Ian Boyne
THE RESULTS of the Doha Development Round and the negotiations at the Hong Kong Ministerial Meeting of the World Trade Organisation (WTO) are far more crucial to Jamaica's development prospects than who wins the leadership contest in the People's National Party, or whether Bruce Golding comes to power.
The parochialism of our thinking still leads us to pay insufficient attention to the global agenda while we continue to delude ourselves that all we need to do locally is to set our house in order economically and politically, and all things will be added to us. We still have a senior and highly influential journalist like Wilmot Perkins scoffing at the call of developing countries for a reform of the international trading and economic system. Perkins dismisses this as mere mendicancy and a plea for handouts.
He still holds the uninformed and naïve view that if developing countries like Jamaica would only reduce their corruption and kleptocracy, reform their political systems and increase production and create wealth 'the way Singapore and the Asians countries did it', we would be okay. Damn the international system and our excuses! If we were productive and were attracting enough foreign investments we would be okay, says Perkins and others.
It is a pity that they don't realise that even the bastions of conservative institutional power like the World Bank and the International Monetary Fund (IMF) have long moved beyond those views and are now major advocates for reform in the interest of developing countries. Some of the finest studies now being conducted showing the inequities in the international economic system and the failures of capitalist development are now being led by these Bretton Woods institutions. But most of us are too busy to be bothered with pouring over these studies.
REWRITING UNFAIR TRADE RULES
World Bank President Paul Wolfowitz, certainly no Leftist, said at the start of the Hong Kong Ministerial meeting on Tuesday that the stakes for the world's poor were too high for the Doha Round to fail.
Hear him: "The Doha Round presents an opportunity to rewrite the rules of an unfair trading system that holds back the potential of the poorest peoples." If Patterson or any Third World leader had said that, Perkins would be delivering himself of his usual cynical laughter, pointing out that these are the kinds of irresponsible statements Third World leaders make after they wreck their economies.
Too few people understand the constraints under which developing countries operate in the international economic system and the journalists and opinion leaders who are supposed to help in informing people also need to be educated on these issues. No less a person than Carla Hills, the U.S. trade representative under President George HW Bush, writes in the special edition of the prestigious Foreign Affairs Journal dealing with the WTO (December, 2005): "Most Americans have no idea that poor countries are required to pay higher tariffs on their exports than wealthy countries. They would be astonished to learn that last year Mongolia paid the United States US$13 million more on tariffs on its US$240 million of exports than Norway paid on its $6.5 billion of exports, or that Washington collects roughly the same amount of tariffs from Bangladesh on its $2 billion of exports than it does from France on its $30 billion of exports."
So if this is any comfort, it is not only Jamaicans who are ignorant of these trade and economic issues. U.S. Department of Agriculture studies show that eliminating rich countries' agricultural supports would result in a 24 per cent gain in the value of poor countries' farm exports which account for a third of their total exports, and which involve industries employing nearly half of their population. Many don't know that tariffs charged on developing countries' exports are much higher in the industrialised countries than those imposed on other industrialised countries.
So when talk-show hosts and other commentators and politicians talk nonsense about just 'increasing production', 'attracting more foreign investments' and 'creating wealth', they ignore the fact that many developing countries have significantly increased their manufactured exports, for example, but they are not receiving their just compensation for them because of an unfair and unjust international trading and economic system. This is why developing nations indeed the world have a vested interest in the success of the Doha Round, and why its stalling is a loss for all of us.
HYPOCRISY
The former U.S. trade representative Carla Hills herself points out in that Foreign Affairs article that even in the United States where tariffs average as low as two per cent, the tariffs on the goods most poor countries export like footwear, vegetables, fruit juices, peanuts and sugar range from 40 per cent to 100 per cent. The tariffs in other industrialised countries are even worse, she points out: Some go up to 1,000 per cent on some farm goods. So the issue is not just one of increased production. It's one also, and significantly, of reforming the unjust international economic system.
