Prosperity Through Trade vs. Poverty Through ‘Eurolateralism’

by | Sep 13, 2003 | POLITICS

CANCUN, Mexico – As the “extremely dangerous” Hurricane Isabel advances toward the Yucatan from the Western Atlantic, delegates from 146 countries are racing to finish work at this resort town on a once-in-a-generation opportunity to slash subsidies and open up the most notoriously protected sector of the global economy: agriculture. It just may happen. Certainly, […]

CANCUN, Mexico – As the “extremely dangerous” Hurricane Isabel advances toward the Yucatan from the Western Atlantic, delegates from 146 countries are racing to finish work at this resort town on a once-in-a-generation opportunity to slash subsidies and open up the most notoriously protected sector of the global economy: agriculture. It just may happen.

Certainly, it’s unlikely that this ministerial meeting of the World Trade Organization will become another Seattle, where four years ago talks broke down amid anti-globalization riots. Passions aren’t nearly as high here – in large part because free trade has proven its value to poor countries. Plus, security is tight.

It’s true that Thursday, clashes between protesters and police got violent, and, in a bizarre turn, a South Korean activist committed suicide by stabbing himself on the barricades. But that action was far from the “Hotel Zone,” where the conference is being held in this scrupulously planned, Americanized city, which is more like Fort Lauderdale than Acapulco. The police and military have cordoned off the meeting sites, and Mexican navy frigates and torpedo boats incongruously lurk in the turquoise waters off the gorgeous beach, keeping putative landing parties of demonstrators at bay.

The United States and the European Union set the stage Aug. 13 with a pre-conference agreement on agriculture, but it was sketchy. Now, they’re under intense pressure, especially from a new group of developing countries called the Group of 21, to make good on promises to stop supporting wasteful practices by their own farmers and to give agricultural imports from poor nations a fair chance.

While the U.S. has been criticized – as it should be – for its farm subsidies, it is Europe that is is bearing the brunt of the animosity. And that’s sheer pleasure for Americans used to being blamed for everything from global warming to ubiquitous fried chicken.

In fact, the WTO conference continues the surprising theme set last year at the Earth Summit in Johannesburg – the isolation and marginalization of Europe. The Europeans are becoming testy over finding themselves, for a change, on the receiving end.

For example, the other day, Franz Fischler, the EU’s agriculture commissioner, in an interview from Brussels, blasted Brazil, China and India, the leaders of the Group of 21: “I can’t help but think that we are in different orbits entirely. If they want to do business, they should put both feet on the ground. If they continue in their space orbit, they will not get the moon and the stars, but rather empty hands.”

Besides biting back, the strategy of the Europeans and their supporters from non-governmental organizations, who help set the agenda at every global conference, is to change the subject. They have met with little success. One contentious item came off the table even before the conference began when an agreement was reached in Geneva on getting patented drugs to the poorest countries in health emergencies.

But the favorite European tactic is to conflate environmental and trade issues. Pascal Lamy, the EU’s trade commissioner, declared yesterday “Sustainable Trade Day,” attempting to promote what the EU calls “the inter-linkages between trade, environment and development.” Such integration would weigh down the WTO, which has succeeded in large part because it has a simple purpose – to achieve free trade worldwide.

In a report released at the conference, Alan Oxley, former ambassador from Australia to the General Agreement on Tariffs and Trade (GATT), the WTO’s predecessor, released a think-tank report, “European Unilateralism: Environmental Trade Barriers and the Rising Threat to Prosperity Through Trade,” which detailed 40 environmental restrictions on free trade, all of which “disregard the rights of members of the WTO.”

On Tuesday, the European Court of Justice ruled that one of those restrictions – a ban on genetically modified corn – was unjustified. That doesn’t mean that the EU’s moratorium on GM foods – which Africans, especially, are eager to grow and export to Europe – will end soon, but it’s an important step.

The developing world, which is wielding more and more clout at these international conferences, is unimpressed with what columnist and former Reagan aide Jim Pinkerton calls “eurolateralism.” Poor countries just aren’t buying the enviro-rhetoric.

For example, Supachai Panitchpakdi, the former deputy of Thailand and current director-general of the WTO, yesterday said that, rather than being “internalized” into trade deals, environmental concerns should be dealt with separately – a position that’s a blow both to Europe and to aggressive Green non-governmental organizations like Greenpeace, WWF and Oxfam, which turn out in force at these conferences. Expanded trade, said Panitchpakdi, is good for natural-resource conservation. It’s “win-win.”

Delegates from developing countries understand that the best route to a better environment is through economic prosperity. Wealth makes health. That’s what they want, and they believe that blasting open markets in the U.S., Europe and Japan – which currently spend $300 billion protecting their farmers – will make them richer and healthier.

The developing countries are right, but they miss the full story. If Europe and the U.S. do end farm subsidies, the main beneficiaries will not be African farmers but European and American consumers, who will glean lower prices. Developing nations will gain through acquiring more export markets, but, by lowering their own tariff barriers, they will gain even more.

While the good news is that the Doha Round of WTO negotiations in 2001 put the spotlight on developing nations, the bad news is that it promised them “special and differential treatment” in implementing any new agreements. That was a mistake. These countries already get special deals under WTO, and their economies suffer as a result. In the U.S., for example, the average tariff on industrial goods is 4 percent. In India, it is more than 30 percent; in Bangladesh, 20 percent.

As Oxley wrote recently, “The problem in poor countries is generally not lack of access for exports, it is economies that don’t work. Self-help – opening up their economies to imports, not trade Band-Aids – is the answer.”

The rich nations have only themselves to blame for this predicament. Their rhetoric paints trade negotiations as exercises in which Country A agrees to lower its tariffs only as a necessary evil in order to entice Country B to lower its tariffs, so that Country A can sell its goods there. Adam Smith understood more than two centuries ago that the reason we trade is for attractive imports – that is, things that are cheaper and better than things we make at home. Yes, Europe and the U.S. should reduce the protection of their farming sectors; it’s in their own interest even more than it’s in Africa’s interest.

Still, overall trade barriers in rich countries are exceptionally low, and you can sympathize with the exasperation that European and American negotiators feel when they see protectionists like the Indians and Brazilians mounting the soapbox in indignation.

However, given a choice between having the EU and its NGO pals running the show here in Cancun and having developing nations providing the juice, I’ll pick the developing nations.

Just as at the Earth Summit in Johannesburg, these poor countries, which represent the vast majority of WTO membership, are the main act. And it is a generally good one – since these countries have learned through experience that prosperity depends on free markets, and not on the kind of command and control in matters of health, energy and the environment that rich, white NGO members insist the poor need.

Now, if only the delegates can beat that hurricane.

Ambassador Glassman has had a long career in media. He was host of three weekly public-affairs programs, editor-in-chief and co-owner of Roll Call, the congressional newspaper, and publisher of the Atlantic Monthly and the New Republic. For 11 years, he was both an investment and op-ed columnist for the Washington Post.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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