FREE TRADE: A CHANGE OF PARADIGM

The United States, champion of the free trade paradigm, is itself now criticizing it, with President Trump taking
the country on a protectionist road.
This article, by a prominent Peruvian economist, points out the flaws of the orthodox paradigm which has
caused difficulties for developing countries; and the change in the US policy may bring more problems.

By Humberto Campodonico
One of the pillars of orthodox economic theory explains that trade liberalization and tariff reductions benefits all
countries, rich or poor. This was the theoretical matrix of the Bretton Woods Agreements in 1944, which designed
the “international economic and trade order” for the next 70 years.
This matrix has just suffered a traumatic blow by Donald Trump. The slogan “America first” means that this is
achieved at the expense of others, and not in partnership with them. Therefore, he proposes a tariff of 45% for
Chinese products and 35% for Mexicans.
The magnitude of this rise is enormous. The WTO says that the weighted US tariff average in 2015 was only 1.69%.
So we’re talking about raising it 18 to 25 times. Incredible.
Why does he do this? Because he says that free trade has not brought benefits to the US. And that NAFTA (the US
Free Trade Agreement with Mexico and Canada) has caused the loss of millions of jobs in the US. And that the
same would happen with Obama´s TPP (that Trump has rejected).
Bernie Sanders said the same thing: free trade brings losers and winners (although his economic and trade policies
alternatives are far away from those of Trump). It’s not like what David Ricardo told us in the 19th Century: that
everyone wins with free trade and therefore each country must specialize in its comparative advantages, according
to the endowment of factors that it possesses (natural resources, capital, labor force).
If each country does that, Ricardo says, it will have a specific place in the international division of labor. If you do it
as a supplier of raw materials or a producer of capital goods, it does not matter. In the end, everyone will win
because international prices of goods will match and the same will happen with the prices of capital and labor.
One moment. That’s what the orthodox theory says. But reality tells us something different. In Peru, for example,
we also have winners and losers, as in every country. For example, non-traditional exporters of agricultural
products, including grapes, potas and squids, maca, strawberries and, recently, blueberries, are clearly the winners
in trade with China. And also winners are those who buy cheaper consumer goods (from cell phones to
motorcycles) as well as capital goods for the industry.
Among the losers we have the footwear industries (medium and small enterprises), as well as the textile industries
(that is the case of the Gamarra textile cluster in Lima) since cheaper imports from third countries (mainly China)
have strongly affected local production.
But the orthodox theory is not the only one that exists. There are other economic theories that point to orthodox
failures. Recently, economist Dani Rodrik has clearly demonstrated that Ricardian theory is oversold. He adds,
against all orthodoxy, that there are cases where “less trade may be better than more trade” (1).
The Economic Commission for Latin America and the Caribbean of the United Nations (ECLAC) tells us that “in
recent years, greater integration in trade and global financial and investment flows has been associated with the
weakening of redistributive systems, especially in several advanced countries” (2).
ECLAC adds that when they analyzed the world distribution of income, a paradox arose: in the last three decades,
global inequality declined, while the internal inequality of most countries increased, especially in the industrialized
countries. Let’s look at this more closely.
Global inequality declined especially in the “emerging countries”, such as China, India and, also, in Latin
America. But in the OECD countries, the ratio of income share of the richest 10% of the population to that of the
poorest 10% has steadily increased over the last four decades, from 7 in the eighties to 9.6 in 2014 (ECLAC, p.75).
This aggravation is explained by the replacement of manufacturing workers from rich countries by workers in the
same sector in developing countries. Between 2000 and 2010, in the US and Europe almost 10 million
manufacturing jobs were lost, more than a quarter of the total. In the same period, China created more than 45
million jobs in this sector, while Latin America generated 4 million (ECLAC, p.76).
Interesting, right? Someone would say: at last, rich countries are receiving their own medicine. With free trade in a
global economy rich countries lose and emerging countries win. It doesn´t matter if the orthodox theory is wrong,
as long as the outcomes are in my favor.
That’s what Trump is going to try to change, in order, he says, to aid American workers to get back their jobs. We
do not believe that he will succeed despite his rhetoric: the announcement of lowering the income tax from 30 to
15% will further concentrate wealth in the richest 1% of the population.
Not only that. According to Paul Krugman, the underlying central characteristics of his economic and trade policies
are more “effectist” than anything else because the real problem of the US economy is that productivity growth is
not creating more jobs in the manufacturing sector due to several factors, including the boom of the service sector
and the increasing automation (the use of robots). Therefore, the root of the problem is not that jobs have gone to
other countries. Trump is wrong (3).
Let’s go back to Latin America. ECLAC says that the increase in fiscal resources due to the super-cycle of
commodity prices generated greater employment and a positive cycle of redistributive policies that “marked a
break with the past and that probably improved the population’s perception of the globalization process”.
But now that we have the “thin cows” period, that boom is over and will lead to an increase in social and political
tensions. In addition, the Region, including Peru, did not take advantage of this super cycle to transform its
production matrix towards greater value added and, thus, continues to depend on raw materials exports.
And we are in diapers in the economy of the future, which is increasingly based on the revolution of the digital
economy (Internet economy). That is what Asian countries did, starting with China, because they did not believe
the Ricardian tale of specialization according to our static comparative advantages. But in Latin America we have
stumbled again on the same stone.
Corollary: We are facing a huge paradigm shift that no longer supports the free trade theses of 200 years ago nor
the Bretton Woods agreements of 1944. That is the crux of the matter.
https://www.southcentre.int/question/free-trade-a-change-of-paradigm/

