American Farmers Fall In Love With IMF
15 countries of the European Union maintain an average tariff rate of 3.6 percent; Japan has an average tariff rate of less than 2 percent; and Hong Kong has an average tariff rate of 0.1 percent. 23 Portugal is the only one of these 17 countries to receive an IMF loan in the past 15 years; its 1984 loan was for about $600 million.
Non-tariff barriers to trade among IMF recipients are extremely high and also work to keep U.S. exports out of these countries. Based on data compiled and analyzed for The Heritage Foundation/Wall Street Journal 1998 Index of Economic Freedom, most non-tariff barriers among IMF recipients include (but are not limited to) import bans and quotas, corrupt customs officials, unnecessary licensing and labeling requirements, and unrealistic health and sanitary requirements aimed specifically at keeping out U.S. exports, including agricultural products. The Index analysis also indicates that these non-tariff barriers are more prevalent among IMF recipients than non-recipients. 24
The IMF was created in 1944 by the Bretton Woods Agreement, along with the World Bank and the General Agreement on Tariffs and Trade (GATT), which is now the World Trade Organization. GATT, not the IMF, was created to promote free trade. Consequently, the IMF has been ill-equipped to deal with trade liberalization issues. Historically, even when the IMF has attempted to promote trade liberalization, its efforts have been largely ineffectual. This makes its assistance more likely to reward countries that have high barriers to trade with loans than to encourage them to lower their barriers to levels maintained by the United States, Europe, or Japan.
CONCLUSION
Regardless of the merits of the International Monetary Fund or whether there should be one at all, the issue of the IMF's effect on the U.S. agricultural industry is no mystery. U.S. farmers are being frightened into supporting the IMF with groundless assertions from their lobbyists on Capitol Hill that they face eminent doom unless the IMF gets more money. What is being missed in this entire debate is that the current $18 billion funding request has nothing to do with the Asian financial crisis. That money, is already on the way to Asia and whether the U.S. give $18 billion to the IMF or not will have no impact whatsoever on Asia. But more importantly, American farmers are missing the point: the IMF is far more likely to harm their exports than they are to
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