I am writing this from Bangkok, where the Association for Women’s Rights in Development (AWID) is holding its global forum under the theme: “How does Change Happen?” About 2000 delegates from as many as 120 countries have gathered to look at gender equality and change in the current global context. One of the issues that is receiving significant attention is the question of how we can change the current global trading system so that it is fair, equitable and just, and serves all the people on the planet.
As many civil society organisations around the world are finalising their preparations in the run-up to the World Trade Organisation (WTO) meeting in Hong Kong in December, it is worth asking why trade justice is important to every citizen in the world today.
Although trade issues appear complex, and are characterised by the use of a lot of jargon, the reality is that all of us who purchase goods and services are a central part of the global trading system. We have choices, for example, about whether to buy goods that have been fairly priced to ensure that neither the producers nor the consumers are exploited.
Trade justice is a fundamental human rights issue. As many people have pointed out, without trade justice, even the minimalist Millennium Development Goals (MDGs) will not be achieved. Others argue that cancelling debt, increasing the quantity of aid and improving the quality of aid to developing countries alone is a meaningless and unsustainable pathway out of poverty unless we begin to fundamentally change current trade regimes.
Changes in international trade could dramatically improve the lives of millions of the world’s poorest women and men. However, rich country governments, largely without the consent of their own citizens, and working through the World Trade Organisation (WTO), the World Bank and the International Monetary Fund (IMF), and a raft of bilateral and regional free trade agreements, are pushing for the indiscriminate ‘liberalisation’ of developing country economies rather than supporting trade policies that promote sustainable development, poverty eradication and gender equity. This ‘liberalisation’ refers, among other things, to opening developing country markets without an even playing field being achieved, and forcing them to pursue privatisation irrespective of whether this makes practical and ethical sense for individual countries and even for basic public services like water and even education. In some countries privatisation, in practice has been little more than a massive stripping of assets from publicly owned entities, largely to the benefit of a handful of people. In developed countries, such as the UK, previously privatised companies, such as RailTracK, have been effectively placed back in public hands since the efficiencies and controls expected were not delivered and safety was compromised.
Key global trade rules are unfair as they have asymmetrical impact on rich and poor countries. There are still a number of significant trade barriers in sectors that are vital for developing countries. The most obvious is agricultural protectionism by rich country governments, which is a major obstacle to reducing poverty and negates many of the benefits that could come from aid.
In addition, trade barriers have forced developing countries to cede autonomy in important areas of development policy and little attention has been given to policies that could help developing countries cope with the strains of adjustment and strengthen their technological capacity. Nor have developing countries had many opportunities to develop effective industrial policies. The agreement on subsidies and countervailing measures prohibits subsidies that depend on export performance and those that are contingent on the use of domestic rather than imported inputs. Similarly, some elements of the TRIPS agreement, which deals with issues such as patents and copyright, make it more difficult for developing countries to imitate or reverse engineer new technology, which raises the costs of acquiring these new products. WTO rules make the selective protection or strategic promotion of domestic business more difficult than it was under the previous trade regimes, aggravated by some policy conditionality aspects of institutions such as the IMF and the World Bank. All these global rules should be reviewed to allow greater policy space for developing countries.
At the same time, the WTO has developed unprecedented powers to intervene in what are essentially domestic policy concerns, yet this has not been accompanied by any social, development, gender or environmental policy dimensions.
The current talks at the WTO remain unfavourable for developing country members. From the proposals submitted by the rich industrialised countries, developing countries are being pressurised to undertake further liberalisation and to provide greater market access in the areas of agricultural and industrial products and services, which will result in the further curtailment of their policy space and flexibility. At the same time, developed country members appear intent on maintaining their protectionism and trade distorting subsidies, especially in agriculture. If the negotiations continue along this path, the evolving multilateral trading system will permanently remove the types of policies that the successful economies of developed countries are using today to pursue their respective development plans and agendas.
