International trade (in) justice or the survival of the fattest?

Trade justice or injustice has been on the international agenda like never before. Academics and activists are campaigning for just trade and even rich countries are giving the impression that they're willing to address injustices in the global system. Tope Akinwande looks at what the reality is for West African cotton farmers.

“While 70% of the population of Africa work in agriculture, only a few percent do so in rich countries. Yet rich countries support their agriculture to the tune of a staggering $279 billion a year. That's over ten times current aid to Africa. That's a sum comparable to the income of the whole of sub-Saharan Africa. Market barriers keep out developing countries that have a natural advantage in producing agricultural goods. Average tariff between rich countries are only 3%, but can rise to over 200% in the US for fruits and nuts, or to 300% in the EU for meat..." - Hilary Benn, UK Secretary of State for International Development, in “How Can we get trade justice", a speech delivered at the London School of Economics, 29 June 2005.

During the 2005 "Global Week for Action" organised to campaign against trade injustice, I saw a sculpture by Jens Galschiot, a controversial Danish Sculptor. Titled the "Survival of the Fattest", the bronze sculpture depicted a very skinny man - with protruding rib cages - carrying fat and well-fed Justitia, the western goddess of Justice, on his bent back. Justitia had a scale in her right hand and her long pole in her left hand on which it was inscribed: "I'm sitting on the back of a man - He is sinking under the burden - I would do anything to help him - Except stepping down from his back.”

Some people might genuinely wonder how there could be injustice in trade between two consenting people or sovereign countries who have goods to sell or exchange with one another. Since trade is not meant to be a "donor-recipient" relationship but one in which a country has something to sell to another to meet the needs of its populace, one could wonder why there would be injustice or why a country could not move onto another buyer if they do not get a good deal somewhere. If trade, - as it has been simply defined by the Cambridge International Dictionary - is “the activity of buying and selling, or exchanging, goods and/or services between people or countries", why should there be injustice?

One of the most contentious issues in international politics and trade in recent times has been the issue of trade (in) justice. Like never before, there have been systematic mobilisations for trade justice towards countries, particularly Africa. Non-governmental organisations (NGOs), world leaders, academics and activists around the world are leading the campaign to ensure fair trade. In the UK, the Justice Movement, an umbrella campaign organisation of over 70 NGOs are campaigning and lobbying the UK government in various forms to ensure trade justice - not free trade - with compassionate rules to benefit poor people and the environment. [1]

In the face of these campaigns, richer countries have also given the impression of a willingness to redress the seeming "trade injustice" through different negotiations known as "Rounds" and named after the places where they have been initiated. Hence there have been Tokyo, Uruguay and Doha Rounds. Apart from these “Rounds”, rich countries are apparently doing everything humanly possible (international development aid, SAP turned PRSP, MDGs, AGOA…) to eradicate (the less pretentious ones use the word “alleviate”) poverty in poor countries like Mali and Burkina Faso.

However, the reality is something else. The reality of international trade - like any other form of activities with vested interests to protect - is that there have been some trading practices that are deemed unfair. The most prominent of these “sharp practices” is the provision of subsidies to western farmers by their governments. These subsidies encourage farmers to produce irrespective of the situation of the market and the "beauty" of it all is that they are sure of a minimal income.

There are different types of agricultural subsidies. While some are directly linked to the level of production others such as subsidies for water irrigation are indirectly linked. There are also subsidies such as export subsides which are used to promote exports of agricultural products. The surplus production is put on the world market which could force a decrease in price as there is high availability of a particular commodity. This process of flooding the market with excess production and inducing a price decrease is what has been happening for years in the international agricultural trade sector. Developed countries led by the European Union (EU) and US highly subsidise their agriculture allowing their farmers and related industries to sell their products at a lower rate than the cost of production. [3]

In 2001/02, the US, Chinese, Spanish and Greek governments subsidised their cotton producers to over $6 billion dollars. US farmers alone are said to receive almost $4 billion in subsidies. US and European subsidies to domestic producers continue to impose enormous costs on poor countries. The welfare costs of the EU's Common Agricultural Policy (CAP) have been well over the development aid given to all sub-Saharan Africa.

In "Cultivating Poverty: The Impact of US Cotton Subsidies in Africa", Oxfam argues that the rock-bottom cotton price can be blamed directly on enormous subsidies paid to US cotton farmers as they are first among equals in the harvesting of subsidies. These subsidies are destroying livelihoods in Africa and other developing countries with rural communities being the worst-hit. [4]

Killing Burkina Faso and Mali Softly

The cost of cotton production in west and central Africa is very low compared to other cotton-producing countries. African cotton farmers could compete with their counterparts from developed countries if they were not enjoying the massive subsidies of their governments. This has been succinctly expressed by a West African minister who said that his country was “happy to compete with US farmers but not with the US Treasury". [5] Sahel countries like Burkina Faso and Mali have a comparative "advantage" [6] in the production of cotton and the rapid increase in their productivity has shown that they could make considerable developmental gains over time.

In the 1990s, the World Bank encouraged Mali to cultivate cotton since that was its comparative advantage. The West African country threw all its energy and meagre resources into cotton production, rapidly becoming the second largest cotton producer in Africa ahead of Egypt. Despite this Malian "success story", it could not sell its production at good rates as American producers with lower comparative advantage enjoyed a record harvest.

