June 14, 2002
In April this year the British charity, Oxfam, launched its three-year campaign on fair trade. To back this campaign, it issued a study whose title is suggestive of the hypocrisy of the developed countries - Rigged Rules And Double Standards: Trade, Globalisation, And The Fight Against Poverty.
The report has been rightly criticised in some non-governmental organisation (NGO) circles for being too focused on providing a market-based solution to the condition of poverty of the poor countries.
Nonetheless, coming from a respected Western mega-NGO, it is an important document. The study provides proof of the double standards applied by the Western countries, and on the manipulation of international trade rules, especially in the framework of the World Trade Organisation (WTO).
This should provide good reason for African (as indeed other Third World) countries to take serious note of what is happening around them, and wake up from the illusions they nurse, such as the New Partnership for Africa's Development (Nepad), for example.
Nepad is fundamentally flawed in its premises and assumptions. The strategy it offers is unrealistic. It is based on the illusion that it is in the interest of the developed countries to bale out Africa with enormous doses of foreign direct investments (FDIs) if only Africa puts its house in order in the economic and political governance front as directed by the developed countries.
This assumption is so naive that it is almost breathtaking. The following story says why.
In the United States the Republican-dominated House of Representatives and the Democratic-dominated Senate recently passed a controversial farm bill providing for US$173,5 billion (Z$9 543 billion) subsidy to farmers.(Contrast this with the, by comparison, mere US$64 billion that Nepad hopes to secure for the whole of Africa to get the continent out of its poverty trap).
This move by the US is in utter contempt for the rules of international trade, and the very principles of free trade that the US administration claims to promote.
This, by the way, has come close on the heels of the huge tariff escalation on steel imports that blatantly put protectionist measures to shield inefficient steel industry of the US from global competition. The US Farm Bill is also in complete disregard of its possible implications for the agriculture of developing countries. The developing countries were not an issue; the forthcoming Congressional elections were the issue.
In other words, it is domestic politics that determined the vote, and the allocation of such huge subsidies to agriculture barely six months after the WTO Doha Conference in November 2001 when the US pressured the European Union (EU) to begin to phase down its own subsidies to agriculture. The US Congress acted in relation to its own subsidy bill as if Doha never took place, and as if the developing countries do not even exist.
Africa must draw proper lessons from the behaviour of the big powers. They, the superpowers, may talk in the language of high principles and morality.
But their actions are based on utter cynicism. When it comes to protecting their own narrowly and politically defined interests, the principles are sacrificed at the altar of realpolitik. In the real world, subsidised food products from the US and the EU have wrought havoc to agriculture in Africa and Latin America.
The Oxfam study, cited above, argues that the EU and the US have increased the scale of export dumping to the ruin of African (and other Third World) agriculture. Both these agricultural superpowers are exporting at prices lower than one-third of the cost of production.
Commenting on the US Farm Bill, the Zambian Agriculture Minister, Mundia Sikatana, is reported as saying: "They are the same people who tell us not to subsidise production but are doing exactly that."
"It's a slap in the face for African countries," said Moses Ikiara, policy analyst at the Kenya Institute of Public Policy Research and Analysis think-tank. "This is completely in contrast to what everybody has been expecting. It will be very difficult now to convince African countries about liberalisation."
Why cannot African leaders see the hypocrisy of Western countries?
Ikiara says the US Farm Bill will undermines the confidence of African countries in the process of liberalisation. Actually, this will not happen, notwithstanding the US Farm Bill, and no matter the double standards of the Western countries, as graphically illustrated in the Oxfam study. Why? Because of two things. One is that most African leaders are already convinced about the merits of liberalisation.
Nepad is the high point of this ideological conversion of African leaders to liberalisation. They actually seem to think that globalisation is helping Africa, even in the face of all evidence to the contrary.
To explain this contrarian evidence, their answer is that insofar as globalisation has not benefited Africa, the fault lies with the Africans themselves. Africans have not put their economic and political governance in place so as to attract a sufficient amount of foreign capital to put Africa on the road to sustainable development.
The victims, in other words, are authors of their own victimisation. This is where Nepad derives its strategy. With apologies to Shakespeare, "the fault, dear Brutus, is not in our stars, but in ourselves," says Nepad. Nepad not only misses the whole historical experience of Africa, but it also misunderstands the politicsof international economics.
The US Farm Bill and the continuing protectionist policies of the EU should have taught African leaders to be less than trusting on what their "partners" can deliver to Africa as reward for good behaviour.
It is an illusion, one of many that Africa has nursed for the last now almost 50 years. The second reason it will not be difficult for African leaders to continue to swear by liberalisation is that, as a collective, they are fearful of challenging the power of the bigger global players. Since they cannot act in unity, they hang separately.
At the end of the day, they get their arms twisted either by the International Monetary Fund or by the World Bank, or directly by the great powers themselves, as indeed happened at Doha at the Fourth WTO Ministerial Summit. The interesting thing is that, in many instances, even before they get their arms twisted, many African leaders are prepared to surrender in anticipation of the rewards they think might follow from their submissive approach. This is the humiliating saga of Nepad.
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