With this in mind, there is deep concern that enforced liberalisation in developing countries will lead to similar negative experiences as we have seen in those countries that have undergone rapid trade liberalisation due to IMF and World Bank conditionalities. Already, the vast expansion in trade and investment, particularly in the 1990s, has had a profound effect on labour standards around the world. While some regions have benefited from this, the negative effects are obvious in the 850 export-processing zones around the world, where minimum labour standards are regularly violated and trade union organisers are forbidden entry. On average, 80% of the workers in these zones are young and unorganised women workers.
The development agenda for developing countries to have special and differential treatment has been effectively marginalised. Many civil society organisations are demanding that these issues be treated as a matter of priority ahead of the market access negotiations, and that they be effectively dealt with in the negotiations with clear processes and timelines, and datelines.
Current negotiations are on agriculture, NAMA (Non-Agricultural Market Access) services and intellectual property. Not only is agriculture crucial for small-scale family producers but is also a key to broader economic growth and sustainable development in developing countries.
Today, developing countries represent only 31 per cent of world trade, despite the fact that they are home to more than 80 per cent of the world’s population. This picture is even bleaker if one looks closely at the data on agriculture: developing countries capture only a third of world agricultural trade and within this, Africa accounts for only four per cent. An improvement in these statistics could make a huge difference to poverty reduction on the rich continent of Africa, which has been impoverished by past and current injustices, and elsewhere in the developing world. But currently, unfair trade rules and the practices of rich countries severely undermine that potential.
Developing countries are severely affected by the subsidies received by farmers in rich countries. The US spends $3.5 billion a year subsidising its 25,000 cotton farmers, the vast majority of which are linked to large agricultural businesses. This allows the US to dump cheap cotton on world markets, which has contributed to world cotton prices falling by half since the mid 1990s, and caused massive hardship among the 10 million cotton farmers living in West Africa and elsewhere. Notably, US cotton subsidies are three times more than the entire US aid budget for Africa. Similarly, the European Union subsidises every European cow to the tune of two Euros per day, which is more than what half the world's population lives on. With this, the EU makes it impossible for developing country farmers to compete in this lucrative area.
Highlighting the problems caused by subsidies, Third World Network’s Director, Martin Khor, writes: “Farmers in developing countries incur losses in three ways: they lose export opportunities and revenues from having their market access blocked in the developed countries using the subsidies; they lose export opportunities in third countries, because the subsidizing country is exporting to these countries at artificially low prices; and they lose their market share in their own domestic market, and even lose their livelihoods, due to the inflow of artificially cheap subsidised imports.”
Clearly, not everyone benefits from the opportunities of increased trade – in many cases the livelihoods of small-scale farmers and agricultural labourers have worsened. With a handful of companies dominating the world market, few people can benefit from international agricultural trade. For example, around 75% of the global cereals trade is controlled by two multinational companies. Similarly, women are at a distinct disadvantage despite it being difficult to overstate their importance in the agriculture of developing country. While women account for 70% of all the food grown in Africa and Asia, they have unequal access to capital, legal and social ownership rights and access to productive resources and services.
With these issues in mind, civil society organisations supporting the Global Call to Action against Poverty’s (GCAP) third White Band Day mobilisation on 10 December are strongly calling for developing countries not to be forced to undertake further commitments to reduce their tariffs on their small farmers' products. This is essential for a range of reasons, including food security, protection of small farmers’ livelihoods and incomes, alleviating poverty and rural development needs. There should be no enforced liberalisation, especially while rich countries continue to provide agricultural subsidies. Many CSOs support the proposal of developing countries that a 'special safeguard mechanism' be created in the WTO Agriculture Agreement, so that developing countries can simply and effectively increase the tariffs of agricultural imports whose prices may fall so low as to threaten the livelihoods of small farmers.
Unfortunately, although WTO decisions are based on consensus, economic power inequalities and differentiation among developing countries has left the poorest with the weakest bargaining position. Moreover, the increased technical complexity of negotiations and a lack of capacity in many developing countries have added to these inequalities. As the Catholic Development Agency CIDSE puts it: “On paper, the WTO is the most democratic of all the international institutions with a global mandate. However, the negotiating and decision-making practices have marginalised developing countries through non-inclusive working methods, lack of transparency in the negotiations, and a proliferating number of informal consultations…”
Another shortcoming of the WTO is the lack of democratic accountability of governments. Trade ministers are rarely subject to close and regular scrutiny by national parliaments, nor are there stringent requirements for public disclosure of information. Furthermore there is a lack of transparency and no proper assessments of the global impact of major policy decisions.
