Deals that kill the poor

Observations on unfair trade

Most of us know very little about the chain that links what the farmer produces and what we buy. Few of us understand why we pay what we do. At the same time it is difficult - perhaps impossible - for producers to understand why they sell their produce for so little when consumers are paying such high prices in the shops.

As the grandson of Mexican farmers, I have seen this process from both ends and have come to realise that free trade, particularly when imposed by major trading blocs such as the United States and the European Union, is not the answer for developing countries.

Mexican producers have no chance of winning once the trade in maize is freed up completely under the North American Free Trade Agreement (Nafta). They are entering into a competition with the big-subsidy superpowers, with no protection.

Two years ago, I went with Oxfam to visit farms and producers in the state of Chiapas to look at the perilous situation maize farmers were then facing. Under Nafta arrangements, Mexico is obliged by next year to abandon the 5 per cent tariff it imposes on imported maize, which mainly comes from the US. Mexico is also obliged to get rid of government support for the price of its own maize. There could be worse to come if plans to liberalise the market for beans, rice and powdered milk also go ahead.

Such liberalisation could mean that we Mexicans will have to stop eating tortillas made from white maize (more nutritious and tastier than the yellow maize imported from the US). We may have to break with the practice of milling our own maize, a tradition that unites us as a nation.

Farmers' groups have not been taking this lying down. Many serious ideas and proposals arrive of necessity. It is not true that country people cannot organise. None the less, when the ideas run out and time makes its mark on empty stomachs, people leave for the US, risking their lives and their human rights, sowing unrest and social disintegration and creating a cultural vacuum.

The devastation inflicted by the imposition of free trade agreements affects not only Mexico. FTAs of this kind, which threaten to undermine the food self-sufficiency of poor developing countries, are being imposed at the rate of roughly two a day, according to a report just published by Oxfam.

The report looks at the trade strategy of the US and EU and shows how, having failed to get what they want through the World Trade Organisation, they are imposing regional trade agreements on the poorest countries. In addition to agricultural tariffs, such agreements cover intellectual property rules, the imposition of which is preventing technological advance and impeding provision of healthcare in developing countries. Many of the trade conditions being forced on the poorest countries have already failed within the relatively democratic set-up of the WTO.

Some 3o per cent of world trade is now governed by regional and bilateral deals. And yet, as Joseph Stiglitz, a former World Bank senior vice-president and 2001 winner of the Nobel Prize in Economics, has pointed out, such deals enrich the giant corporations at the expense of farmers, small businesses and the environment. "[They] are not right for developing countries," he has said. "It is not a negotiation, it is rather an imposition."

I saw the impact of Nafta in Mexico at first hand. Yet these deals are being used daily to force developing countries to cut trade tariffs to zero, while rich countries maintain huge subsidies for their own farmers. Seventy per cent of the poorest people in the world live in rural areas and depend on agriculture to survive.

But, as long as rich countries cling to subsidies, encouraging overproduction and dumping, small producers will be in danger and will end up being forced to leave the land.

Oxfam's report should be required reading for all who make decisions on such issues.

"Signing Away Our Future" is published by Oxfam.

This article first appeared in the 26 March 2007 issue of the New Statesman, Scotland: Time to break free?