An onslaught against some of the worldâ€™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-consâ€™ designs on the Middle East. The upcoming â€˜mini-ministerialâ€™ 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 monthâ€™s WTO ministerial meeting in Hong Kong, this agenda was only edged forward, thanks to massive opposition from developing countries dismayed by the EUâ€™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 EUâ€™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 countriesâ€™ 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 countriesâ€™ 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 peoplesâ€™ 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 ministersâ€™ speeches praising the wonders of â€˜free tradeâ€™.
The British government’s solution to this is to champion poor country exportersâ€™ 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.
Mark Curtis is the author of Unpeople: Britainâ€™s Secret Human Rights Abuses and a former Director of the World Development Movement. [email protected]