RETHINKING TRADE POLICY AND PROTECTIONISM IN THE TRUMP ERA

It is now almost certain that the United States under President Trump will significantly increase trade
protectionism, while going for a different (and probably worse) approach to free trade agreements. Developing
countries should reconsider their own policies towards trade and trade agreements.

By Martin Khor
What kind of trade policy will the United States have under President Donald Trump? This is a hot issue, as Trump
has made unorthodox pronouncements on trade issues before and after his inauguration. If he acts on even some
of the positions he took, it will create a sea change in trade policy in the US and possibly the world.
After a few weeks in office, Trump is now taking some trade action. True to his pledge, he withdrew the US from
the Trans Pacific Partnership Agreement (TPP) and is preparing to renegotiate the North American Free Trade
Agreement (NAFTA).
He called them a disaster for the US. He was probably referring to the claim that many of manufacturing jobs lost
in the US in recent years were due to free trade agreements (FTAs) and the overseas relocation of US companies.
He is also blaming trade agreements for the US’ huge trade deficits.
Most economists however have a different view. They attribute US job losses mainly to technological change, with
trade having only a minor role overall. However, the visible closure of factories in some sectors and areas linked to
import competition has fuelled the popular US campaign against FTAs.
There are legitimate fears that Trump’s “America First” slogan, when applied to trade, will lead to a big increase in
trade protectionism.
Trump has threatened to raise tariffs or impose a “border adjustment tax” on products from China (by 45%) and
Mexico (by 20%). Trump in his campaign accused China of being a “currency manipulator”. If a country is so
labelled by the Treasury Department it could be grounds under US law to slap extra tariffs on its products.
President Obama came under pressure from many Congress members and economists to do just that, but he
smartly resisted as he realised it would trigger a very nasty trade war with China.
It is possible Trump will also climb down from this particular populist stance. For a start, China’s currency is not
under-valued and currently its government is trying to prevent (not encourage) its currency from further sliding.
Secondly, taking trade action against China on currency grounds would be against the rules of WTO, and China
should be able to successfully take a WTO case against the US for any such action.
Finally, China has warned it will retaliate if the US were to take protectionist actions. An article in the Beijing-based
Global Times spelled out how the country would cancel its orders of Boeing aircraft, restrict US auto and I-phone
sales in China and halt US soybean and maize imports, while a number of US industries would be impaired.
Instead of tariffs, Trump may impose a “border adjustment tax” as part of reforms to the US corporate tax. This
would have a similar effect as imposing a tax (the expectation is that it will be a tax of 20%) on goods that
companies import, while providing a tax exemption equivalent to a subsidy on goods that companies export. This
would have the same effect as putting a tariff or tax on imports, and giving a subsidy for exports, a measure that is
sure to attract opposition and cases against the US by other countries.
The Trump administration is also likely to consider taking more trade-remedy action on a range of products from
China and other countries by claiming they are being dumped or unfairly subsidised.
There are loopholes in the WTO rules on trade remedies which have made these a favourite protectionist tool. A
country can slap on high tariffs against an imported good from another country by claiming its price is artificially
low because it has been “dumped” (exported at a price lower than the domestic price) or unfairly subsidised by the
state.
But if the exporting country complains and a WTO panel rules that the actions were wrongly taken, there is no
penalty imposed against the offending country which is only asked to lift the tariff. Meanwhile the aggrieved
country has lost many years of export earnings. Moreover, the same actions can again be taken against the same
country, thus perpetuating the protection.
