Free Trade Rice and Walmart

I came across a little snippet in Inside Costa Rica about the World Trade Organization, Costa Rica and Rice, and was intrigued. At the moment I am on a no-carb diet (almost 0) and rice sounds better than usual, so I did a little research and turned up an opinion piece in La Nacion. With the help of my online translator, I slogged through the editorial and thought about the subject a little, and what follows is the result.

Apparently the World Trade Organization wants Costa Rica to open up its market to more to foreign rice imports, lower tariffs, that sort of thing. I would expect no less from the WTO. And apparently Costa Rica is going to do it. The gist of the editorial was that rice can be produced more cheaply abroad and if free trade were implemented, the price would go down and the poor people would get rice cheaper, which is a good thing. They argue for a gradual move towards this goal, not wanting to throw all the growers out of business all at once.

I don’t argue that high rice prices are good for consumers. And aren’t we all consumers? The trouble is that no matter how cheap a product may get, it’s still not free. Costa Rica is pretty good at creating more consumers. The problem is, in order to engage in free trade, you have to have something to trade. Is a market a market if nobody has anything to spend? In 2008, imports TO Costa Rica were valued at $15.37 billion. Exports FROM Costa Rica were valued at $9.675 billion. Let me get out my calculator here… that’s a trade deficit of $5.695 billion, equal to around 59% of exports. Is that a lot?

Costa Rica has ways of making up this 59%. Tourism, borrowing and foreign ‘investment’ come to mind. I put that in quotes because sometimes it’s hard to distinguish between investment and sale of assets or outright fraud… look up Paragon Properties Costa Rica or Villalobos Brothers Costa Rica. Still, Tourism is less than 2 billion a year. Costa Rica’s biggest exporter is Intel, at $2 billion. Intel employs around 3000 people. 3000 jobs account for 20% of exports. What’s my point? Does Costa Rica really need to import rice and export jobs?

This brings me to Walmart. It’s a well known phenomenon in small town America where Walmart moves in and the local ‘Mom and Pop’ stores end up going out of business. This is a good thing to some, allowing Mom and Pop to retrain themselves as financial advisers, real estate salesmen or telemarketers. In a similar vein, Costa Rica’s farmers and farm workers can, in theory, train themselves to do something high tech and high paying. I’ll do some research and cover just what that might be in a future post. Or not.

To me it seems that Costa Rica has a choice here. They can follow the Walmart model, going with the lowest prices possible regardless of where the goods are made. This allows consumers to get a better deal (disregarding cadmium in the paint on baby toys). It also centralizes power and lowers wages domestically. Some say this is a good thing. Some those say that the answer is to lower wages of agricultural (and all other) workers to be ‘competitive’ with Chinese and Indians and Indonesians and Cambodians and any other worker in any other up and coming country where wages are low and hours long.

No doubt about it, we can all agree that high paying high tech jobs are better than low paying low skill jobs. All Costa Rica needs is about 300 more Intels. I suppose we can settle for 150. Hell! That’s a 50% reduction right there!

Failing that, maybe the government can strike a compromise. There must be some way to keep domestic production (and employment) and keep the price of rice and beans affordable. I can think of a few ways, but none which line the pockets of the country’s decision makers, so maybe I should just go back to writing about butterflies. Have you heard the one about the monarch and the swallow-tail?

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