WTO-SPECIAL: Lack of Size Matters

By Sanjay Suri Reprint | | Print |

Sanjay Suri

LONDON, Dec 3 2005 (IPS) - Small island states have learnt to fear more than a tsunami. They are preparing themselves for being swamped by a tidal wave of devastating imports if world trade ministers cannot come to an agreement that protects their interests.

Small can be really small. Not all are quite like Tuvalu, with a population of 11,000 or so. You have a relatively large nation by way of Maldives with a population of about 350,000. And there are many more such giants relative to tiny Tuvalu, with a population running into a few hundred thousand.

They are a few people, but in quite a few countries, though. And they fear they will be forgotten when the world talks trade agreements, and that agreements once made will swamp them, and no one else in the world will notice.

The fears of small states hit the headlines after the tsunami at the end of December last year. Those concerns that these island countries could be simply swamped by the sea dominated an international meeting on small island states held in Mauritius early this year.

That meeting had sought to take forward the 1994 Barbados programme of action for the sustainable development of small island developing states (SIDS). No one seemed to have taken much notice of the Barbados agreement until the tsunami came along.

”My country is like a can of tuna fish,” Maldivian foreign minister Fathulla Jameel had said, ”because it comes with an expiry date.” Now that fears of another tsunami have receded, countries like the Maldives are beginning to fear cans of fish packed in Western countries sold cheaper than production costs in developing countries because of both domestic production subsidies and export subsidies offered by rich governments.

Few of these small countries have an effective voice at the Commonwealth, and many are not sending any representatives there at all. The Commonwealth, a grouping of 53 countries that were once a part of the British Empire, is now stepping up to speak for them at the trade ministers meeting in Hong Kong later this month.

”The Commonwealth will not be at the table at the WTO (World Trade Organisation) meeting,” Winston Cox from the Commonwealth told IPS. ”But we will provide assistance and expertise for member countries so that they are not at a disadvantage at the table.”

Cox will be particularly well placed to strengthen the case of small island states. He is deputy secretary-general in charge of WTO issues at the Commonwealth, he is from Barbados, a small island state with a population of 280,000, and he was formerly director at the World Bank.

”A major concern is going to be to ensure special and differential treatment for small and vulnerable countries,” he said. ”They will be looking for better market access, looking for recognition that their size of the international trade is so small that they cannot have any distorting effect on world trade at all.”

The small states, and those representing them, will seek to make sure, he said, that ”they are not pushed into actions that will destroy their economies.”

Many of these countries have just one commodity to sell, and when that is hit, the national economy faces ruin. Such dangers have emerged starkly with the new risks to banana and sugar exports from many of these countries.

”The economy of Dominica (pop. 69,000) has been devastated because of the challenge to the EU (European Union) banana policy,” Cox said. An EU decision to reduce preferential access to bananas from African, Caribbean and Pacific (ACP) nations following a WTO ruling has hit many of these countries hard.

”Many countries exporting sugar to the EU will see a decline in the price of the sugar they export as a result of reforms of the EU sugar policy,” Cox said. ”EU farmers are getting a completely different level of compensation through these reforms than the farmers in these small countries.”

Many of these countries face threats to services too.

The Commonwealth is looking to support financial services offered by small countries like St. Kitts and Nevis (pop. 39,000). The Organisation for Economic Cooperation and Development (OECD), a grouping of 30 rich countries, has been pushing for a crackdown on services offered by many of these countries, which it considers tax havens and centres for money laundering.

”These countries would like to be able to provide services to the rest of the world,” Cox said. ”Most of these economies have entered into double taxation treaties with other jurisdictions, which legitimises tax behaviour between two countries.”

Among the less noticed campaigns at Hong Kong this month will be the one that seeks to show that lack of size matters.