We may see a rise in such trade-remedy actions under President Trump, especially if he is counselled against taking
the more blatant route of imposing an all-out tariff wall.
But we can also expect tit-for-tat counter-action of the same type by the affected countries, in a global spiral of
protectionism. That will be in nobody’s interest.
The new Trump presidency is also expected to usher in a major change in how the US (and eventually many other
countries) will perceive free trade agreements. Trump’s objection to the TTPA and NAFTA seems to be based on
the issue of goods trade, that the template of these agreements seems to favour the exports of the partner
countries at the expense of the US.
Trump said he would instead “negotiate fair bilateral deals that bring jobs and industry back.” This appears to be
neo-mercantilist and against the free-trade principle, but it is this kind of “America-first” populism that helped
propel him to power.
If the new US policy moves in this direction, what is to prevent other countries from doing likewise? “Free trade”
or “fair trade” will be interpreted by each country in ways that favour it, and many of the present rules will have to
be set aside.
However the FTAs are much more than trade, and they became unpopular with the public in the US and elsewhere
not only because of the threat of cheap imports taking over the market of local producers, but also because of the
non-trade issues that are embedded in most recent FTAs, including FTAs between developed countries, and those
between developed and developing countries. Most of these issues favour the big corporations at the expense of
states and consumers.
One of these issues include investment rules aimed at liberalising foreign investment and financial flows, with an
especially controversial section that gives rights to foreign investors to take cases and make claims against the host
government in an international tribunal (known as the investor-state dispute settlement system).
Another issue is the strengthening of intellectual property rules that boost multinational companies at consumers’
expense. A most unpopular effect is a tremendous rise in the prices of patented medicines through the additional
curbing of competition from cheaper generic drugs.
Other issues include the opening up government procurement to foreign firms on a national-treatment basis, thus
reducing the share of local businesses in this huge sector; the liberalisation of the services sectors, which for some
countries may affect the cost of basic services that are normally performed by the public sector; and, in the most
recent FTAs, the establishment of new rules imposing restrictions on the operations of state-owned enterprises.
The structure of this kind of North-South FTAs is mainly unfavourable to developing countries in general. In the
trade component of the FTA, a developing country can get some benefits through better market access to the
developed country, but can also suffer damage to its local companies and farms due to cheaper imports. The non-
trade issues are usually much against their interests as the developed countries (and their companies) are far
stronger and have the upper hand in the areas of investment, intellectual property, services and procurement.
However, civil society groups in the developed countries also find the non-trade issues against the public interest.
For example, the investor-state dispute system undermines the ability of these countries to set their own
environmental or health policies, and the tighter intellectual property rules impede access to medicines and
knowledge for the consumers in these advanced countries as well. In the trade aspect, these CSOs also blame FTAs
for the inflow of cheap imports causing the closure of factories and loss of jobs. Therefore these modern FTAs
have become very unpopular in the US, Europe and other developed countries.
Through the recent FTAs, sensitive areas and issues that were previously under the purview of the national
government are now subjected to new and intrusive rules that cramp the space that countries (whether in the
South or North) normally have to set their own policies.
Both the trade and non-trade issues have made the “trade agreements” highly controversial. Civil society groups in
developing countries have been expressing their concerns that the public interest and national sovereignty are
