An onslaught against some of the world’s poorest people is about
to enter its next phase in a remote Swiss ski resort. Unlike over Iraq, the
world's richest countries are united in this big push which would reorganize
the global economy in more far-reaching ways than the US neo-cons’ designs
on the Middle East. The upcoming ‘mini-ministerial’ meeting of the
World Trade Organisation (WTO) in Davos threatens to become an economic Fallujah.
While world leaders were last year professing their commitment to ending poverty,
their real goals were revealed in months of behind closed door discussions at
the WTO in Geneva. There, rich countries have single-mindedly embarked on a grab
for new markets around the world for their companies. The aim is to push developing
countries to reduce their trade barriers on imports of manufactured goods and
services companies from the rich world. At last month’s WTO ministerial
meeting in Hong Kong, this agenda was only edged forward, thanks to massive opposition
from developing countries dismayed by the EU’s failure to cut its massive
farm subsidies. But the Davos meeting is the next step in this big push.
The European Commission's aim is to create 'new business opportunities' for manufacturing
exporters and 'to improve market access for European services exporters in foreign
markets', especially for financial services and construction. Behind this lies
a public relations campaign, led by the EU’s trade commissioner and leading
spin doctor, Peter Mandelson, whose attempt to colonise new markets is being dressed
up in the grandest rhetoric about development.
The idea that trade liberalization is good for development is one of the grand
delusions of our era. Rather, tariffs on industrial imports can play a crucial
role in nurturing poor countries’ infant industries and creating jobs.
If these countries are forced to give equal treatment to foreign as to domestic
firms, a key tool in industrial policy will be removed. A recent analysis by
the UN's trade body, UNCTAD, showed that half of a sample of 40 countries experienced
deindustrialization after trade liberalization. 'Investment' by foreign companies
often means taking over local companies and privatising public services.
As the world's poorest countries have opened up their economies in the past
20 years, with trade now providing half their national income, they have become
poorer: 80 per cent of the least developed countries’ population now lives
on $2 a day. An UNCTAD analysis of 108 countries shows that only 10 out of 35
countries with the most 'open' trade regimes have high economic growth whereas
only 7 of 36 classified as most 'restrictive' have low economic growth. They
conclude that 'there is no basis for concluding that trade liberalization, in
the short run, reduces poverty'.
Even this is a massive understatement. A recent report by ActionAid shows that
Nigeria has suffered an 'industrial tsunami' by removing tariffs on textile
imports which has devastated the local industry, cutting 16,000 jobs and destroying
100,000 peoples’ source of livelihood. In Gambia and Ghana the flooding
of local markets with cheap milk and rice imports is depressing local prices
and putting desperately poor farmers out of business. The UN has documented
a massive 1,217 cases of such 'import surges' on just 8 commodities in 28 developing
countries, meaning that the wiping out of poor communities by trade rules is
even more regular than British ministers’ speeches praising the wonders
of ‘free trade’.
The British government's solution to this is to champion poor country exporters’
greater access into Northern markets. It is surely gross hypocrisy for the EU
to keep its markets closed while forcing open others. Yet moving to global free
trade does not offer a level playing to all, but mainly benefits rich country
corporations able to capture markets. Rather, poor countries need the right
to protect their economies, to keep out imports and to subsidise their agriculture
and industry when in the development interest. Protection does not always work,
but it must be available to poor countries as a policy option.
This is currently heresy to the liberalisation theologists in Whitehall and
the WTO. Yet protection is not only what rich countries currently practice on
a massive scale in agriculture; it is also what they did in past to build up
their industries to become internationally competitive. Protection was also
a key economic policy in successful East Asia countries like South Korea, which
50 years ago was as poor as Sudan.
Protection of other people's markets, however, is not good business. So at the
WTO negotiations, rich countries, led by the EU, are vociferously opposing poor
country proposals to designate some products as 'special' and exempt them from
tariff reductions. At the same time, G8 leaders have been displaying the grossest
hypocrisy by claiming they champion the right of poor countries to decide their
own development policies.
Trade negotiations may appear like a techy debate for anoraks only - but they
go to the heart of what domestic economic policies will be permissible under
global rules. The rich country project of recolonising the world in the interest
of corporations will only be stopped by a combination of opposition from developing
countries and public mobilization around the world.