As the world prepares for the forthcoming WTO Ministerial, fifth in the series, to be held at Cancun in Mexico in September, there is a deafening disquiet on the western front. The decade of economic liberalisation and free trade some call it the Great Decade has actually pushed the poorest of the poor into the dark age.
In the so-called great decade, a significant hard core of countries ended further behind with more poor people, said Mark Malloch Brown, administrator of the UN Development Program, while releasing recently the annual Human Development Report. Fifty-four countries, almost half of them in Africa, are poorer now than in 1990, and some will not meet the development goals for 50 years.
Like the elusive 'weapons of mass destruction', the Cancun Ministerial too is likely to push for further reducing the trade barriers in the developing countries and at the same time forcing a new multilateral investment regime through a compendium of related issues like the competition policy, procurement policy and of course the general agreement on trade in services (GATS) all in the name of reducing poverty. Developing countries, the multinational companies claim, are responsible for thwarting the magnificent opportunity that free trade provides to growth and prosperity. Trade ministers from the world's richest block the Organisation for Economic Cooperation and Development (OECD) are expected to once again mislead the world by joining the MNCs chorus for 'over-ambitious' market access into the majority world.
"Every European cow is getting a $ 3 a day subsidy whereas 40 per cent of Africans live on less than $1 a day," Malloch Brown said. In the United States, cotton farmers received subsidies three times higher than US aid to sub-Saharan Africa, he said. It is not only Africans, what Malloch Brown probably didn't know was that nearly half of India's 1000 million plus population also lives on less than $ 1 a day.
Says Stephen Byers, Britains Labour MP for North Tyneside, and a former trade and industry secretary and a cabinet member from 1998 to 2002: "Since leaving the cabinet a year ago, I've had the opportunity to see at first hand the consequences of trade policy. No longer sitting in the air-conditioned offices of fellow government ministers I have, instead, been meeting farmers and communities at the sharp end. It is this experience that has led me to the conclusion that full trade liberalisation is not the way forward. A different approach is needed: one which recognises the importance of managing trade with the objective of achieving development goals."
As leader of the delegation from the United Kingdom, I was convinced that the expansion of world trade had the potential to bring major benefits to developing countries and would be one of the key means by which world poverty would be tackled. But my mind has changed, he wrote in The Guardian (May 19, 2003). "I now believe that this approach is wrong and misguided." Not many of the world leaders will however have the courage and sincerity that Stephen Byers had in at least acknowledging the flaw in his thinking. Nor do political leaders want to accept the realities lest it exposes and reaffirms their visible and invisible connections with the industry.
Citing a number of examples to prove how the economists and policy-makers are misguiding the people to believe in free trade mantra, Stephen Byers says: "Taiwan and South Korea are often held out as being good illustrations of the benefits of trade liberalisation. In fact, they built their international trading strength on the foundations of government subsidies and heavy investment in infrastructure and skills development while being protected from competition by overseas firms. On the other hand, there are an increasing number of countries in which full-scale trade liberalisation has been applied and then failed to deliver economic growth while allowing domestic markets to be dominated by imports. This often has devastating effects."
Failure of New Economy
Zambia and Ghana are both examples of countries in which the opening up of markets has led to sudden falls in rates of growth with sectors being unable to compete with foreign goods. Even in those countries that have experienced overall economic growth as a result of trade liberalisation, poverty has not necessarily been reduced. In Mexico during the first half of the 1990s there was economic growth, yet the number of people living below the poverty line increased by 14 million in the 10 years from the mid-1980s.
This was due to the fact that the benefits of a more open market all went to the large commercial operators, with the small concerns being squeezed out, he explained. Knowing well that the anger against the multilateral trade regime is building up, the developed countries are trying not to provoke a reaction from the developing world to the injustice that is being done to them. The European Union, for instance, has already announced that it will not be pushing any new issues.
The Cairns Group (food exporting countries) is trying to keep the fight to agricultural subsidies in America and Europe. But what is equally important is that the developing countries bring out the inequalities and injustice in a manner that the industrialised world is forced to sit back and takes notice. Merely signing on the dotted lines, calling it the development round or an 'over-ambitious' round, is not going to help the poor. They in any case continue to hope against hope.