being undermined.
At the same time, the public in developed countries, including in the US, Europe, Canada, Australia, New Zealand
and Japan, have become disillusioned and even outraged by the effects of the FTAs their governments signed or
proposed.
The anti-FTA movement became so strong in the US that it helped boost the unexpectedly good showing by Bernie
Sanders in the Democratic primaries, pressurised Hillary Clinton to pledge her opposition to the TPP, and enabled
Trump to ride on and add to the “anti-trade” emotions in his campaign.
The heightened focus on trade policy during and after the US elections is a good time to review what works and
what does not work for the public interest in trade agreements.
It is becoming clear that trade agreements have become overloaded with many issues that do not belong to an
agreement originally designed for trade in goods.
For example, there is a history and logic to the “non-discrimination” and “national treatment” principles
established for trade in goods among countries, and even then there is a debate on the conditions under which the
application of these principles bring about mutual benefits in trade.
The same principles and template are often inappropriate when applied to non-trade issues for which they were
not designed. Creating rules based on these principles and including them in trade agreements can lead to
imbalances and unequal outcomes among the partners, and even adverse consequences for all the partners.
However in recent years the scope of trade agreements has grown to include more and more issues, to which the
original trade principles have been applied, leading to more and more contention and unpopularity.
The overloaded agenda in FTAs gives trade a bad name, with people being confused between trade, trade policy
and trade agreements. Many people who are disgruntled with trade agreements also become unhappy with trade
per se, and the benefits that trade can bring get mixed up with and overwhelmed by the contentious non-trade
issues, and trade ends up being condemned as well.
It is important at this moment to clarify the difference between trade and trade agreements, and to review the
whole issue of trade policy.
A good outcome would be to design new agreements that are mutually beneficial in the trade aspect to all
partners, whilst removing the controversial non-trade issues from the agenda. And this could be part of a broader
pro-development trade agenda.
But this is not likely to be the new agreements being envisaged by the Trump team. The danger is that these may
be even worse than the existing ones.
We risk entering a new era where the US, and maybe some other developed countries as well, are tempted to
promote extreme trade protectionism, whilst retaining or expanding the unpopular non-trade issues in the trade
agenda because it is in the interest of their corporations.
We might end up with a new type of “America first” agreements, in which a Trump administration ensures that the
US can curb imports whilst championing its exports, thus reducing the trade benefits to its partners; while at the
same time strengthening the rules in non-trade issues like intellectual property, investment, liberalising financial
services and curbing state-owned enterprises that favour US corporations but are against the partners’ interests.
That would be the worst of both worlds, at least for developing countries.
It is thus crucial for policy makers and thinkers in developing countries to rethink what kind of trade is good for
their economies, what kind of trade policy would correspond to that positive trade performance, and what kind of
trade agreements would be good to have and which types should be avoided.
It is also time to rethink the role of the World Trade Organization and reaffirm the priority of developing a
balanced and pro-development multilateral trading system. If (and that is a big if) the WTO could evolve into such
an ideal system, there would be no need for North-South bilateral trade agreements.
https://www.southcentre.int/question/rethinking-trade-policy-and-protectionism-in-the-trump-era/
A wake-up call for Trump's trade agenda
This week, labor, environmental, religious and other groups, representing over 180 million people from around the
world, sent a letter to a corporate mining CEO — a letter that is also a wake-up call for President Trump's trade
agenda.

