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Hong Kong trade fiasco: Sellers of raw materials trashed once more
2005-12-21 08:24:52
By mireny john
The third World Trade Organisation (WTO) conference, which ended on Sunday, was plagued by glaring challenges.
Of the 149-national delegations meeting in Hong Kong to delve into crucial trade issues concerning increased access to rich world markets, four-fifths were in dire need of redress.
These countries, most of them poor, and heavily-indebted, value their membership of an organization with a focus on the bridging of socio-economic divides that betray the globalization initiative.
Judging from the last round of talks in Cancun (Mexico), 2003, and other unpleasant blows from the industrialized rich ’camp’ members, we must remember that these developing nations attend WTO meetings with mixed feelings.
There was much ado about nothing as the 6,000 delegates ended in trading angry accusations, the US blaming the EU for blocking free trade and vice versa.
The trading war was pitted between two major camps: On the one hand, the developed countries were protecting their finished industrial goods and services from competition, while poor countries waged a fight against farm subsidies and other trade distorting practices by rich countries.
When we point a finger at US to lift cotton subsidies, the final impact goes to about 33 big US cotton farmers, with powerful political clout.
Considering that the United States is the biggest exporter of cotton, which has been a big issue since the Cancun WTO meeting of 2003, cotton- producing countries, like producers of other raw materials, have been crying loudly for a redress of the grossly distorted patterns of world trade .
This cry sounded alarming when a diplomat from Benin, recently regretted that African nations face a ’social disaster’ because of cheap cotton from rich industrialized nations. Other subsidized agricultural products from rich industrialized nations flood the world market, depressing the prices from developing countries.
In a recent reaction, the USA has called for a total elimination of all export subsidies in agriculture worldwide by 2010. But this goodwill should be backed by a sympathetic ear for the developing countries who in the face of the present disturbing trade trends consider globalization an economic death threat , should they continue to embrace economic strategies without seeking a redress of the negative trends that betray their commitment to efficient, effective and profitable trade.
By the end of the six-day meeting on global commerce, trade ministers ended up with a compromise deal, adopting an accord to scrap agricultural subsidies by the end of 2013.
While demonstration of good will by liberalizing markets definitely rekindles the interest of some WTO member states who are fast losing hope in the WTO as a result of glaring economic protectionism, poor countries need to carve out a new entry point to global trade negotiations.
From the business point of view, it is extremely difficult to protect the price of raw materials whose consumption is determined by someone else. It is even tougher to bargain because, say for a product like cotton, no one country can claim to be the sole producer .
A country like China, for instance, would argue for fair trade in finished toys and apparels, or semi-processed metals and the like.
Worst still, most of the raw materials from developing countries are inefficiently produced by small peasants, all of them applying rudimentary technologies, without any advantage arising from economies of scale.
Before the next round of WTO talks, the raw material exporting countries should have put in place a strategy for negotiating trade for at least a small range of specialized and finished products and services.
It seems Brazil is approaching that level of trade talk having managed to aggressively engage its private sector in agri-business: farming, processing, packaging and selling to international markets, including the US.
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