Sir Ronald Sanders
No tears should be shed by small developing countries over
the collapse on July 24 of trade negotiations at the World
Trade Organisation (WTO). There was very little in it for
Although trumpeted as a development round since
November 2001 when the negotiations began, the talks have
been nothing more than a tussle between the United States
(US) and the European Union (EU) to get an advantage over
each other for agricultural exports to the world market.
In the Ministerial meetings that followed in Cancun in 2003
and Hong Kong in 2005, the negotiations failed to move because
the US and the EU shadow-boxed with each other over who would
make the least reduction in subsidies to their farming communities.
And, while they were doing so, farming communities in desperate
countries, such as those in sub-Saharan Africa, languished
in ever increasing poverty unable to compete in the global
market place even though their labour is dirt cheap.
The farming lobbies in the EU, particularly France, and the
US are powerful groups and elected representatives cross them
at the risk of being voted out of office.
In the US, upcoming mid-term elections in farming states would
undoubtedly have influenced the stance of US representatives
at the WTO talks. Rice, corn, wheat, soyabeans and cotton
account for 93 per cent of the subsidies that go to 40 per
cent of big and powerful US farmers.
Britains Prime Minister Tony Blair has pointed out the
unfairness of a similar situation in the EU in which a handful
of wealthy but powerful farmers benefit from subsidies, but
Frances President Jacques Chirac remains a strong supporter
of help to French farmers.
So, both the US and the EU proclaim that they want to see
a reduction in subsidies to farmers, but each demand deeper
cuts from the other in order to make the exports of its own
farmers more competitive in the global market place.
All that happened in Geneva on July 24 was a re-enactment
of the jockeying for position between the US and the EU.
In announcing, finally, that the five years of talks had ground
to a jarring halt, Pascal Lamy, the Director-General of the
WTO, declared: There are no winners and losers in this
assembly. Today, there are only losers.
But, there would have been many losers had these talks succeeded.
For the talks success would have depended on a deal between
the US and the EU not only to agree parity on their cuts in
subsidies, but also on agreement to demand radical reductions
in tariffs on agricultural imports by developing countries.
The result would have been the annihilation of farmers in
many small countries, such as those in the Caribbean and Pacific,
who would have been unable to compete with imports from the
US and the EU.
Rural communities in Africa would also have been devastated
since, because they can not compete globally with heavily
subsidised EU and US agricultural exports, they rely heavily
on sales in their domestic market, and they would have been
severely undercut by US and EU products on which tariffs were
But, while the failure by the EU and the US to agree over
agricultural subsidies was the straw that broke the camels
back in these talks, it was by no means the only failure.
Pascal Lamy pointed out that the discussions in Geneva between
the representatives of six WTO member statesthe so called
G6did not even move on to the third leg of the trianglemarket
access in non-agricultural goods. The G6 are: US, EU, India,
Australia, Brazil and Japan.
On market access for non-agricultural goods, industrialised
nations want developing countries to cut their tariffs by
60 to 70 per cent while offering to cut theirs by only 20
to 30 per cent. Their argument being that tariffs by developing
countries place their products at a disadvantage.
In other words, having developed their own industries by a
raft of protectionist measures over decades, the industrialised
countries now want to kick away the same ladder for businesses
in developing countries in their own markets.
It is just as well for developing countries that the G6 representatives
did not get past the obstacle of agricultural subsidies to
contend with the challenge of market access for non-agricultural
For, even if by some miracle, Brazil, India and China had
agreed to slash tariffs to the extent required by industrialised
nations, it is most unlikely that other nations in Asia, Africa
and Latin America would have acquiesced.
The reality is that, thus far, these trade negotiations have
offered little to developing countriesparticularly small
ones such as those in the Caribbean, the Pacific and Africa.
Indeed, if the trends that are painfully evident in these
talks continue, the losses in tariff income for many developing
countries will not only be huge; there will be little room
in which to replace them except by high taxes on already impoverished
Pascal Lamy said that the failure of this Round would
be a blow to the development prospects of the more vulnerable
members for whom integration in international trade represents
the best hope for growth and poverty alleviation.
He would have been right if these talks were indeed a development
round with real and concrete measures for development
permeating the discussions.
But, the talks have been anything but development oriented.
Principally, they have been about rivalry between the farming
lobbies in the EU and the US for agricultural dominance of
the world market.
To a lesser extent, they have also been about the competitive
relationship between the EU and the US on the one hand and
the increasingly large developing economies of China, India
and Brazil on the other.
Neither of those two items addresses the very different concerns
of poor countries and small states.
It is now to be hoped that, in trying to reinvigorate these
talks, the US and the EU especially will acknowledge that
free trade is not necessarily fair
trade when the trading relationship is between hugely unequal
nations, and will therefore put in place real measures for
the development of poor and vulnerable countries.
They should start by reaffirming their commitment, given to
poor countries in Hong Kong last November, to provide them
with duty-free, quota free access. And, they should volunteer
to accord to small states longer periods of duty-free access
to markets of developed countries, and permit them to maintain
tariffs on a non-reciprocal basis.
The idea that the full liberalisation of trade in all its
aspects will benefit poor and small states should be challenged.
With the WTO grappling to find a way forward, now would be
the right time to make the challenge.
(The writer is a business executive and former Caribbean Ambassador
to the World Trade Organisation who publishes widely on small
states in the global community)
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