Cancún exposed hypocrisy of wealthy nations

Squawks and moans of editorial writers and academics aside, the breakdown of the World Trade Organization’s ministerial meeting Sept. 14 in Cancún was a good thing. The refusal of the world’s developing nations to capitulate to pressure from the developed world -- the United States, Canada, the European Union and Japan -- sends an unmistakable message: They are mad as hell and aren’t going to take it anymore.

Nor should they.

Everyone it seems (particularly the aforementioned editorial writers and academics) believes in “free trade.” It is an ideology -- seen by many as an end unto itself; the motherhood and apple pie of international finance.

But no country, least of all the wealthy nations that preach its merits, actually practices free trade. Entrenched and powerful domestic special interests in Europe, Japan, Canada and the United States successfully lobby to exclude their favored products from competition.

Over the past eight years, for example, heavily subsidized U.S. corporate cotton farmers (they get $3 billion annually from U.S. taxpayers) have flooded world markets, halving the costs of the commodity. The result is catastrophe in Western and Central Africa, where, were it not for the U.S. corporate welfare, much of the world would get its cotton at a price that reflected the actual cost of production, which, in turn, would enable African farmers to earn a livable wage for their labor. Instead, African cotton farmers and their families are, quite literally, starving.

The system is so out of whack that those subsidies to U.S. cotton producers outpace by a considerable margin what the United States provides in humanitarian assistance to the entire continent of Africa.

There are countless other examples. U.S. sugar growers enjoy protection from competition (in the form of punitive tariffs) and unjustified subsidies that stifle competition and consequently induce poverty in Caribbean nations. Attempts to curtail these practices are routinely rejected by Congress.

And take the case of that most delicious of commodities, olive oil. Morocco, Tunisia, Lebanon, Syria and Turkey are the world’s most efficient producers of olive oil, yet nearly all the olive oil sold in supermarkets from Madrid to Manhattan is produced in Spain, Italy and Greece.

“This is because the European Union, through its ‘Common Agricultural Policy,’ neutralizes the comparative advantage of its Muslim-world neighbors by paying European olive oil growers $2.3 billion each year,” reports the Progressive Policy Institute. The subsidy means that European Union olive oil producers can charge less for their product than their Muslim-nation competitors regardless of what it actually costs to produce a quart of extra virgin. And should a non-European Union olive oil producer overcome this competitive disadvantage and try to export into an EU country, it still faces prohibitive tariffs not levied on its European competitors. The result: European agribusiness interests profit while Moroccan, Turkish, Lebanese, Syrian and Tunisian producers go broke.

It was in this context that the world’s wealthy nations offered a deal in Cancún. They pledged to make modest adjustments to the $300 billion in annual subsidies they provide to their agribusiness interests (including U.S. cotton producers) if the developing nations would promise increased access to their markets through “political” reforms.

The developing nations -- through their “Group of 21” -- said the former wasn’t good enough and feared the latter would gut worker protection and environmental regulation in their countries. So they walked out of the Cancún talks.

Despite the headlines and the whining, the failure of the high-level ministerial meeting does not bode the end of multilateral trade negotiations. In the short term, talks will continue at a lower level at the World Trade Organization’s Geneva headquarters.

But the actions of the Group of 21 in Cancún could, over the long run, lead to a more sound international trading structure -- one that puts economic justice for developing nations ahead of the hypocritical free trade ideology of the world’s richest countries.

National Catholic Reporter, September 26, 2003