August 8, 2001
You wouldn't necessarily have heard, but at a seaport town lying thousands of kilometres south of Genoa people have been protesting the international trade regime. While the international media was focussing on the aftermath of the Italian demonstrations, trade ministers from the world's poorest countries were meeting in Zanzibar, Tanzania, to discuss their grievances with the World Trade Organization (WTO).
Their message: Unfulfilled promises by Western countries for a fair trading system are no longer good enough. It's time to act.
During the last round of global trade talks in 1999 at Seattle, USA, least developed countries (LDCs) were promised greater access to Western markets for their exports. This has so far failed to materialise, although developing countries have opened up their own markets to goods and services from rich nations. There are 49 LDCs listed by the United Nations. Thirty-nine were represented in Zanzibar, and 29 of them are members of the WTO.
They are what the United Nations Conference on Trade and Development (UNCTAD) terms 'Pockets of Poverty'. Most of the 614 million people in LDCs survive on less than $2 a day, life expectancy is 50 years and one half of adults are illiterate.
The ministers agreed a common position to take to the fourth WTO Ministerial Conference to be held in Doha, Qatar, from 9-13 November.
In a joint statement to the WTO, the ministers asked for a 'New Deal' on trade, which includes a binding commitment on duty free and quota free market access for all products from LDCs "on a secure, long term and predictable basis". Most Western countries impose high import tariffs on exports from developing countries, and only allow a limited amount of some products to cross their borders. LDCs also want easier access to the WTO, the powerhouse governing world trade. Their mood is one of anger and frustration at the immoveable positions taken by rich nations.
Dr Ali Mohamed Shein, vice-president of Tanzania, said: "LDCs have taken the heaviest toll of the negative side of globalisation. "Although there has been tremendous effort on the part of LDCs in liberalisation and reforms, the distribution of the costs and benefits of processes of globalisation and liberalisation has remained uneven."
Certainly, the WTO-directed world trading system has provided little, if any, comfort for the poorest nations. They remain on the margins of a multilateral trading system dominated by the USA, European Union, Japan and Canada. Accounting for only 0.4 per cent of world trade, LDCs' claim that they have received a raw deal is well justified.
Over the past 50 years average tariffs on manufactured goods have fallen from 40 per cent to four per cent. But for agricultural products, the backbone of LDC exports, there has been little change. Tariffs have remained at 40-50 per cent in most Western markets. Speaking in Zanzibar Rubens Ricupero, secretary general of UNCTAD, said: "Despite progress over the past 50 years, developed countries maintain significant tariff and non-tariff barriers against the exports of LDCs such as agriculture, textiles and clothing." LDC ministers say their countries are worse off than they were before liberalisation and globalisation. Poverty, unemployment and social inequalities are all rising.
Peter Hain, Britain's former Foreign Office minister, admitted last year that the losses incurred from trade barriers are substantial. Hain estimated that sub-Saharan African countries, where many LDCs are located, lose $20 billion a year in export earnings because of high tariffs, anti-dumping regulations and technical barriers to trade imposed by industrialised countries. Anti-dumping regulations are imposed by countries to protect themselves from cheap imports - blocking trade on the grounds that the products are sold for less than the cost of production.
Technical barriers include rules on health and safety and quality control. For all developing countries the losses amount to some $700 billion. In addition are losses from quotas, which limit the quantity of individual products exported to Western markets. Western governments also heavily subsidise their own industries - including agriculture - so their products can be sold at artificially low prices that undercut foreign competition.
At the recent G8 summit in Genoa, leaders of the world's richest countries agreed "trade negotiations aimed at scaling back barriers to imports from developing countries, particularly the LDCs, are central to continuing economic growth and poverty reduction." But despite the promises, prospects remain bleak for LDCs. One of the factors locking them in poverty is the low price they receive for their exports. The economies of most LDCs are dependent on exporting agricultural commodities, which are bought at rock bottom prices on the international markets.
The only way LDCs can earn more from commodities is to process them in-country and then export the more valuable product. But processed goods face even higher trade barriers than raw commodities. Celine Charveriat, policy advisor at Oxfam, explains: "A classic example of LDCs losing out on prices is when they move from exporting fruit to exporting canned fruit, where there is significant value added on canned fruit. In the European Union there are low tariffs on pineapples but very high tariffs on canned pineapples.
"This is due to the protection in the EU of the canning industry and, most important, the sugar required to can pineapples." In order to protect its sugar beet industry the EU has made sugar one of the few products left out of its recent policy of abolishing almost all tariffs on products from the LDCs. Fair trade could make for a brighter future but the deck still remains stacked against the LDCs. Of the 29 LDCs in the WTO, only 12 members have representatives in Geneva. They don't have the manpower or resources to even attend WTO meetings, let alone influence their outcomes. They also lack the legal framework and expertise that is required for arguing their case before the WTO's dispute resolution body. Such lack of representation has meant that most unfair trade practices against LDCs go unnoticed.
International agencies such as Christian Aid and Oxfam recognise that the present trading system is tilted against the poor but they are against shutting down the WTO. For them a rules-based system - however faulty - is preferable to a free-for-all in which small countries are forced to negotiate individually with global giants to gain access to their markets. Upcoming changes to the WTO do offer some hope for the LDCs and other developing countries. With the likely entry of China to the WTO at Doha, the balance of power within the organisation is shifting decisively toward the developing world.
The LDC trade ministers say they do not want to discuss new issues at Doha until previous promises have been turned into binding agreements. Dr Shein warns that "in view of the vulnerability of LDCs and their marginal impact on the global economy, the agenda and work programme of the WTO must take LDC concerns more seriously. The LDC group forms a significant part of the WTO membership, and they rightly have a major stake in the WTO." Now is the time, he adds, "to secure at least a fair deal in the WTO agenda."
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