The WTO shortcomings are further compounded by the clear lack of coherence in global policymaking. As with national ministries, each institution deals with a different issue, whether trade, finance, health, development assistance etc, resulting in a lack of coherence at both levels. There is a real need to coordinate international policies. Organisations in the multilateral system should deal with international economic and labour policies in a more integrated and consistent way. In addition, there are fundamental power asymmetries between institutions dealing with finance and trade and those dealing with normative and social matters. Positive recent trends should be expanded, and policies at international, national and local level need to be developed in integrated ways.
A new operational tool should be developed to upgrade the quality of policy coordination between international organisations on issues in which the implementation of their mandates intersect and their policies interact. Policy coherence initiatives have to be undertaken on key issues addressing the social dimension of globalisation. Priority issues could include: employment creation and the reduction of poverty, gender inequality and the empowerment of women, the integration of the informal economy into the economic mainstream, the protection of core labour rights, education, health, food security and human settlements.
Groups and alliances worldwide that are working together in the Global Call to Action against Poverty want trade rules and policies that ensure the right of developing countries to pursue their own development agendas, putting their people’s interests first.
They have called on the WTO, international financial institutions and national governments to:
- Stop pushing developing countries to liberalise at the WTO and allow them the policy space to determine their own trade policies in accordance with their development priorities.
- Immediately end dumping and rich country subsidies that keep people in poverty.
- With regard to the Least Developed Countries, there is a need to safeguard their interests through Special and Differential Treatment (SDT). Stronger development provisions have to be built into the system so that developing countries can take advantage of the multilateral trading system. The current SDT provisions are insufficient; more time to implement rules is simply not enough. There is a need for affirmative action in favour of countries that are latecomers and do not have the same capabilities as those which developed earlier. Countries need to have the flexibility to join in or opt out of proposed disciplines or new issues in the WTO, which provides them greater policy space to pursue their national development priorities. And finally, South-South trade barriers should also be reduced.
- Enact measures to protect public services from enforced liberalisation and privatisation, secure the right to food and affordable access to essential drugs and strengthen corporate accountability.
- Increase accountability and transparency of governments and international organisations to their grassroots constituencies in the formulation of international trade rules and national trade policies, while ensuring consistency of trade policies with respect for workers’ rights and human rights more broadly.
I hope you will join your voice in the many countries mobilised on 10 December, International Human Rights Day and White Band Day III. Key events in December in Hong Kong are:
1. The People’s Action Week – 8-18 December, Hong Kong - NGO activities, events and mass lobby before and during the WTO Ministerial - www.HKPA.does.it.
2. The Fair Trade Fair – December, Hong Kong - After a highly successful Fair Trade Fair and Sustainable Trade Symposium at the WTO Ministerial in Cancún in 2003, a coalition of organisations will hold a similar event in Hong Kong for the Sixth WTO Ministerial Conference in December 2005. It will feature fair trade products from around the world and a symposium with international experts discussing the latest developments in fair trade - www.fairtradeexpo.org.
Other key online resources are: www.radiohongkong.org (an independent voice at the WTO Ministerial from the Institute for Agriculture and Trade Policy - www.tradeobservatory.org), www.cidse.org (CIDSE) and www.twnside.org.sg (the Third World Network websites).
GCAP believes that there is no point cancelling some debts and increasing aid if the trade rules remain unfair for developing countries. Countries such as Mali in West-Africa received US$37 million in aid in 2001 but lost US$ 43 million from lower export revenues caused by other producer countries’ cotton subsidies.
A growing number of civil society organisations believe that civil society’s involvement inside and outside the Convention Center in December in Honk Kong can make a difference. They believe that trade injustice affects us all, whether we are victims or beneficiaries of the current system. Essentially, trade justice intersects with most of the agendas that are being pursued by millions of civil society organisations worldwide such as gender equality, youth development, human rights, environmental justice, and so much more.
I apologise that this piece is so much longer than regular columns but I felt that this issue needed greater elaboration.