The letter highlights the problems with the so-called "investor-state" provision in trade deals, first created through
the North American Free Trade Agreement (NAFTA) 23 years ago. This provision unfairly prioritizes corporations,
encouraging them to file lawsuits against governments that implement public health and other measures that
impede future corporate profits.

Back to the letter in a moment, but first the dilemma that it highlights for Trump: In one of Trump's first public
statements as president, on Jan. 22, he called for the renegotiation of NAFTA to (as he puts it) help U.S. workers.

So far, the media focus has been on Trump's suggestion that he wants to increase tariffs on U.S. imports from
Mexico. But NAFTA and other trade agreements are only in small part about trade tariffs. They are much more
about giveaways to fleet-footed corporations, giveaways that further encourage corporations to offshore their
production and jobs.

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The No. 1 NAFTA provision that does this is the investor-state clause. By making it easy for corporations to sue
governments in other countries, this provision gives firms a big incentive to relocate across borders and then to
launch frivolous lawsuits.

Back to the letter: What sparked this week's letter and its wide-ranging signatories was one such frivolous lawsuit
filed in 2009 by a Canadian-Australian mining firm that wanted to mine gold in El Salvador.

As the firm explored for gold in northern El Salvador, it set off large-scale community opposition. Farmers and
other community members learned about the huge threat the cyanide used in mining posed to their main source
of water, and they convinced their government to stop issuing new mining licenses in the entire country.

The existence of these investment rules in the Central America version of NAFTA (called CAFTA) and in the
Salvadoran investment law allowed the mining company to retaliate with an investor-state lawsuit, claiming that
the Salvadoran government deprived it of $250 million of future profits.

This was an outrageous claim and lawsuit because the company did not have a mining license, since it had not
completed the basic requirements for seeking a license. But the investment court, which is part of the World Bank
Group in Washington, accepted the case anyway.

The tribunal and the lawyers profit from more cases, the decisions on which are ruled by three highly paid (often
corporate) lawyers who are not allowed to consider environmental, indigenous or other basic rights in their
decisions. Not surprisingly, critics have called it a "kangaroo court" and a corporate-biased venue.

This corporate lawsuit against El Salvador dragged on for seven years, costing the Salvadoran government a
whopping $13 million in fees, and giving the mining firm an extended period to try to convince the government to
allow it to mine.
Fortunately, civil society groups in and out of El Salvador joined with key members of the Salvadoran government
to fight back. Finally, in October 2016, the tribunal ruled that the mining firm, owned by OceanaGold, didn't have a
case and that it was to pay El Salvador $8 million.

However, the corporate bias continues. Now, four months later, OceanaGold still hasn't paid a cent, and it is still
lobbying the Salvadoran government to allow it to mine while offering "fake news" about its ability to mine
without disastrous environmental consequences.

These biased investment rules don't result just in frivolous lawsuits. They also exert what experts call a "regulatory
chill,"scaring governments to refrain from passing measures to protect the environment or public health for fear of
investor-state lawsuits.

Now back to the Trump-related trade issue of the moment, NAFTA: The investor-state provisions in NAFTA don't
help U.S. workers vis-a-vis Mexican workers. Instead, they hand enormous power to corporations to bully
governments into undoing (or not implementing) measures to protect workers, the environment and public health.

In a nutshell: This corporate power shift hurts workers in all three countries.

On the campaign trail, when candidate Trump criticized trade agreements as undermining U.S. independence, he
insinuated that he was opposed to investor-state rules. But, as president, he has said nothing about them.

As President Trump launches discussions on NAFTA, let us see if he stands up against this blatant giveaway to
corporations or if he allows this lining of corporate pockets to continue.

Broad is a professor at the School of International Service at American University and is on the board of Earthworks.
Cavanagh is director of theInstitute for Policy Studies.

http://thehill.com/blogs/pundits-blog/international/320410-a-wake-up-call-for-trumps-trade-agenda

