WTO begins to crack up
We are happy to report that the WTO Ministerial Talks held from 10-14 September 2003 in Cancun, Mexico, collapsed in disarray – as indeed it had been widely predicted they would.
The context of these talks is the attempts by imperialist finance capital to ‘globalise’ investment, competition policy, government procurement and ‘trade facilitation’ (the so-called “Singapore issues”), in order to enable multinationals completely to take over the economies of third-world countries without fear of intervention of any kind from those countries’ elected or unelected representatives. The World Bank is even claiming that the poor countries “need” this “liberalisation” because they would benefit from the estimated $500 billion boost it would give to world trade, and thus bring some modicum of prosperity to the world’s poorest countries. It seems, however, that the world’s poorest countries have learnt by now that in such deals on the part of imperialism, the only result in the long run is that they become poorer still, and they seem no longer to be taking the bait.
The aim of ‘liberalising’ investment is to enable foreign investors (virtually all of them imperialist, since nobody else has money to invest) to enter countries without conditions and regulation, and to be protected against expropriation of their assets by national authorities. As Martin Khor points out on the Third World Network website, “An international agreement on investment rules of this type is ultimately designed to maximise foreign investors’ rights whilst minimising the authority, rights and policy space of governments and developing countries”. To avoid alarming the intended victims of this ‘liberalisation’, “the major proponents are now offering watered-down versions”. “These step-by-step approaches are aimed at getting Members [of the WTO] to agree to the concept that investment rules belong in the mandate of the WTO; and then drawing them into an agreement which appears not to be so harmful … and then later on to pressurise them to liberalise more… It should be recognised that such watered-down versions are only shifts in tactics and not in ultimate goals.”
Bringing competition policy within the WTO was done with a view to imperialist countries dictating to oppressed ones that they must adhere to free competition, i.e., allow imperialist multinationals to run riot within their economies, regardless of the destruction they wreak on home industries and agriculture, leaving local people bereft of employment and thus means of subsistence.
Even before negotiation of the Singapore issues, while third-world governments are technically still free to restrict the activities of the imperialist multinationals, their countries are still being devastated by competition from these multinationals – which is all the more overwhelming as a result of the unfair subsidies that imperialist governments provide to business in imperialist countries, especially in agriculture. In agriculture alone, these subsidies worldwide amount to over $300 billion – the equivalent of the GDP of the whole of Africa!
Many bourgeois newspapers, on the assumption that general acceptance and implementation of the Singapore issues really would lift the world out of recession and herald in times of happiness and prosperity for all, are prepared to inveigh against these unfair subsidies and give examples of the effect they have on third-world countries. Thus the Independent on Sunday of 14 September 2003 gives the example of tomato growing in Ghana. Their journalist, Andrew Pendleton, spoke to a tomato grower there who “explained that he once grew his tomatoes exclusively for the Pwaling cannery, which closed in 1989 …
“The state-owned cannery was closed at the behest of the World Bank and IMF as part of an ongoing programme of economic changes known as ‘structural adjustment’, designed to cut government expenditure in Ghana and open up state industries to private enterprise. A buyer was never found. So … hundreds of people in the surrounding area lost their main customer and employer.
“Ghana also made promises under the same programme to open up its markets to competition from abroad. So, as tons of Ghanaian tomatoes were disappearing from the shelves of the country’s shops, Italian tomatoes were rapidly filling the space. With import tariffs reduced, the heavily subsidised Italian tomatoes were cheap. By 2001, Ghana and its west African neighbours were importing 64,900 tons of tinned tomatoes and tomato paste.
“‘Everyone’s eating the Italian tomatoes now’ [said a Ghanaian tomato grower]. It’s heartbreaking to see how we’ve lost our own market.”
It’s the same story with rice in Honduras. The plight of Honduran rice growers even moved Patricia Hewitt (our Secretary of State for Trade and Industry) to call for something (unspecified) to be done about subsidies paid to US and European farmers. She noted that “just over 10 years ago… Honduras produced 100% of its domestic rice needs [and] …had surpluses to export to neighbouring countries… This changed in 1991, when the Honduran government – under pressure from the IMF – abolished import controls and threw the rice market wide open.
