December 20, 2005
Shipping the Good Bananas Out

Interesting NYTimes article from Dec. 16, by Tim Harford.

Excerpt:

AT this week's ministerial meeting of the World Trade Organization in Hong Kong, negotiators have once again hit an impasse over how and when to open the rich world's agricultural markets to farmers in the poorest countries. What few people have realized, however, is that poor countries don't have to wait for the World Trade Organization. There is plenty that they can and should do to help their own farmers to trade.

Imagine a dream scenario in which the trade ministers emerge from their negotiations this weekend holding hands and proclaiming an end to all agricultural protectionism. What then?

For, say, a banana picker in the Central African Republic, not a lot. The trade barriers at the borders of the rich world may have disappeared, but if our picker wants to sell his bananas abroad he first has to get them onto a ship bound for America or Europe. That takes 116 days, and an incredible 38 signatures - each one an opportunity for some official to collect a bribe. Something is rotten here, and not just the bananas.

Sub-Saharan African exporters face, on average, delays of nearly 50 days for each shipment. They must get roughly 20 signatures on eight or nine separate customs forms. (These figures are all documented in "Doing Business in 2006: Creating Jobs," a report released in September by the World Bank. A disclosure: I was an adviser to the report team.)

Part of the problem, of course, is that landlocked African countries are linked to the outside world by long, decrepit roads and underdeveloped ports in neighboring countries. But determined growers can move bananas along even lousy roads. The real problem is elsewhere: three-quarters of delays are the result of red tape, not port handling or inland transport. These delays, caused by senseless bureaucracy, unnecessary forms and archaic inspection practices, can often be eliminated with a stroke of a pen by a country's chief executive. Even the more sophisticated reforms, like introducing electronic filing, or using software to guide sensible risk-based customs inspections, require only small outlays. What's more, such reforms increase the interception of smuggled goods and discourage corrupt customs officials.

Always tempting to think that improving trade and reducing transactions costs will help poor countries immediately. But....what if they don't want to be helped, or act like they don't? Bureaucratic jobs confer status, and a chance to extort money. Hard to negotiate around that, when the claim that "we will find you another job" rings hollow. So, customs "officials" kill trade, and prevent wealth, in spite of the best intentions.

(nod to Katie at CV)

Posted by Michael Munger at 05:50 PM  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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