The Rigged Trade Game: The WTO in the Philippines

NY Times
July 20, 2003
Put simply, the Philippines got taken. A charter member of
the World Trade Organization in 1995, the former American
colony dutifully embraced globalization's free-market
gospel over the last decade, opening its economy to foreign
trade and investment. Despite widespread worries about
their ability to compete, Filipinos bought the theory that
their farmers' lack of good transportation and high
technology would be balanced out by their cheap labor. The
government predicted that access to world markets would
create a net gain of a half-million farming jobs a year,
and improve the country's trade balance.
It didn't happen. Small-scale farmers across the Philippine
archipelago have discovered that their competitors in
places like the United States or Europe do not simply have
better seeds, fertilizers and equipment. Their products are
also often protected by high tariffs, or underwritten by
massive farm subsidies that make them artificially cheap.
No matter how small a wage Filipino workers are willing to
accept, they cannot compete with agribusinesses afloat on
billions of dollars in government welfare. "Farmers in the
United States get help every step of the way," says
Rudivico Mamac, a very typical, and very poor, Filipino
sharecropper, whose 12-year-old son is embarrassed that his
family cannot afford to buy him a ballpoint pen or
notebooks for school.
The same sad story repeats itself around the globe, as poor
countries trying to pull themselves into the world market
come up against the richest nations' insistence on stacking
the deck for their own farmers. President Bush deserves
credit for traveling to Africa and trying to focus
attention on that continent's plight. But meanwhile,
struggling African cotton farmers are forced to compete
with products from affluent American agribusinesses whose
rock-bottom prices are made possible by as much as $3
billion in annual subsidies. Sugar producers in Africa are
stymied by the European Union's insistence on subsidizing
beet sugar production as part of a wasteful farming-welfare
program that gobbles up half its budget.
Instead of making any gains, the Philippines has lost
hundreds of thousands of farming jobs since joining the
W.T.O. Its modest agricultural trade surpluses of the early
1990's have turned into deficits. Filipinos, who like
referring to their history as a Spanish and American colony
as "three centuries in the convent followed by fifty years
in Hollywood," increasingly view the much-promoted
globalization as a new imperialism. Despair in the
countryside feeds a number of potent anti-government
insurgencies. Leaders who hitched their political fortunes
to faith in the free market have grown bitter.
They include Fidel Ramos, who was Washington's staunch ally
when he managed the Philippines' economic opening as
president in the mid-1990's. Now, Mr. Ramos blames rich
nations' unfair trade practices - especially their "hidden
farm subsidies and other tricks" - for much of the
suffering in the countryside. Given how long the world's
economic powers have been trying to persuade the rest of
the world to embrace a more open global economy, Mr. Ramos
said in an interview, he was taken aback by their
unwillingness to level the competitive playing field. "Poor
countries cannot afford to be on the short end of this deal
for long," he said. "People are in real need. People are
dying."
Mr. Ramos's plea could have emanated from any number of
countries in the developing world, home to 96 percent of
the world's farmers. It is a plea that needs to be heeded,
before it is too late.
The United States, Europe and Japan funnel nearly a billion
dollars a day to their farmers in taxpayer subsidies. These
farmers say they will not be able to stay in business if
they are left at the mercy of wildly fluctuating prices and
are forced to compete against people in places like the
Philippines, who are happy to work in the fields for a
dollar a day. So the federal government writes out checks
to Iowa corn farmers to supplement their income, and at
times insures them against all sorts of risks assumed by
any other business. This allows American companies to then
profitably dump grain on international markets for a
fraction of what it cost to grow, courtesy of the taxpayer,
often at a price less than the break-even point for the
impoverished third-world farmers. If all else fails,
wealthy nations simply throw up trade barriers to lock out
foreign commodities.
The system is sold to the American taxpayer as a way of
preserving the iconic family farm, which does face tough
times and deserves plenty of empathy, but it in fact helps
corporate agribusiness interests the most.
By rigging the global trade game against farmers in
developing nations, Europe, the United States and Japan are
essentially kicking aside the development ladder for some
of the world's most desperate people. This is morally
depraved. By our actions, we are harvesting poverty around
the world.
Hypocrisy compounds the outrage. The United States and
Europe have mastered the art of forcing open poor nations'
economies to imported industrial goods and services. But
they are slow to reciprocate when it comes to farming,
where poorer nations can often manage, in a fair game, to
compete. Globalization, it turns out, can be a one-way
street.