“Liberalisation put the Honduran rice market at the mercy of big American rice producers who enjoy subsidies worth, we were told, 65% of the production costs of rice in Honduras. Against such unfair competition Honduran rice production collapsed to just 1% of domestic needs, with the gap filled by American imports …
“Young people, unable to work on family farms, moved to the towns; unemployment rose; lawlessness grew …”
As a result of intervention by the Honduran government to protect the local industry, production in Honduras has since risen again to capture 33% of a now-protected market. But the thrust of competition ‘liberalisation’ as envisaged by imperialism would mean that third-world governments would be prevented from intervening in this way, leaving them with no means of preventing the bankruptcy and consequent destitution of thousands of their already-impoverished citizens.
Transparency in government procurement
The third Singapore issue is ‘transparency’ in government procurement practices. While there is no immediate demand that a country’s government should not favour that country’s nationals over foreign competitors, it is self-evident that the only reason for demanding ‘transparency’ is in order to be able to challenge government procurement decisions. As Martin Khor points out, “since developing countries have found it unacceptable to integrate government procurement and its market-access aspect into the WTO, the major developed countries devised the tactic of a 2-step process: firstly to draw all Members into an agreement on transparency; and secondly, to then extend the scope from transparency to other areas (for example, due process) and then to the ultimate areas of market access … and national treatment for foreign firms. This is clear from various papers that have been submitted to the WTO.”
The fourth Singapore issue is ‘trade facilitation’, in other words, the removal of practices, such as lengthy customs control procedures and unfathomable paperwork, that might inhibit free trade.
The collapse of the Cancun talks means that no agenda has been set for the discussion of the steps imperialism would like to take to tighten the noose round the necks of third-world countries. Indeed, at Cancun there was virtually no discussion of these issues either. The whole five days it lasted were devoted to the issue of imperialist countries’ unfair subsidisation of agriculture and certain other industries.
One major issue was the “$3bn – $4bn a year in subsidies paid to the US’s 25,000 cotton farmers” which “exceeds the GDP of Burkina Faso and is three times the entire US aid budget for Africa. Meanwhile 10m cotton farmers in west and central Africa [especially Benin, Burkina Faso, Chad and Mali] – many of them living on less than $1 a day – are losing $1bn a year in export earnings” (Financial Times, 16 September 2003, ‘Talks unravel over cotton’).
And Amity Shlaes, writing in the Financial Times of 1 September 2003 (‘Send farmers off to the markets’) points out that the “average European cow gets a subsidy of more than $2 a day, more than many citizens of the world have to live on”. She tells us that OECD farmers “get the equivalent of $11,000 a year in cash or price support. New Zealand subsidises to the tune of $1,000 per farmer. The European Union by contrast hands to each of its farmers the equivalent of $17,000 a year. In the US, the rate is $16,000. Few can beat Norway, which pays about $45,000.”
It should be noted, however, that these subsidies are not paid to “each farmer”. The above are only average figures. And, as Edward Alden notes in the Financial Times of 9 September, (‘US farmers call for tariff harmonisation’), US subsidies, for example, are “showered on the wealthiest farmers, who carry the greatest political muscle in Washington. The top 10% of farmers [i.e., agribusiness] last year received 65% of all subsidies.” And Kevin Watkins in the Financial Times of 2 June 2003 says that “more than half of all EU and US support goes to just 7% of their biggest producers.”
In industrial products, too, the imperialists have been unfairly protecting their home industries from third world competition, albeit principally by means of high tariffs. The Economist of 6 September 2003 (‘The Cancun challenge’) remarks that:
“While overall rich-country tariffs on manufactured goods are low, they are high in areas, such as textiles and footwear, that are most important to poor countries. On average tariffs applied by rich countries on the types of goods that poor countries produce are four or five times higher than the tariffs on goods usually imported from other rich countries. … the tax rate which America applies to imports from Bangladesh is 15% compared with a rate of 1% on imports from France …”. And George Monbiot in the Guardian of 2 September (‘The worst of times’) quotes the same Oxfam report from which the above figures were taken: “The US imposes tariffs of between 0-1% on major imports from Britain, France, Japan and Germany, but taxes 14 or 15% on produce from Bangladesh, Cambodia and Nepal. The British government does the same: Sri Lanka and Uruguay must pay 8 times as much to sell their goods over here as the United States.”
