Blame subsidies for trade woes | Lexington Herald Leader

This editorial appeared in the Dallas Morning News.

Don't be fooled by the recent dip in world oil prices. The factors that caused prices to spike have not disappeared, and global trade patterns underscore the likelihood that a new round of increases could happen at any time.

India and China, two of the biggest oil importers, continue subsidizing fuel for their citizens. Their economies keep booming while their governments absorb the cost of oil. In these countries fuel prices are allowed to rise to market levels, political turmoil could quickly ensue among their billion-plus populations.

That helps explain why the most recent round of World Trade Organization talks in Geneva collapsed after China and India refused to budge on the issue of protectionist tariffs. They not only insist on providing cheaper fuel for consumers and businesses, they also want to protect their farmers from being undercut by cheap food imports.

That's a one-two punch in America's gut. Our producers must compete against cheaper, subsidized Asian imports, while skyrocketing fuel costs are pushing U.S. production costs higher. If this were an Olympic competition, it would be like saddling American gymnasts with 50-pound weights while Chinese athletes got a steroid boost.

If only America could have stood as a shining example for the free-trade and open-market negotiators in Geneva. But, unfortunately, the Asians had ample ammunition suggesting we're also to blame.

For example, when the farm bill came up for a vote in May, Congress could have eliminated wasteful government farm subsidies and removed limits on imported products such as sugar. Congress did the opposite.

When push comes to shove on trade protectionism, American workers and farmers are the ones who lose out. Since Texas led the nation with $168 billion in export revenue in 2007, these trade issues are, quite literally, our business.

It's unrealistic to expect a subsidy-free, tariff-free world. But when the two most populous nations insist on playing by rules skewed to their favor, they risk sending the world into a protectionist tailspin.

Nobody can afford that. And if America can't lead the world by example on free trade, it loses the ability to lead at all. Don't be fooled by the recent dip in world oil prices. The factors that caused prices to spike have not disappeared, and global trade patterns underscore the likelihood that a new round of increases could happen at any time.