The only plausible reason for this bumper harvest of cotton by American farmers was the subsidies they received. It is said that 25,000 American cotton producers received $USD13.9 billion between 1999 and 2005 which represents a subsidy rate of 89.5%. [7] Annually, this represents about $USD 3.2 billion of subsidies for American cotton producers, plus $USD1.6 billion in export aid. [8]

These subsidies had a disastrous effect on the Malian economy as its cotton farmers could not compete with their American counterparts. Indeed Mali lost the equivalent of 1.7% of GDP and 8% of export earnings. These losses are bigger than the $USD 37.7 million Mali received from USAID in 2001. It is on record that the Malian finance minister at the time made this disturbing statement: “The money that those countries put into agricultural subsidies is five times what they give as development assistance. And we've always said to rich countries, 'you are hypocrites'. You tell us to play the rules of open market at the same time you subsidise your farmers and kill our farmers.” [9]

Burkina Faso is one of the poorest countries in the world. Though it has significant reserves of gold, its almost non-existing industrial base has left its mining in the hands of dubious businessmen. Cotton is the mainstay for 90% of Burkinabes.

According to a study carried out by WHO in Burkina Faso, the expansion of cotton farming painted a positive future for development in the country. However, continuous subvention of western farmers has made it impossible for Burkinabe farmers to compete in the international market. Like many countries in the Sahel, Burkina Faso cannot prepare adequately for the food crises it experiences. It is perpetually locked in a vicious cycle of international aid.

This dire situation made President Blaise Compaore of Burkina Faso, a rather shrewd talker and “great friend of the West” to cry out recently in frustration that: “Several central and west African countries are victims of injustice by the US and EU. These countries subsidise their agricultural producers, ignoring the rules of WTO. Such practices are undermining the fragile national economies of countries that depend on cotton.” [10]

This situation is not peculiar to these two countries. It is the same for many African countries whose economies are mainly agricultural-based.

When signing the US Farm Bill in May 2002, President George Bush made a very revealing statement about his choices concerning international agricultural trade: “I told the people, I said if you give me a chance to be President, we are not going to treat our agricultural industry as a secondary citizen when it comes to opening markets. And I mean that...The farm bill is important legislation...It will promote farmer independence, and preserve the farm way of life. It helps America's farmers and therefore it helps America.” [11]

How else would one want world leaders to show where their interest lies on the issue of trade (in) justice? This agricultural bill that sharply increased subsidies and protections for US producers, was passed while the “international community” was pushing for a Doha Round of trade talks that would deal with agriculture.

Since the "international community" led by the US is aware of the predicament of African countries such as Burkina Faso and Mali, why do they continue to subsidise their domestic farmers? Why can't the US stop subsidising its farmers and allow poor countries like Mali to earn decent income and stop “pan-handling” year-in-year-out for development aid? Why are the rich countries advocating free trade and open markets in developing countries while European and US subsidies to their farmers are destroying markets for vulnerable farmers in sub-Saharan Africa?

The answer easily lies in the "national interest" of western countries. Much as the notion of 'national interest' is a shifting one, it reveals the true behaviour of powerful world leaders. It also guards us against two popular misconceptions about the determination of a state's foreign policy - the motives of leaders and ideological preferences.

While political leaders will cast their policies in ideological terms (free trade, democracy, human rights, justice, etc.) they are inevitably confronted by what is desirable and what is possible. There is no room for moral or ethical concerns, prejudice, political philosophy or individual preference in the determination of foreign policy because actions are constrained by the interest of the state and its power to enforce it. The 'national interest' which ought to be the sole pursuit of political leadership, is always defined in terms of strategic and economic capability.

Conclusion

In international politics, no government worth its salt will toy with its national interest, whatever it happens to be at any given time. It is “sacrosanct” to the survival of the nation.

In light of this basic reality, The EU and US will continue to protect their farmers as long as it is politically expedient. This is not an issue of justice or injustice. It is simply the survival of their states (and the political ambitions of its leaders) that require protecting their 'national interests' of which subsidies to domestic farmers is part of. If that cannot be achieved, then these leaders could be considered incompetent or forced to leave.

The onus is for governments at the receiving ends of these “sharp” trade practices to raise their games and find a strong negotiation platform. It is not going to be easy as we have seen with Brazil and the WTO saga. It is either these countries and those who are campaigning along with them for fair trade to find a way of putting fat Justitia down for a serious negotiation or carry her on their bent backs for a long time to come. Nothing can be more certain that Justitia will not want to get off the back of the skinny man as long as it is possible. Who would except where compassion for others surpasses passion for self?

* Tope Akinwande is a Desk Officer at the West Africa Department of TEARFUND, a leading UK relief and development NGO working in partnership with Christian agencies and churches in over 70 countries to tackle the causes and effects of poverty.

* Please send comments to or comment online at www.pambazuka.org

References

1 See,

3. Nigel Grimwade, “International Trade Policy - A Contemporary Analysis”, Routledge, London, 1996

4 OXFAM, “Cultivating Poverty: The Impact of US Cotton Subsidies in Africa”. See http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/bp30-cotton.pdf

5. See (2)

6. Comparative advantage is what a country can produce with less cost at less time and effort above other countries.

7. See http://www.lwf-humanrights.org/issues.php

8. Ibid

9. See 4

10. Ibid

11. See, http//www.whitehouse.gov/news/releases/2002/08/20020806-4.html-45