This is an archived blog post from The Acorn.
Pulapre Balakrishnan, a professor at IIM-Kozhikode, on Foreign Trade and National Interest.
It is a different matter that we may wish to invoke the national interest to keep out certain imports. But we then choose to forget that, as with free trade, protection too has income distributional consequences that might leave many already very poor Indians poorer. The fact that the Japanese restrict the import of rice or that the Americans restrict the import of sugar into their economies is not relevant to us. The average level of income in these countries is approximately 10 times ours, implying that the impact of restrictive policy on the poor of these countries is minimal by comparison.
The price of food relative to per capita income is among the highest in India. We have tended to overlook this cost of self-sufficiency. However, as I had indicated, it may be argued that India’s position at Cancun is not without political virtue so long as we believe that Monsieur Lamy and the US government must be opposed as representatives of the farming and corporate interests of their respective countries. Though such recognition per se would reveal to us that trade and the national interest are seldom reconciled for any country. But so are ‘national interest’ and moral reasoning. [FE]
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