What does imperialism do now?
Up to now, imperialism has been able to secure what it wants from third-world countries via the WTO by a process of deception on the one hand and threats on the other. Subsidisation was accepted during the Uruguay round of GATT talks (GATT being the predecessor of the WTO) as not ‘trade-distorting’, unlike tariff barriers. This was a convenient formulation for imperialism since it is imperialists who rely on subsidisation (oppressed countries lacking the funds to do so). Nowadays, however, as we have seen, the subsidisation method of providing unfair assistance to home producers is everywhere recognised as ‘trade-distorting’, and the third-world countries are absolutely insistent that they are not going to ‘discuss’ anything else until the question of these subsidies is resolved in their favour.
Although, as we have seen, subsidies benefit above all the big capitalist farmer, the agribusiness, far more than the small farmer, the capitalist farmers are confident that they will, with their superior technology (assisted no doubt by the elimination of the small farmers), continue to be able to compete successfully with the peasant farmers of the third world. Indeed, with the new investment rules, imperialist agribusiness will probably be able to buy them all out. So countries such as England, Germany and Sweden, which are home to big capitalist farming concerns, are not at all averse to eliminating farming subsidies, while countries of small farmers – France and Spain, for instance, are adamantly opposed.
The bourgeois press has noted, however, that the various imperialist powers are now less than determined to push their requirements through the World Trade Organisation. There would appear to be various reasons for this.
On the one hand, as it becomes less easy to dupe the third world, “trying to achieve liberalisation in a group of 146 countries is well-nigh impossible”, as the Financial Times of 4 September 2003 reported an imperialist WTO negotiator complaining (‘Modest goals in Cancun’). Incredibly the WTO is too democratic for imperialism to be able to impose its wishes, and increasingly the imperialist powers are turning to bilateral or multi-lateral deals with various amenable oppressed countries outside the scope of the WTO, the US, for example having “recently launched a volley of bilateral trade initiatives”.
The heightening of inter-imperialist contradictions must also not be underestimated as a force destructive of the WTO, which depends on co-operation between imperialist powers in the super-exploitation of the third world. An imperialist power which enters into bilateral or multi-lateral deals with oppressed countries can also restrict the operation of rival imperialists in the countries concerned as part of the deal, or at very least give itself preferential treatment.
There is also some suggestion that the rich countries may have gone cold on whole world liberalisation as they are afraid that it would more than anybody else be of advantage to China. Thus in the view of Guy de Jonquières in the Financial Times article just quoted:
“In developing countries, growing competition from China is adding to caution about pushing ahead with liberalisation. Many fear the main beneficiaries would be Chinese exporters, not their own industries.
“Some trade negotiators predict that the round will find it hard to make headway after Cancun and may face a period of stagnation.”
If in fact the WTO is headed for demise, we can only welcome this. Its demise will be, of course, a step towards intensification of inter-imperialist contradictions and a harbinger of inter-imperialist war in the future, but it will make imperialism incomparably weaker and pave the way for its overthrow.
In the meantime, imperialism in its death throes will be imposing greater and greater hardships on the people of the world. The Independent on Sunday editorial of 14 September spelt out the effect this has on the world’s exploited and oppressed people:
“…As Tony Blair has acknowledged in his more independent-minded moments, terrorism cannot be defeated unless serious measures are taken to tackle dire poverty.
“Over the past two years, however, rich countries – particularly the US – have been more effective recruiting sergeants for al-Qa’ida in the negotiating room than on the battlefield [by failing to agree to cut the subsidies that are ruining third-world masses].”
In other words, imperialist greed pushes the downtrodden masses of the world to fight back. What the Independent on Sunday does not contemplate, for the prospect is far too horrible for it, is that the downtrodden masses will sooner or later find themselves fighting under the umbrella of Marxism-Leninism in a scientific and effective way, to rid the world of imperialism, and indeed of all exploitation and oppression.