The industrialised North subsidise their agricultural sectors to the tune of $1 billion a day or $365 billion a year. As Wolfowitz pointed out last week, 70 per cent of the world's poor live in rural areas and depend on agriculture to earn a living and to feed their families. This is why cutting agricultural tariffs and subsidies is so critical to the Doha Development Round. You can't solve the problem of three billion people living on US$2 a day without addressing agriculture.
Many don't realise that the industrialised countries actually penalise developing countries for increasing value-added to their production. There is what is called tariff escalation, which is applied to the degree of processing which is done to primary products. So it is grotesque when people talk about increasing production as a way out of poverty when these issues are not considered. It is unbearable hypocrisy when developed countries urge developing nations to increase production in an international economic and trading system as manifestly iniquitous as this one.
I go back again to that leading neoconservative intellectual, Paul Wolfowitz, confidant of George Bush himself: "Tariff escalation is one reason, for example, that 90 per cent of the world's cocoa beans are grown in developing countries but those developing countries only produce four per cent of the world's chocolate."
Cotton subsidies amount to approximately $5 billion annually but cost West African cotton producers $150 million a year about 10 per cent of their merchandise exports. In the book released last month by the World Bank in time for the Hong Kong meeting, Trade Doha and development, 'A Window into the Issues', the World Bank says that the full removal of protection on trade in goods would raise real global income by an estimated $287 billion by 2015.
Studies done by the noted economist William Cline of the Centre for Global Development show that removing global barriers to trade would lift some 500 million out of poverty. Studies done by another noted economist, David Dollar, have shown that over the last 20 years globalisation has been responsible for moving 375 million out of extreme poverty.
Says Carla Hills: "It is no exaggeration to say that the Doha Round could do more to stimulate the global economy and to alleviate world poverty over the next quarter century than any other policy initiative the 148 WTO member governments could undertake together."
But there is one issue that some on the Left are ignoring and which you are unlikely to read in any commentary by John Maxwell or Wayne Brown. It is the fact that the developing nations themselves are major sources of obstacles to other developing countries and that developing countries face higher tariffs among developing countries than they do in the developed North.
Talk about South-South co-operation and developing countries banding together to protect "common interests" also betrays ignorance of the dynamics of the international trading system and how the world has changed in the last 25 years. This is not Michael Manley's world. The interests of large developing nations like Brazil, China and India are not synonymous with ours in many respects. Indeed, we find ourselves on the opposite poles with them and have to asking for Europe to help protect us against their lobbying against our preferential access.
INCREASED SOUTH-SOUTH TRADE
The G-20 countries which emerged as a strong bloc at Cancun do not see eye to eye with small developing Caribbean countries like us or with Sub-Saharan Africa.
South-South trade has, indeed, been increasing but that has been part of the problem. Indeed, between 1990 and 2004 South-South trade expanded significantly faster than world trade, increasing from US$219 billion to a staggering $1.1 trillion. Trade between developing countries is now nearly 13 per cent of world trade. So what developing countries do in liberalising their own markets is important to the developing world, a point not often made by critics of the developed world and the multilateral system.
Developing countries collected about US$83 billion in customs duties on merchandise exports in 2000 which is about 60 per cent of the customs collected worldwide. Developing countries often use customs duties as a means of financing their budgets, so they are sometimes resistant to reducing tariffs, focusing only on pressing developed countries to do so. Hypocrisy is not confined to the developed world and Jamaica's negotiators have to be au fait with the changing dynamics and can't be guided by past ideological positions.
Africa's trade with the developing world has been increasing markedly, for example. By 2004 developing countries accounted for 30 per cent of Africa's total exports, up from 18 in 1970. Over that period the share of developing countries in Africa's total imports increased by over 20 percentage points, while the combined share for the European Union and the United States declined by nearly 20 percentage points.
So the actions of developing countries would be crucial to Africa, a point made plain in the IMF paper published last month, 'Africa in the Doha Round: Dealing With Preference Erosion and Beyond'.
"The Doha Round may become the first major multilateral trade negotiation to fail since the 1930s," says well-known American economist C. Fred Bergsten in 'Rescuing the Doha Round' in the December issue of Foreign Affairs. If so, that would be most tragic for global development.
You can send your comments to Ian Boyne at ianboyne1@yahoo.com
