Nothing fair in war of poor v poorest
By Carl Mortishead
HOW much is a banana? This is not a schoolyard joke but a geopolitical problem.
A lot of people are getting angry about the price of bananas, sugar and cotton. These things are grown cheaply in the tropics by poor people but by the time a lump of sugar reaches a European teaspoon, its price is queered by tariffs, import quotas and political rigging in favour of inefficient European farmers and our dodgy friends in the developing world.
Why not sweep it all away — the tariffs, the quotas and the Eurocratic meddling? Let the poor have free access to our markets to sell their produce. Who could oppose free trade with the poor? Many do, including Oxfam. The charity is against opening the door wide to poorer nations. Its preference is for something called fair trade, which sounds nice but is actually rather insidious. In the world of fair trade, not all poor people are equal. Some poor are deserving of assistance while others are not. Instead of open access, fair trade campaigners want a bouncer at our door, chucking out anyone whose face does not quite fit.
For Oxfam, the faces that fit are mainly from certain poor African, Caribbean and Pacific (ACP) states that continually lag in economic league tables. Oxfam’s heart is always in the right place and it has recruited a galaxy of stars to its fair trade cause, including Chris Martin of the band Coldplay and R.E.M. vocalist Michael Stipe.
Vocal advocates in campaigns against the injustice of American and European farm subsidies, they say little about the more inconvenient issue — something strange and alarming is upsetting the politically correct, North v South, view of trade.
A trade war is looming, not between rich and poor but between the poor and the poorest. Contrary to what you may believe and what the development campaigners tell you, the big battle that will erupt at the World Trade Organisation summit in Hong Kong in December is not between America and Europe on the one hand and the Third World on the other. The fight is between those developing countries that are growing and those that are not. It is about the massive grab by Brazil, China and India for market share at the expense of the less efficient, less fortunate and sometimes idle ex-colonies that largely make up the ACP.
Consider the hue and cry over China’s surging clothing exports and be aware that Sri Lanka has lost a quarter of its share of the European Union T-shirt market since textiles quotas were abolished in January. Who should get that job at the mill? The Sri Lankan or the Chinese? Consider bananas. Europe used to rig this market in favour of inefficient Caribbean producers and at the expense of so-called “dollar bananas” from Ecuador, Honduras and Costa Rica. A ruling from the WTO abolished the system of licences that carved up the EU banana market in favour of expensive produce from our former island colonies. Hoping to rescue the islanders from Latin American competition, the EU wants to limit dollar bananas with a huge tariff and the Central Americans are in a rage. Who gets preference? The Honduran plantation worker or the hill farmer in Grenada? You might think the question unfair. In Europe, you might argue, we should have an open market in which all compete on the same terms. Unfortunately, this notion of fairness is not what is meant when people talk about fair trade.
For Oxfam, fair trade really means fair subsidy, a rigged market in which the poorest get more for their produce or a bigger share of the market than their weak position might otherwise command. It sounds nice and the EU obliges with a fiendishly complex system of trade preferences to regulate which poor countries get the sweetest deals.
Unfortunately, the sweetheart deals and market rigging help no one. The poor stay poor and the prices stay high.
The evidence is in a report this week from the European Commission on access by poor countries to the EU market, Opening the door to Development. The Commission’s research shows that decades of preferred access for the very poor under the Lome Convention and the more recent Cotonou Agreement have failed to improve their lot. They remain impoverished, single commodity exporters.
Over the past 25 years and despite preferred access, ACP exports to the EU have stagnated while produce from Asia has more than doubled. Most alarming is sub-Saharan Africa, a region that benefits from a near open door policy into the EU. Sub-Saharan Africa’s share of world trade has declined from 3.3 per cent in 1950 to less than 1 per cent. While India and Thailand have diversified from raw commodities to manufacturing and services, the ACP nations remain one-trick ponies. Even after
25 years, only two commodities account for more than half of EU imports from each ACP nation.
The Commission wants to renegotiate the agreements, forcing African countries to open up their markets to regional competition, weaning poor states off protectionism and dependency. Oxfam objects, arguing that it is a Trojan horse for an EU invasion of these markets.
Most of these countries can only dream of affording what we have to sell. The real question is how to create wealth but trade is only part of the answer. What is needed, as the Commission’s report states, is better governments. Within its campaign material on the sugar trade, Oxfam finally tells us the real story. It points to a Mozambique sugar mill wrecked in the civil war. With better access to EU sugar markets, it might attract investment and create jobs, they say.
Let us open the door to Mozambique but not kid ourselves. Africa’s problem is not trade. It is war, war, war.
carl.mortished@thetimes.co.uk
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