The glaring credibility gap dividing the developed world's
free-trade talk from its market-distorting actions on
agriculture cannot be allowed to continue. While nearly one
billion people struggle to live on $1 a day, European Union
cows net an average of $2 apiece in government subsidies.
Japan, a country that prospered like no other by virtue of
its ability to gain access to foreign markets for its
televisions and cars, retains astronomical rice tariffs.
The developed world's $320 billion in farm subsidies last
year dwarfed its $50 billion in development assistance.
President Bush's pledge to increase foreign aid was
followed by his signing of a farm bill providing $180
billion in support to American farmers over the next
decade.
A fair shot, more than charity, is what poor nations need.
According to International Monetary Fund estimates, a
repeal of all rich-country trade barriers and subsidies to
agriculture would improve global welfare by about $120
billion. An uptick of only 1 percent in Africa's share of
world exports would amount to $70 billion a year, some five
times the amount provided to the region in aid and debt
relief.
The rigged game is sowing ever-greater resentment toward
the United States, the principal architect of the global
economic order. In the aftermath of 9/11, Americans have
desperately been trying to win the hearts and minds of poor
residents of the Muslim world. Somehow, we expect other
nations to take our claims to stand for democracy and
freedom more seriously than they must take our insincere
free-trade rhetoric.
The beleaguered Philippine island of Mindanao is crawling
with Communist and Islamic fundamentalist guerrillas, and
links between Al Qaeda and the local insurgents have made
the island a battlefield in President Bush's war on
terrorism. There is talk of sending in American troops. But
to farmers on Mindanao, home to more than two-thirds of the
Philippines' corn production, subsidized American imports
loom as large as any other threat. Since the Philippines
joined the W.T.O. eight years ago, American corn growers
have received an astonishing $34.5 billion in taxpayer
support, according to an analysis of government data by the
Washington-based Environmental Working Group. This helps
explain how America is able to export - the less polite
word in the patois of trade would be dump - corn at only
two-thirds its cost of production.
The resentment is intense. "The common view here is that
the United States, our former colonial master, is a
destructive force," said Lito Lao, the chairman of the
Alliance of Farmers group in the Mindanao province of Davao
Oriental. Farmers' despair, he adds, fuels the Marxist New
People's Army insurgency.
The global economy is supposed to change the world for
people like Rudi and Nelly Mamac, who live with their seven
children in a two-room shack on the edge of a massive
plantation in Davao Oriental. The Mamacs are lucky if they
clear the equivalent of $1 a day. Mr. Mamac, the
sharecropper, was ready to imagine the better future
promised by the great global trade game. He wishes he could
afford a television and, when drawing a blank upon being
asked about life beyond his corn-and-coconut-filled
existence, he will wave vaguely, somewhat apologetically,
toward the corner of their living space where they imagine
the tube should stand.
But none of their dreams are happening. Arnel Mamac, 12,
already skips plenty of school days, when his family cannot
afford to buy rice. His parents don't want him making the
two-mile trek on an empty stomach. One thing the Mamacs
seem to realize, even without the benefit of a TV, is that
the global economy they are forced to compete in is no
level playing field. "It's very unfair that the American
government takes so much care of its farmers while abusing
those in the third world," Mr. Mamac says.
The United States and its wealthy allies will not eradicate
poverty - or defeat terrorism, for that matter - by
conspiring to deprive the world's poor farmers of even the
most modest opportunities. And the threat of a devastating
antiglobalization backlash set off by a widespread
resentment of "northern" trade practices is enormous.
Acknowledging the imminent crisis, W.T.O. negotiators
labeled the current round of trade liberalization talks,
begun in Doha, Qatar, in late 2001, the "development
round." Any success depends on a commitment by the United
States, Europe and Japan to reduce barriers to agricultural
imports by 2005, and to cut subsidies. But several
deadlines have already been missed. The European Union and
Japan are particularly reluctant to make the painful
reforms needed to make trade a meaningful two-way street,
and the Bush administration has little credibility to prod
them along, given its own outrageous farm subsidies. So a
crucial September meeting of the W.T.O. in Cancún threatens
to be a reprise of its Seattle meeting in 1999, when the
last round of trade-liberalization talks stalled, and
protesters outside famously threw their anti-globalization
fest.
Back on Mindanao, it's a shame Rudivico Mamac cannot have
his TV set to watch all those trade delegates gather in
picturesque Cancún come September. After all, what they
really will be discussing, notwithstanding all the
mind-numbing trade jargon, is whether a global economy has
room for the world's poorest farmers.
https://www.organicconsumers.org/old_articles/corp/wto_philippines.php