Australian Financial Review | Sept. 13, 2003
It's too early to say whether delegates to the World Trade Organisation meeting in Cancun, now immersed in private talks, can get the faltering Doha round of trade liberalisation negotiations back on track.
But what can be said is that the usual saboteurs have been hard at work muddying the waters so that supporters of free trade, such as Australia, can't be confident real progress will be made.
The first group of saboteurs includes the world's richest nations and regions, which heavily subsidise their farmers for political reasons. These include the European Union and the United States, which have struck a feeble joint proposal for cutting support, plus Japan, Korea and countries such as Switzerland and Norway.
Between them they pay $US245 billion to farmers to flood the world market with cheap exports, and maintain steep barriers against farm imports.
The EU, the worst offender, offers concessions to the poorest countries for their basic commodity exports. But should these poor countries so forget their station in life as to want to add value, they face steep tariffs.
The EU imposes no tariff on cocoa, which it doesn't grow. But should cocoa producers such as Ghana, Nigeria or Brazil want to make chocolate, they face 18 per cent tariffs in the EU market. Tea and coffee producers are similarly thwarted, and sugar producers face 228 per cent tariffs as well as a world market flooded with massively subsidised EU sugar.
The US says EU policies tie its hands, but its massively subsidised cotton knocks African producers out of markets. And so on.
The other group of saboteurs embraces NGOs and anti-globalisation protesters of differing degrees of culpability. Oxfam has done a good job explaining the hypocrisy of the US, EU and other farm-subsidising nations to a constituency that wouldn't believe this from any other credible source. Oxfam also acknowledges the indispensable role of trade, private investment and economic growth in lifting poor countries out of poverty, and is justly concerned about the unintended consequences of poorly designed investment and trade.
But it remains overly suspicious of free trade and exaggerates the potential for "managed trade" to succeed where free trade hasn't. This attitude has infected the G21 group of developing farm producers, who feel no obligation to cut their own trade barriers even as they demand this of rich countries.
It is tempting to say they have a point, but poor countries encounter stiffer protection when they trade among themselves than when they trade with rich countries. Experience has shown that the greatest benefits come from cutting your own barriers, not from gaining access to others' markets.
The G21 stance also risks driving the US into the arms of its partner-of-convenience, the EU. US trade representative Robert Zoellick is already warning the G21 and the Cairns group of farm exporters, led by Australia, that they need to compromise their demands for substantial cuts in farm support or risk Doha's collapse. But just who is being intransigent here?
In the confusion, the EU is making common cause with anti-globalisation groups. The most extreme of these, such as Global Trade Watch, whose backers include Greenpeace and the ACTU, want labour and environmental standards included in trade talks. This neo-protection risks penalising poor countries for their very poverty.
Out of this mess, Cancun delegates must build a framework to carry the Doha round to completion by early 2005. It would be silly to write it off, but they will have their work cut out.Australian Financial Review:
