another kettle of fish to implement it.
In spite of everything the DR has three great advantages. A 12 month growing season, matched by very few US states. An abundant and cheap labor force. Even more abundant and cheaper if Haitian labor is employed. And large areas of underutilized land in the interior. Certainly cheaper than US farm land.Chris said:
The disadvantage of course is trying to do business in an environment of corrupt and inefficient government.
"Free trade" has proven to be a disaster for many countries, even the United States.
It simple logic to argue that flooding the market with cheap products will bring down overall prices in order to compete, thus making goods cheaper for the average consumer.Some people seem to miss the larger picture.
One can look at what "Free trade" has done to Haiti. A nation that in 1986 could virtually feed itself is now facing agricultural disaster. The poultry industry is wrecked, and the average farmer can barely survive. Those farmers that abandon the land and end up in Haiti's cities looking for factory work find themselves jobless. "Free trade" has caused Haiti to lose half of its textile industry jobs in the last few years. Haiti is now dependent on food imports to feed itself. Poverty is becoming worse. One need only to look outside his door in the DR to see the Haitians roaming the streets looking for work. Refugees of free trade.
Where I live in North Carolina, the textile industry is almost gone. The last 5 years alone has been devastating. Thanks to free trade. In 1994 America had a 5 billion dollar trade surplus with Mexico. Today America is tens of Billions in the hole with Mexico. The reason? NAFTA.
The new jobs that were supposed to replace textiles and other manufacturing jobs , like, let say computers, are being outsourced to India.
I have never supported free trade. I've never seen the benefit in it for the average worker in America. Or anywhere. The factory workers in China that have taken the once well paying manufacting jobs of America are working for slave wages, treated like convict laborers.
Who benefits from "free trade"? The corporate CEO's, a few other big wheels, not the average citizen.
I can't see the benefits of Nafta,WTO, all the rest of it. It seems like a great way to spread poverty and wreck human lives, not much else.
Sure, WAL-MART sells microwave ovens and refrigerators on the cheap, but what benefit is that to an American who is jobless, or working for minimum wage because the Amana appliance factory closed and set new plants in Mexico and China?
I think it is the responsibility of a nation's government to look out for the well being of its citizens. Even Trujillo and Papa Doc were smart enough to protect there domestic markets in order to provide decent jobs for their citizens.
I guess we will all be able to enjoy the benefits of "free trade" in 3 or 4 years when the DR's agricutural industry has been reduced to levels approaching that of the Haitians...
It simple logic to argue that flooding the market with cheap products will bring down overall prices in order to compete, thus making goods cheaper for the average consumer.Some people seem to miss the larger picture.
One can look at what "Free trade" has done to Haiti. A nation that in 1986 could virtually feed itself is now facing agricultural disaster. The poultry industry is wrecked, and the average farmer can barely survive. Those farmers that abandon the land and end up in Haiti's cities looking for factory work find themselves jobless. "Free trade" has caused Haiti to lose half of its textile industry jobs in the last few years. Haiti is now dependent on food imports to feed itself. Poverty is becoming worse. One need only to look outside his door in the DR to see the Haitians roaming the streets looking for work. Refugees of free trade.
Where I live in North Carolina, the textile industry is almost gone. The last 5 years alone has been devastating. Thanks to free trade. In 1994 America had a 5 billion dollar trade surplus with Mexico. Today America is tens of Billions in the hole with Mexico. The reason? NAFTA.
The new jobs that were supposed to replace textiles and other manufacturing jobs , like, let say computers, are being outsourced to India.
I have never supported free trade. I've never seen the benefit in it for the average worker in America. Or anywhere. The factory workers in China that have taken the once well paying manufacting jobs of America are working for slave wages, treated like convict laborers.
Who benefits from "free trade"? The corporate CEO's, a few other big wheels, not the average citizen.
I can't see the benefits of Nafta,WTO, all the rest of it. It seems like a great way to spread poverty and wreck human lives, not much else.
Sure, WAL-MART sells microwave ovens and refrigerators on the cheap, but what benefit is that to an American who is jobless, or working for minimum wage because the Amana appliance factory closed and set new plants in Mexico and China?
I think it is the responsibility of a nation's government to look out for the well being of its citizens. Even Trujillo and Papa Doc were smart enough to protect there domestic markets in order to provide decent jobs for their citizens.
I guess we will all be able to enjoy the benefits of "free trade" in 3 or 4 years when the DR's agricutural industry has been reduced to levels approaching that of the Haitians...
HOWMAR said:
Indeed not. Forced trade was part of the modern problem. We seem to ignore the fact that we are talking about a free trade agreement between a strong economy, to small, weak and fragile economies in comparison, and the results of that. We are not talking about Haiti. But it we were, I strongly urge you to read the World History Archives at this link...http://www.hartford-hwp.com/archives/43a/index-cd.html
Lets do some quotes: "Although the IMF was not directly involved in sending cheap American rice to Haiti, its policies accelerated the breakdown of the old subsistence economy, and its replacement by a cash economy. Through a series of structural adjustment programs, beginning in the late 1980s, the IMF encouraged Haiti to adopt some of the lowest tariffs in the Caribbean....
IMF officials insist that many Haitians, particularly those living in cities, have benefited from lower tariffs. Because of the influx of cheap American rice, food prices have remained fairly stable. Maintaining a relatively low inflation rate has been the IMF's main achievement in Haiti over the last few years."
Amazing, maintaining a low inflation rate eh! What a great achievement. I wonder why people are starving then.
and: "According to free market theory, nations should specialize in areas where they have a comparative economic advantage. Poor countries should be able to take advantage of the abundance of cheap labor to increase their exports of manufactured goods, as well as certain agricultural items like mangoes and coffee, to markets including the United States."
but: "..there is a gap between free-market theory and Haitian reality, as the rice conflict demonstrates. Development economists point out that the competition between Haitian and American rice growers was hardly fair, since U.S. rice production is subsidized through a wide variety of mechanisms." And then it goes on to talk about a company with almost a monopolistic 'rice' position in Haiti.
So, can we rest the case of Haiti and try and figure out what we should do right here in the Dominican Republic? Small economies such as ours is fragile. And that is my fear.