The Doha rounds of WTO negotiations started in 2001 in have been stalled almost from the beginning over the issue of agricultural support subsidies in the United States and in the EU. Poor countries around the world under pressure from the World Bank to implement economic reforms for promised economic aid fell in line and granted the demands of the planners in the west who dangled bits of aid as incentive. This has allowed American and European agriculture to dump cheap grains on the rest of the world. Small agriculture collapsed around the world and then the US and Europe decides to divert more agriculture to biofuel, add to that some bad harvests and what do you have food shortages.
This is an excerpt from an article in the Guardian.
“Heather Stewart The Observer, Sunday July 20, 2008
With America reeling from the worst financial crisis for half a century, poor consumers struggling to afford food, and China’s appetite for raw materials forcing up the cost of oil, now may not seem the best moment for a new leap towards globalization. Yet as trade ministers gather at the HQ of the World Trade Organization on the shores of Lake Geneva this weekend, in a last attempt to resuscitate the seven-year-old Doha round of WTO talks, there is a powerful sense of now or never.
Conceived in the aftermath of the 11 September attacks, the ‘Doha Development Agenda’ was meant to provide fairer access to the global trading system for poor countries, but has repeatedly become bogged down in squabbles, including the dramatic collapse of talks in Cancun, Mexico in 2003, when furious developing countries walked out.
With the Bush presidency in its dying months, many countries hope this week could finally see the outlines of a deal emerging. Bush’s team has nothing to lose and he can leave it to his successor to push any agreement through Congress.
Yet with economic uncertainty at fever pitch in the US, Europe and across a swath of developing countries, more trade liberalization could be a hard sell. When hundreds of thousands of protesters rioted against the WTO’s secretive pursuit of trade liberalization in Seattle in 1999, most were angry about the impact of gung-ho globalization on the world’s poorest countries. But today, many in rich countries, too, are deeply anxious about the consequences of unfettered trade. Even before the credit crunch hit last summer, US politicians were pointing the finger at China for job losses in the American rust-belt, and disquiet was growing about the impact of globalization on the lowest-paid workers.
Barack Obama has questioned the rationale for pursuing the Doha round; even hinting he could try to unpick existing agreements, including the North American Free Trade Association with Canada and Mexico. In Europe, trade commissioner Peter Mandelson has come under furious criticism from French President Nicolas Sarkozy for offering too many concessions on farm subsidies.
Securing a deal would send a powerful signal that, notwithstanding continuing economic turmoil, the WTO’s members are committed to globalization. Under the terms on the table, Europe and the US would trim their farm subsidies and reduce support for exports in exchange for cuts in tariffs on manufactured goods in many of the larger developing countries. The World Bank has estimated that the potential gains could be as high as £90bn, though most analysts believe they will be considerably lower.
For countries such as the former colonies in the Caribbean, which have long enjoyed preferential access to European markets, there is much to lose and little to gain as their advantage over other exporters is eroded. Others, such as India and Pakistan, hope that it is worth agreeing to reduce protection for their farmers in exchange for winning new export markets.
For the poorest countries, ‘aid-for-trade’ which helps them to develop transport links and more productive technology, is likely to be as important as the level of tariffs. Many already enjoy tax-free access to European markets, under the ‘everything but arms’ agreement, but have been unable to take advantage of it because they don’t have the economic capacity. Europe’s trade ministers agreed on Friday to provide €1bn of support for farmers in poor countries as a gesture towards a more comprehensive aid-for-trade agreement.
Because of the prominence of agriculture, some politicians have suggested that a Doha deal could provide a solution to the global food crisis, which has seen the price of staple products such as rice and wheat rocket, driven by poor harvests, the rising price of oil-based fertilizers, and growing demand for biofuels made from corn. But trade analysts say the devastation wrought by sky-high food prices on some of the world’s most vulnerable communities is better seen as a cautionary tale about the dangers of ill-thought-out liberalization than a sign of the Doha round’s importance.
Many developing countries were encouraged in recent decades, partly by the last round of trade talks, but also by the lending policies of the International Monetary Fund, to tear down agricultural trade barriers in an attempt to make their farming sectors more efficient and generate export business. But with the US and Europe still spending billions on subsidizing their own farmers, the result in many cases has been a dramatic increase in dependence on food imports instead of the hoped-for improvement in the health of the agricultural sector.
