Inequities of free trade

IT SEEMS grossly unfair, even callous, for the World Trade Organisation to be insisting on the phasing out of preferential trade agreements which have long sustained the fragile economies of small island states while, at the same time, permitting rich countries to continue their programme of hugely subsidising their farmers. It seems to us that if the United States and European countries want to maintain this assistance to their farmers, then the WTO should be be quite amenable to small island states, such as those of the Caribbean, seeking to extend the life of trading concessions they have traditionally enjoyed. In terms of consequences, the hardship that one-crop island economies will face from a curtailment of preferential access to metropolitan markets will be far more severe than any adjustment or restructuring that rich country farmers may have to undertake as a result of the removal of subsidies.

Farm subsidies, in fact, have been the main obstacle to progress in world trade negotiations and one of the drawbacks to the economic advancement of developing countries such as those in Africa. As The Economist pointed out two weeks ago: “What Africa really needs is sharp cuts in rich countries’ farm subsidies. These are higher in Europe than in America, despite last month’s lukewarm reform of the EU’s Common Agricultural Policy and Mr Bush’s disgraceful handouts to American farmers. The average European cow attracts more subsidy than the average African farmer earns, which obviously makes it difficult for beef farmers in Botswana to compete with beef farmers in Europe.” If rich nations are intent on protecting their farmers, in spite of the free trade thrust and the protest of poorer countries, then why should the WTO insist on the dismantling of concessions upon which small island states depend for their economic survival? It seems necessary, then, for Caricom countries to use their collective strength to make this point in negotiations at the WTO Ministerial Conference to be held in Cancun, Mexico, in September. Jamaica’s Prime Minister PJ Patterson emphasised this approach when he said: “Our mission must aim to ensure that the rules and the pace of implementation in multilateral, hemispheric and inter-regional trade agreements take full account of the goals and disabilities peculiar to small, developing economies.” Specifically, he added, special and differential treatment provisions must be crafted to facilitate structural adjustment and promotion of the development of small developing economies, in particular the small island developing states.”

A similar point was made by Belize Prime Minister Said Musa who noted that “over a decade, the Caribbean has been promoting concepts related to the need to create a human-oriented trade regime which took account of the special circumstances of small and disadvantaged states and which put people first.” While many leading economists champion the cause of free trade, claiming that all countries will eventually benefit from the consequent growth in the world economy, the movement still seems to be riddled with inconsitencies, insensitive to the economic fragility of small island states and more or less geared to benefit the developed industrialised nations. In this environment, it seems crucial for Caricom states to negotiate their future as one united block. As President of the Caribbean Development Bank Prof Compton Bourne said, while small states do not have a voice in some international rule-making forums within the financial world or within the UN, they have a lobbying role. In other words, for small states to stand a chance of being taken seriously, they will have to speak with one voice and act in concert.