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| Tuesday, 10 August 2004 |
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WTO Geneva agreement - did third World get its due? by Preethi Sirimanne von den Driesch
After several days of delays, wire-pulling and bargaining, a final compromise was reached at the World Trade Organisation (WTO) in Geneva ending the rift between the developed and the developing countries regarding agriculture trade policies. The US delegate called the result a win-win for the US, the WTO, for exporters, consumers and for the developed and developing countries. In contrast, a delegate of the Dominican Republic referred to the final arrangement as unjust, unfortunate, disappointing and immoral. The disparities between the rich and poor nations were apparent, though Brazil, India and China spoke of an agreeable consensus. It can hardly be called a historic deal since it is only a framework agreed by the 147 members for further talks which will draft a final deal in Hong Kong in December next year. The success of the agreement will depend on, if the arranged agreements in Geneva are implemented. During the negotiations the US, the EU, Japan and Switzerland vehemently defended their farm subsidies and refused to end them unless they get greater access for the export of industrial products to the developing countries. The WTO trying to avoid another failure, as it was in Cancun, finally announced that the US and the EU have agreed to cut their farm subsidies, the developing countries will gain the rights to protect their special products and in exchange rich countries will gain access to markets in developing countries. Despite the WTO ruling (earlier this year) that cotton subsidies given to the US farmers were trade distorting, African countries did not receive what they wanted. Instead, they were forced to accept development aid. That means the problem of 10 million African farmers whose farming is affected through dumping was not resolved. According to reports, industrialised countries still can practise protectionism categorizing their agricultural commodities as sensitive products. A crucial point is that no concrete date was mentioned in the text regarding the elimination of export subsidies given to EU farmers. Oxfam reported: "Presented as a breakthrough, the text on agriculture does little to address the problem of export dumping, instead introducing dangerous loopholes for yet more subsidies especially from the US. There are no cast-iron commitments here and no clear timeline for reform. If rich countries do not immediately put their promises into action, this declaration will become just one more stage in a long journey of disappointment and deception. Already earlier rich countries had been bending rules of agreements by shifting their subsidies from trade distorting categories to ones where dumping is allowed. It becomes obvious that rich countries come to WTO meetings with other interests than coming to a consensus. Their stance and their intentions became apparent at Cancun." Cancun reviewed The conference in Cancun collapsed as two themes, agriculture subsidies and the so-called Singapore issues, polarised the meeting. The final death knell which led to the failure was the Singapore issues which dealt with investment rates, competition policy, trade facilities and transparency in government procurement. The rich countries ignored the importance of the subsidy question and were extremely anxious to deal with the Singapore issues, because it would have enabled multinationals to establish businesses and investment services, such as water management, telecommunication and banking, in developing countries. The aim was to force developing countries to adhere to competition by removing bureaucratic procedures that would hinder or delay the free trade. Further, industrialised countries wanted to secure the right of investors and protect their business ventures against expropriation by national governments. If the Singapore issues materialized, it would have curtailed the authority of national governments considerably enabling multinationals to conquer local businesses. Many delegates who participated in the Cancun-conference were irritated and angry that industrialised countries insisted on dealing with trade expansion issues, when many developing countries were faced with enormous difficulties in the farming sector due to dumping prices. The subsidies granted to the farmers in industrialised countries are particularly egregious as they hinder the wealth accumulation of developing countries. Critics call the subsidies one of the worst injustices in the global economic system. According to reports the removal of subsidies will contribute to an export growth in developing countries, approximately 700 billion US dollars annually. The dumping of goods, such as sugar, cotton, cereals and dairy products, at prices below the world market not only systematically destroys the livelihood of million of farmers in the world but also sets the world market mechanism out of control. For example, the costs of cotton production in Burkina Faso are three times cheaper and better in quality than those produced in the US. Yet, it is the US cotton farmers who control the global market price. Their excessive production has reduced the cotton price in the world market massively. This market dominating factor in return causes existential problems to millions of farmers in poor countries. Initially, it was thought that the WTO will create an equal playing field for trade. But this is not the case. Its treaties are formulated in such a manner that it allows multinationals to make huge profits in developing countries, because there are no regulations on corporations. While the rules force developing countries to open their markets to foreign products, they allow industrialised countries to give subsidies, although it is widely known that dumping of agriculture products is ruinous. Such practices not only threaten the food security in many countries but also undermine the local economies tremendously. 'The Guardian' wrote on August 2, 2004: "The WTO is an institution where the membership acts in flat contradiction to its professed beliefs. It is an institution that encourages the rich and powerful to steamroller aside all opposition, if they can. And it is an institution where efficient policymaking runs smack up against democratic involvement. It can be pretty hard going, as the events of the past week have shown." Food as a weapon Often negotiations on subsidies fail, because the industrialised countries have a hidden agenda to control the global food market. Already 60 per cent of world food stocks are in the hands of private companies and 70 per cent of the world grain trade is controlled by just six of these companies. The inability of the WTO to work for a fair free trade will eventually lead to a situation that few countries will have power to control food. Once they obtain this power, they might be able to use it as a weapon for blackmailing countries or making countries dependent on them. They might be able to control the half a trillion dollars a year food market and manipulate the market to their own desires. This might become a reality, if the WTO fails to act in an impartial way. |
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