‘In the long run, subsidies to improve production in Europe have disincentivised production in developing countries,’ says Simonetta Rarrilli of Unctad, the UN’s trade and development arm. ‘This has led to a situation where the agricultural sector has had very little investment, and developing countries are not able to respond to the crisis because they do not have supply capacity.’
Jack Thurston, co-founder of farmsubsidy.org, which campaigns for transparency about agricultural subsidies, agrees: ‘If free markets had been given a chance in agriculture over the past 40 years, I don’t think we would be in the position we are. We are reaping the whirlwind.’ Developing countries dismantled the barriers protecting their farmers, he says, ‘without the quid pro quo of undistorted markets’.
That has meant cut-price, subsidized food products from Europe and America being ‘dumped’ on developing countries. When world prices are low, consumers in poor countries benefit, but at the same time there is little economic reason to invest in agriculture.
As a report from Unctad, prepared for last month’s emergency Rome food summit, put it: ‘Developing country producers were left defenseless and agricultural production in these countries suffered setbacks from which it has not been easy to recover quickly.’
Anti-poverty campaigners warn developing countries to remember this before signing up to a Doha deal in its present form. ‘A deal along current lines would be more about salvaging political reputations and accommodating special interest lobbies rather than delivering trade reform favoring the poor,’ says Amy Barry, trade campaigner at Oxfam.
Claire Melamed, of ActionAid, insists ‘using the food crisis to force a resolution on these trade talks is nothing more than a shameless distortion of the truth. Luring developing countries into signing up to a bad deal when they are already coping with rising food prices, climate change and the threat of global recession is an insult to the world’s poor.’
Developing countries may decide they simply do not have enough to gain to make Doha worth their while. But this time it is just as likely to be the world’s richest countries, jarred by job losses, economic insecurity and the growing toll taken by the credit crunch, which decide to walk away.
Haiti: where the recipe led to hunger
Thousands of protesters took to the streets of Port-au-Prince, the capital of the Caribbean island state of Haiti, earlier this year to protest against rising food prices, which were forcing the poorest families to go hungry. UN peacekeepers fired rubber bullets and tear gas into the crowd, and some reports suggested that five people died.
Yet this is a country that followed the rich world’s recipe for opening up its farm sector - and campaigners say it is a terrible illustration of just how badly market liberalization can go wrong.
Haiti is very poor: almost 80 per cent of its population lives on less than $2 a day. A coup in 1991 led to the exile of President Aristide and a political and economic embargo, which devastated the economy. But in the mid-Nineties, after US-backed military intervention brought Aristide back from exile and helped secure elections, the new government obediently followed a World Bank and IMF-backed programme to open up its food markets to foreign competition, in exchange for much-needed aid.
As prescribed by textbook free market economics, the Haitian government slashed the tax on imports of the staple food of rice, from 50 to 3 per cent.
This liberalization process was meant to make Haiti’s farmers more competitive, and allow its consumers access to cheaper imports from the world market, while redirecting investment to more profitable industries such as tourism and, eventually, leading to a sustainable escape from poverty.
Yet, despite carefully following the so-called Washington consensus of open markets, Haiti is struggling to feed its people, and subject to wild price swings on international commodity markets.
Initially, rice prices did fall as cheap imports arrived from America, helping the poor in the cities. But local agriculture was devastated, leading to job losses and leaving little productive capacity once world rice prices shot up again.
In a recent report, Christian Aid found that Haiti has gone from being self-sufficient in food to using 80 per cent of its export earnings to pay for food imports. Rice production has fallen by almost half, and three-quarters of the rice consumed comes from the US.
Meanwhile, the other, more profitable industries, such as tourism, which were meant to help replace jobs lost in agriculture, have failed to materialize. The IMF says that’s because the Haitian government didn’t implement other elements of the economic development programme, such as privatizations; but, as in many developing countries, subsistence farming is a huge employer, and replacing those jobs can be very difficult.
‘Rural decline has prompted a huge exodus from the countryside. This has extremely negative impacts on urban areas, where there is a growing slum population and an appalling deterioration in living conditions,’ said Christian Aid, adding that hunger has increased since the food market was liberalized. In this instance, it is difficult to see trade liberalization as a recipe for economic success.”
