The farm bill will come down the pipe this week:

[T]he U.S. Agriculture Department announced it will outline its proposals on Wednesday for revamping U.S. farm subsidy programs, which are up for renewal this year. Many countries could see the proposal as a barometer of how serious Washington is about reforming agriculture in the Doha round.

And Bush is spending today asking for TPA extension.

Prosperity and economic logic contend with a bit of hysteria and xenophobia:

The United States is losing market share in the global economy, and that is not necessarily a bad thing…

Ultimately, the decline of economic pre-eminence may be more damaging psychologically than economically. Ms. Mann notes that many people gauge their well-being not simply as a function of how much their income grows, but how much it grows relative to that of their neighbors. “By virtue of the world becoming richer, in part because of our engagement in international trade, we are getting richer, but many of the poor are getting richer, too,” she said. “Psychologically, a lot of people are going to view that narrowing gap as a negative.”

More broadly, the fact that economies that were closed to outside investment a generation ago are now creating systems of market capitalism should be seen as a victory for the United States, not a defeat. “Many of the countries that are doing well are mimicking the best of what America has stood for — globalization and the export of the American capital markets culture,” said Mr. O’Neill at Goldman Sachs. “There’s nothing that New York and U.S. policies can do about it unless they want to roll back globalization.”

For more on anti-foreign biases, see Robin Hanson and Bryan Caplan.

Iana Dreyer says that the World Social Forum, the anti-Davos gathering of globalization skeptics and opponents, has run “out of steam” and is suffering from a lack of participation.

AP: “The European Union, Australia, Argentina and Brazil have joined Canada in a [WTO] complaint against the United States over what they claim are illegal government handouts to American corn growers, trade officials said Monday.”

The Economist has a short piece on India’s cotton sector:

Only one in 12 of India’s farmers has ever heard of the World Trade Organisation (WTO). The mostly illiterate cotton farmers of Vidarbha—the north-eastern corner of Maharashtra, where Wardha is located—surely count among the other 11. But even the most exalted of trade officials has heard of them. In the past 18 months more than 1,200 farmers in this, the cotton bowl of India, have taken their own lives to escape debts to money-lenders…

Prices are low partly because cotton is so heavily subsidised by rich countries, principally America. The Doha round aims to cut these handouts “ambitiously” and “expeditiously”. If they were cut completely, it might add about 13% to world prices, according to one recent estimate by two World Bank economists. But the Doha round is unlikely to be so slick. A more likely scenario, in which cotton subsidies are cut by a third (and export subsidies eliminated), would add less than 5% to the price.

In the meantime, India’s government could impose a “countervailing” tariff on dumped cotton. But cheap fibres please its textile industry, which is keen to take advantage of the end in 2005 of the old global quota regime…

In the abstract, the answer to the farmers’ distress seems easy: move from growing cotton to weaving it in factories. But India’s onerous labour laws inhibit industrial employment, and the lack of a safety net leaves farmers clinging to their marginal patches of land.

The State Department’s electronic journal dedicated its most recent issue to the benefits of trade and the costs of protectionism.

Professor Menzie Chinn attended a few AEA sessions related to international economics and posted some highlights here.
Hat tip: Econ Watch

Robert Wade:

Is the threat of a protectionist backlash so severe? An FT editorial (Multilateral muscle needed for Doha deal, 3 Jan., 2007) made much the same argument by way of urging states to press ahead with the agreements on the table of the Doha development round. But it undercut itself by pointing out that the last 5 years have seen very fast growth of global economic integration even without the liberalizing impetus of the Doha round. On the face of it, it seems that global integration is being driven by forces not much affected by policy stances–and will continue to increase even if some OECD states adopt higher protection. (See my Letter to the Editor, 8 Jan.)

But this begs the question: Is what is happening really ‘global integration’? Martin uses global and globalization–like just about everyone else–as ‘that which is not national’, and assumes that the global represents the tendency of all contemporary economic relationships. My guess is that part of the underlying dynamic of the world economy comes from the rapid formation of macro-regions, like China-Japan; Northeast Asia-Southeast Asia; US-Canada; continental western Europe; the Nordics. Macro-regions have become strong and are becoming stronger in terms of (a) correlated fluctuations of major economic variables, (b) trade, (c) sales of multinational corporations. (Alan Rugman et al. show that hardly any of the top 500 MNCs have ‘global’ sales, in the sense of at least 20% in each of North America, Europe and East Asia and less than 50% in any one of them.) The answer to the FT editorial’s implied paradox — little further trade/investment liberalization over the past 5 years yet very fast ‘global’ integration — may lie in the point that the integration is more regional than global, and that the regionalization drivers are not mainly to do with policy stances.

‘Globalization’ and the dichotomy between national and global obscure the important regionalizing tendencies of the world economy.

The WaPo ran a Sunday cover story on NAFTA’s impact on Mexico as it takes full effect:

As NAFTA’s final provisions take effect next year, tying Mexico’s fortunes more tightly to world markets, how will its economy adjust? And how will the latest wave of trade liberalization alter the calculations for millions of Mexicans wanting to stay home, but constantly feeling the tug of the north?…

NAFTA did bring Mexico foreign investment. Jobs at its maquiladoras — export factories set up in the 1960s, mostly near the border — more than doubled from 540,000 to 1.13 million between 1993 and 2004. But in other factories, employment has slipped and average wages have dropped by 5 percent.

Economists emphasize that any assessment of NAFTA must include the financial crisis that savaged Mexico in 1994 and 1995, sowing unemployment. Some assert that without NAFTA and the exports it fueled, Mexico’s recovery would have been slower. Many also say that Mexico’s government squandered opportunities for growth by failing to improve highways and ports, and by leaving unchecked the monopoly power of the national telephone company, which has kept rates for Internet access and other telecommunication services high, discouraging new ventures…

“For people who can grow huge scale for export, NAFTA has been good,” he said. “For people like us, it’s been a bloodbath.”…

Feed amounts to nearly 60 percent of the cost of raising a chicken. For the American poultry industry, the cost has been held down, historically, by subsidies for corn production. In 2005, American cropland for corn received a range of subsidies worth more than $10 billion, according to a Washington Post analysis of data from the U.S. Department of Agriculture.

Labor, where Mexico has an advantage, makes up only about 5 percent of production costs.

Know anything about Bangladeshi development?

Propose an innovative and practical idea that would improve the lives of low- and middle- income people of Bangladesh (everyone except the top-third of the population in terms of annual income). Proposals will be judged by four Harvard University faculty members, in consultation with scholars familiar with Bangladesh.

This global contest is open to any individual in the world. Any compelling essay that establishes a way to improve the lives of low- and middle-income people in Bangladesh is acceptable for submission. The essays will be rated giving equal weights to a) innovative nature of the idea; b) clarity and cogency of argument and writing; c) ease and practicality of implementation; and d) the size of impact.

The author of the winning essay will be awarded the Anwarul Quadir Prize, USD $25,000.

Entries due June 30. Full info.