American Farmers Fall In Love With IMF
"A U.S. contribution to the IMF of $18 billion will not only help rebuild foreign economies, but keep U.S. farmers at the trade table as the absence of fast track legislation continues."21
Reality: Neither the IMF nor an $18 billion funding increase is an effective substitute for fast-track authority and free trade. The agricultural industry in general understands the importance of trade liberalizing policies, such as fast-track authority and free trade, and the effectiveness of the World Trade Organization. The lack of fast-track negotiating authority threatens the expansion of market share for U.S. agricultural exports abroad. However, the IMF is not a viable alternative to traditional trade liberalizing vehicles.
According to Under Secretary Schumacher, "U.S. farm and food products can face tariffs of 100, 200, and 300 percent or more in some markets. Our own import duties average less than 5 percent, while bound agricultural tariffs worldwide average around 56 percent.... [W]e need to get these high bound tariffs down further." 22 The agricultural industry is understandably concerned that the lack of fast-track authority will prevent any progress in reducing these barriers to U.S. agricultural exports and impede trade liberalization globally.
However, supporting free trade is not the IMF's primary goal, and recipients of IMF aid typically are the most egregious abusers of trade barriers. According to research conducted at The Heritage Foundation, the average tariff rate for IMF loan recipients is more than 17 percent - over five times higher than the average tariff rate of the countries in the European Union and Japan. For example:
1.Thailand, South Korea, and Indonesia received over $35 billion from the IMF in the recent Asian bailout, yet they collectively maintain an average tariff rate of 11 percent - over five times higher than Japan's and nearly four times greater than tariff rates of members of the European Union.
2.Bangladesh has received five loans totaling $1.125 billion from the IMF since 1983, yet it has maintained an average tariff rate of around 50 percent for most of this period.
3.India received two loans totaling $2.86 billion from the IMF in 1991 and 1992, yet it has maintained an average tariff rate of over 30 percent for most of this period.
4.Pakistan has received five loans totaling over $3 billion from the IMF since 1989, yet it has maintained an average tariff rate of around 47 percent for most of this period.
By comparison, the 15
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