This excerpt has emphasized the lack of willingness on the part of the developed west to give up its own subsidies. The ruling classes of the West are no fools. They know that they need their agricultural prowess to insure that when the shit hits the fan in the next decade they are capable of countering their weakness in fossil fuels with their abundance of “amber waves of grain”. With manufacturing moved overseas to China, the US and Europe want to remain dominant in the world though control of the worlds finance, high tech, and military might. But more than any of these is an ability to provide the world with massive food surpluses. Add the Australian, Argentine, and Brazilian backup grain production, and you are sitting in a very strong position relative to the needs of the teeming masses of Asia and the raw material reserves in Africa. This is an oversimplification, but the United States and the EU have no intention of ending subsidies. The fact that they were able to black mail nations like Haiti to make disastrous reforms for a pittance of financial aid was simply good business as far as the Clinton administration was concerned. The Bush administration has simply been less adept at playing the game than Clinton was. But then the bombing of the World Trade Center, if it had succeeded in 1993 under Clinton would have simply happened 8 years earlier. Luck had it that it came on Bushes watch and as Ward Churchill so succinctly stated “the hens came home to roost”, or was that pigeons? What we are seeing is simply a manifestation of the anger and resentment felt in Asia and Africa over the dominance of the world by the west over the last 2 1/2 centuries, and more immediately the free trade agenda of the multinationals since the end of World War 2 when the British decided that there was a more sophisticated way to skin a cat than direct occupation. The French at first did not believe in the system devised by their Anglo counterparts but after a few bruised noses in Indochina and North Africa they soon came around. They were able to set the United States up as the new cop on the beat to keep the rest of the world in line. They only had to deal with the troublesome Russians and Chinese. Armand Hammer had proven long ago that Lenin and the Bolsheviks were people that the west could do business with, all that was needed was to bring them around the western approach of economic control through state capitalism, and to stop fooling around with communist rhetoric.
The Germans and Japanese, highly ambitious players who fought to become world players in World War Two, proved their mettle and were given much support once they had been properly taught how to play by the rules. Question is the rules shifting under the feet of all the players?
Global warming, food shortages, fuel shortages, environmental destruction and overpopulation were seen back in the 1970’s by groups such as the Club of Rome and the Trilateral Commission as coming to a head in this century, somewhere between 2010 and 2060, depending on what was done to mitigate the situation. They postulated severe restrictions of popular democracy and the implementation of martial law type regimes in all of the worlds states to insure civil order as the world went though the crisis period. Because almost nothing was done to mitigate the situation it has come sooner than later. We are now truly reaping the whirlwind.
What was not foreseen was the potential of things such as the Gulf Stream changing and dieing out. That would not lead to the collapse of agriculture in much of Europe, nor was the desertification of North America foreseen. Thus these agricultural giants are threatened with serious consequences. The need for tightening up of the control over the world has now become urgent. How will they resolve this crisis? Will they resolve it, remains to be seen? Those of us in the opposition must do our best to insure that something of our traditions of human solidarity and liberty are retained so that we may come up with a strategy to eliminate this giant leech like entity that is sucking out our life blood. But until people see capitalism for what it is, they will continue to drain us, and as the world plunges into further recession, hopefully we will be able to remove this cancer from the body of humanity before they cause us much more misery with their World Trade Organizations and their so called free markets.
I am not saying we need to return to isolation, I am saying that humans need to unite and eliminate those who are keeping too much wealth in the hands of a very few who seem to think that is their divine right to live as gods among us mere mortals.
There are reforms that are needed, rational food redistribution, global climate change mitigation, elimination of subsidies for the rich, and a leveling of the inequity of the distribution of the worlds wealth, to name a few. Elimination of the world’s armies would solve the financial crises most nations face immediately. That would free up resources to give free medical care for all, as a start.
Much more can be done, but we must first get rid of this parasitical force that is poisoning our minds with delusional thoughts through the mass media, miss education systems and mind numbing work. Debt forgiveness for the masses would be another immediate goal. Elimination of usurious interest rates would be another. But it is late and I must go back to my own personal grind in the morning. “A feast of friends, alive she cried, waiting for us, outside” to quote Jim Morrison.