What we want
Free trade has been the talisman that the rich world has brandished to keep economic barbarism at bay. Without it, according to post-Berlin Wall dogma, nations would descend into an unthinkable horror – trade war. Now we have the real thing, ugly and messy, and spats about cashmere and Roquefort cheese pale into insignificance. But don’t expect the mantra to be forgotten.
In Qatar next month, the World Trade Organisation will discuss the next round of global trade talks. There is no sign that the world’s largest trading powers – the US, the EU, Japan and Canada – intend to forgo the opportunity to push further the free-trade-in-everything ideal: public services, intellectual property rights and investment are on the agenda. And it is indeed through trade, more than through debt relief or aid packages, that the rich world can improve the lives of the poorest. But the need is for fair trade rather than free trade.
According to the UN, inequitable trade rules robbed developing countries of $1.9bn a day in 1999, or 14 times the amount they received in aid. The current “free trade” regime has made the rich richer and kept the weakest in poverty.
Those who shout loudest about free trade do not actually practise it. The EU, Japan and the US, for example, protect their own farmers and textile industries with monstrous tariff barriers against products from developing countries. Seven years after the WTO was set up to police their abolition, these barriers remain firmly in place. At the same time, the poorest countries are challenged at every turn with arm-twisting rules, inducements and sanctions to ensure, supposedly for their own good, that they keep the free trade faith.
Poor countries, we were told in 1994 at the end of the Uruguay Round of tariff negotiations, have everything to gain from working towards a global free market. But those who signed up to the WTO have discovered that club membership is no guarantee of an equal voice in the global market place. They have not gained access to hitherto protected markets, particularly for their agricultural produce and textiles. Meanwhile, their domestic markets have been flooded with heavily subsidised agricultural products – the EU being a major culprit. Manufacturers and farmers in rich countries enjoy fat subsidies (around $17,000 per farmer in the EU, for example); yet WTO rules, combined with IMF conditions on debt-relief packages, proscribe any equivalent subsidies for agriculture or nascent industries in the poor world. Under the Uruguay Round, the countries in the Organisation for Economic Co-operation and Development were supposed to phase out subsidies by 2005. Yet their support for producers rose from $275bn in 1988 to $326bn in 1999.
“On a number of occasions,” notes a recent report from the World Development Movement, “the EU has offered to unilaterally lower trade barriers to exports from the LDCs [least developed countries]. But faced with a lobby from EU companies, it was eventually agreed that duty-free access would be delayed for some of the most important exports from LDCs: bananas delayed until January 2006, sugar by July 2009 and rice by September 2009 . . . It is to the shame of the US, and most other rich nations, that they have not even matched the EU’s meagre concessions.”
In textile manufacture, hardly any quota restrictions have been lifted. By June 2000, according to the International Textiles and Clothing Bureau, the US had lifted only 13 out of 750 restrictions acknowledged during Uruguay; the EU 14 out of 219; Canada 29 out of 295. The elimination of such “trade distortions” (the WTO’s term) has been a one-way process. Developing countries, for example, have been challenged under WTO rules, which protect patent-holders, about attempts to provide affordable medicines to treat HIV/Aids. In effect, the poorest countries subsidise some of the richest companies.
As long ago as the 1970s, Judith Hart, a Labour minister for overseas development, asked what business an advanced technological nation such as Britain had in making shoes. Her question is as valid today. What are we doing stifling infant low-tech industries such as textiles and clothing, which could be the first building blocks for an African country’s manufacturing industry? Why are we subsidising millionaire farmers in East Anglia to grow sugar beet to sell at prices that undercut a Caribbean country’s primary agricultural export? How can we justify dumping Europe’s surplus agricultural production on developing countries, thereby bankrupting poor farmers who produce food for local consumption?
The WTO must change. Martin Khor of the Third World Network proposes that it should have a new brief: to promote development through trade. The fundamental question that should be asked of any new multilateral agreements, he says, should be not whether they promote freer trade, but whether they benefit development. “The test of a rule, proposal or policy . . . should not be whether it is ‘trade distorting’, but whether it is ‘development distorting’.”
Trade liberalisation is not an end in itself: it is only a means for redressing the current inequities. As Tony Blair recognised earlier this year in a speech at Chatham House: “It really is hypocrisy for us, the wealthy countries, to talk of our concern to alleviate poverty of the developing world, while we block access to our markets.”
A new world order demands more: helping poor countries develop production, marketing and trade; monitoring and stabilising commodity markets; and ensuring a fair price for the exports of developing countries. If the PM is serious about a new moral order, this is where he must start.
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