TRADE-AGRICULTURE: Unpromising Atmosphere for Liberalisation

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Nov 29 1999 (IPS) - The world was to discuss the freeing up of trade in agriculture this week, according to the timetable established in 1994. But the atmosphere seems all but promising.

Five years ago in Marrakesh, the 117 countries that had just concluded the Uruguay Round of multilateral trade talks agreed, among other things, to gradually lift farm subsidies and return to negotiations on the issue before the millenium was out.

Official delegates from the nearly 140 countries comprising the World Trade Organisation (WTO) – the successor to the Uruguay Round’s General Agreement on Tariffs and Trade (GATT) – meeting in the U.S. city of Seattle, Washington as of Tuesday, were to make good on that pledge.

But the setting is not the most favorable for those waving the banners of free trade. The WTO third ministerial conference is taking place against a background of protests by at least 70,000 activists from a wide range of sectors and countries opposed to a version of free trade that only plays in favour of large corporations.

Representatives of civil society want the discussions to include the impact that barrier-free trade has on the environment, employment, wages, child labour, poverty, and difficulty in access to medicines and other basic items.

The Argentine Foreign Ministry’s secretary of international economic relations, Jorge Campbell, warned, however, that the protesters were not the only ones threatening to hinder the progress of the four-day meeting.

He pointed out that the delegates themselves had been unable to reach even the barest agreement on the draft declaration to be approved by the ministers.

The world’s governments have come to Seattle with a text plagued with bracketed items, which in diplomatic jargon signifies points on which no consensus has been reached, and which are subject to change.

Argentina, a country that basically exports farm products, has headed to Seattle to push for the same treatment for agriculture goods as that given industrial products – which pay tariffs 10 times lower on average – and to press for clear commitments on the removal of farm subsidies.

According to the Organisation for Economic Cooperation and Development (OECD), the industrialised nations comprising that group spend 300 billion dollars a year on agricultural subsidies.

The United States is willing to eliminate the practice if the European Union (EU) and Japan agree to do the same.

But both the EU and Japan are reluctant to leave aside their protectionist practices, arguing that in their countries, agriculture is much more than merely an economic activity, and that it fulfills a multiplicity of functions such as preserving the environment and the rural landscape, as well as providing jobs.

Moreover, public opinion does not look kindly on the concept of free trade. “We are going to discuss free trade at a time at which almost no sector in our countries is calling for it,” Campbell told IPS.

Since 1997, southeast Asia, projected on the international scene as a growing market of consumers, became the epicentre of a global economic crisis that affected all countries to one extent or another.

The prices of farm products, like those of other commodities, fell by an average of 25 percent in the past two years – in some cases double that amount – while countries that were already heavily protectionist shut their doors even tighter, compounding the problem.

A world in which free trade reigns without any barriers set up by democratic States around the globe was the vision shared by many of the local and foreign producers who led an investment boom in Argentina.

Currency speculator George Soros bought up thousands of fertile hectares in Argentina’s pampas. And in just a short time, thanks to its soil and climatic conditions, Argentina became the world’s second-largest exporter of soya.

But growth began to wane due to the fallout from the meltdown in Asia, and the reluctance of protectionist countries to negotiate a reduction in farm subsidies has done nothing but aggravate the problem, because with subsidised markets, prices have continued to slide.

Nor does the imminence of presidential elections in the United States contribute to the freeing up of trade in agriculture, despite that country’s greater tendency to yield in practices like subsidies which represent a burden to the State budget.

A broad sector of U.S. voters believes free trade agreements lead to the loss of thousands of jobs, and only benefit large businesses.

Thus, the meeting in Seattle is getting underway at a critical juncture for those in favour of free trade, which early this decade was touted, along with democracy, as the panacea for the world’s economies – and especially developing countries.

Cuban President Fidel Castro, a leading critic of free trade, has already made his position clear with respect to the coming round of multilateral trade talks – dubbed alternatively the Millenium or Development Round.

“The countries of the Third World have gradually lost everything: tariffs that protected their nascent industries and generated income, agreements on commodities, preferential treatment, any instruments to protect the value of their exports. Now what?”

Argentina, which like the rest of Latin America was heavily protectionist until the start of the present decade, once again began to espouse the principles of economic liberalism, and has now taken a stance far removed from that of Castro. But like many other countries, it is now asking the same question Castro did.

“We have the authority to demand that subsidies be eliminated because we are a country absolutely open to trade, investment and services,” complained Campbell as he headed to Seattle. But for the time being there seem to be few ready to acknowledge such efforts in Latin America at throwing open markets.