Geneva 27 May 2004
At the session on Agricultural Subsidies organised by the Institute for Agriculture and Trade Policy among others, a common thread that emerged was about the effects of subsidy cuts on small farmers.
The serious problem facing farmers worldwide is the very low commodity prices, which many say will only continue to fall. The low prices cause over-production, which in turn causes prices to fall further. Comments from speakers from the EU, US and South America all reiterated this phenomenon as the justification for continued subsidies, and calls were made for the root causes to be addressed and solutions found.
One interesting issue, which should have required more deliberations, was the effects of operational agri-intermediary cartels who have actually been the main beneficiaries of the lower prices for agricultural commodities, instead of consumers.
These intermediaries abuse their monopolistic dominance in the market for final products while in the markets for primary products they abuse their monopsonistic dominance. A World Bank report estimated that the divergence between producer and consumer prices may have cost commodity-exporting countries – which mostly are developing and LDCs – more than US$100bn a year, and suggests that imperfect competition at the intermediary level is the key factor.
A session organised by the Commonwealth Business Council and the Geneva Women in International Trade brought to the forefront the interlinkages between trade and gender as well as the impact of women in small, medium and micro enterprises. Although the issues of inequality covered is much more of a development issue, perhaps more pertinent to national government policy, the discussion on entrepreneurial development and the practicalities of how to engage in the international market were interesting.
The evergreen debate of whether environmental standards under the SPS and TBT agreement under the WTO should be enhanced beyond the least common denominator was the focus of a workshop organised by the European Commission on “Environment and Governance: What role for the WTO”. Rupert Schlegelmilch of EC DG Trade tried hard to sell the EC’s view of introducing process standards in the WTO, but was met with substantial civil society opposition.
Another issue that emerged was regards the compatibility of multilateral environmental agreements such as the Montreal and the Kyoto Protocols with the international trading system especially in terms of their trade related impact.
“The trade equation of MEAs will not be solved unless these issues enter the WTO”, said EC’s Representative. In counter, Tom Crompton from WWF, UK vocalised the views of most NGOs as well as developing countries “WTO is ill equipped to handle additional environmental issues. It will be more relevant to strengthen UNEP”
The International Policy Network’s session on “Trade, Technology and Development” was another discussion which witnessed a great deal of debate as to whether there is a simple causal relationship between trade liberalisation, local FDI presence of TNCs in developing countries together with the technology they bring in and economic development. Implicit consensus was that appropriate regulatory mechanisms are needed badly, and an imperative if the developing countries are to reap the benefits of opening their economies.
Countering an example quoted by Johan Norberg of Timbro, Stockholm, author of “In Defence of Global Capitalism”, Alice Pham of CUTS revealed to the participants a sad fact that the monthly salary of a normal Nike worker in Vietnam is not sufficient to afford even one high-quality pair of Nike shoes; as against the huge profits the same TNCs have been making in the developing world.
“Asymmetry or exploitation, is just a tricky game of words”, said Dr. Margaret Karembu of the University of Nairobi and ISAAA Africentre, one of the panellists. “That people are competitively thriving for a US$100-monthly-salary-for-hard-labour doesn’t mean TNCs are doing a favour to developing countries, if one looks at these companies’ super-profits there, and at the number of weaker local enterprises driven out of business”.
LDCs like Bangladesh, for example, remain an LDC despite having an extremely open investment regime. Technology transfer doesn’t happen if the host countries, which are weak, don’t have the absorptive capacity. More so, the transfer is blocked by the legal but anti-competitive licensing practices which the current trading system is granting the ‘big guys’.
The role of the International Monetary Fund in supporting the WTO negotiations also came under scrutiny. According to Hans-Peter Lakes of IMF, although the Fund streamlined its policy imposing trade liberalisation-related conditionalities since 2001, a small number of assistance programmes are still linked to conditionalities.
Ambassador Toufiq Ali of Bangladesh questioned the rationale behind IMF proposing the Trade Integration Mechanism, whereby the Fund pushes the developing countries to further integrate into the world economy through new commitments in the WTO. He suggested that that the Fund should rather start programmes to enhance the export base of developing countries, whereby the poor countries benefit, rather than offering onerous loans to undertake new commitments.
At another session focusing on market access, Ambassador Nathan Irumba of Uganda pointed out that if the large developing countries represented at G-20 are ready to accommodate concerns of the lease developed countries (LDCs) in the G-90 group, both could join together in the current round. He disclosed that there are dialogues going on between G-20 and G-90 to reach an understanding on taking common positions in many areas including agriculture.
Prof Ajit Singh of Cambridge University argued that the success of India and China in liberalisation was due to the controlled liberalisation and integration with the global economy which they followed in the 1990s. He suggested that poor countries should learn from the liberalisation experience of Japan, South Korea as they all followed “strategic integration” with the world economy.
The experience of the above countries showed that free trade is not the only way of economic growth but controlled liberalisation whereby countries should go for liberalisation of sectors where it is competitive or complimentary to foster welfare of the people.
The Symposium ended with a hope that the three days of extensive exchange of ideas and intensive discussion among the civil society and the trade community will act as a catalyst in the run-up to the July deadline of the Doha Round. Whether the concerns raised would be addressed or not is still a question, but the meet clearly sent a signal that the civil society has a higher responsibility and will need to come up to the expectations of the role they are constructively playing to achieve a better, rights-based world trading system for all.