WTO: no deal is better than a bad deal

OneWorld Country Guides provide little cheer on the subject of international trade. One after the other they present a catalogue of woes, from entire economies destroyed by obscure commodity pricing mechanisms to poor farmers heading for the urban slums as their produce is undercut by European subsidies.

How different this picture would be if OneWorld instead produced a series of Guides for rich countries! World trade volumes have almost doubled in the last 10 years and the happy few are reaping the rewards. The 30 most successful countries in the world account for over 85% of global trade; Africa’s share is a miserable 2%.

The Doha trade round which comes to a head at the WTO Ministerial in Hong Kong next week has the stated objective of improving the share of world trade for poor countries. The big idea is to persuade North America and Europe to reduce farming subsidies and remove barriers to agricultural imports.

In return developing countries will be asked to allow greater access to trade in services which cover a wide range of industries including finance, telecommunications, advertising and transport. It’s as though the rich countries are saying: “we’ll buy your food but you must put the money in our bank”. Is this a model for development?

OneWorld Guides certainly verify that agriculture is important to poor countries. Bangladesh, Burkina Faso and Uganda are not untypical in providing employment on the land to over 80% of the working population, with agriculture contributing over a third of GDP.

Such countries are no strangers to the obstacle course of finding export markets for their produce. Mali and Benin have waited years for WTO action against unfair US subsidies on cotton and Vietnam is still waiting for equity in the trade for shrimp. The long-established chicken industry in Ghana collapsed under the weight of dumping of surplus meat from the European Union. It’s a wonder that George Orwell is not more often misquoted by African leaders: “all trade is free but some trade is not quite so free.”

The Doha dream of a more level playing field for agriculture could remove some of this injustice. But Mexican farmers have not enjoyed the experience of the North American Free Trade Agreement (NAFTA), many of them losing their livelihoods as US agribusiness moved in. And the rich buyer countries have a habit of inventing trading mechanisms which make life difficult for the sellers: Uganda will testify to its strenuous efforts to diversify in the face of unpredictable world market prices for coffee and tea.

More serious still is the risk of replacing staple produce with crops for export, often encouraged by the economic gurus of the World Bank. For example, Guatemala faces the

indignity of importing US grain having converted many of its farms to grow exotic produce for the supermarkets of its northern neighbour. And western consumers are as fickle as the futures markets – greater awareness of the environmental impact of transporting produce over long distances is just one bombshell waiting to explode the WTO’s best-laid plans.

The picture emerging from OneWorld Guides is that trade in agriculture is a messy business for poor countries, perhaps raising the question of whether the Doha package is really worth bothering about. Whilst any increase in trade is of course desirable, is there any evidence that a boom in agricultural exports will lead a country out of poverty?

Argentina, New Zealand and Australia might fit the bill at a pinch but a very long time ago. Today India and China have burst through the development barrier almost at the expense of agriculture, their farming sectors now in disarray with hundreds of millions of rural people living on the wrong side of poverty.

If the globalisation of agriculture offers something less than a stepping stone towards a modern economy, it is little wonder that the poorest countries are hesitating before handing over the silver spoons of access to their service economies. The WTO agenda is possibly being driven more by countries like Brazil, China and India whose more robust economies are less vulnerable to the downsides of trade in agriculture.

The troublesome framework for agriculture in the European Union has its origins at least in part from the post-WW2 crisis in food production. Farmers were granted concessions in the UK and France in particular out of determination that never again would they lack self-sufficiency in food and be forced into rationing through inability to pay for imports.

This right to self-sufficiency was seen as absolute and not as a bargaining chip which is one reason why the Common Agricultural Policy has survived to the point at which it is patent nonsense. We should therefore not be too surprised if poor countries in today’s more globalised world feel they have a right to fair trading rules in agriculture on grounds of global justice alone.


this article was first published by OneWorld UK