07-31-2006, 12:27 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>A triumph for vested interests </b>
Pioneer.com
The collapse of the Doha round augurs ill for the developing and under-developed countries, says André Mejia-Vergnaud
The death of the Doha Round is a victory for rich people in poor countries, farmers in rich countries and many other vested interests. Some even claim it is good for developing countries. The biggest losers, as ever, are the poor, who have no voice.
Mr John Hilary, the policy director at the British NGO War on Want, claimed this week that "the deal on the table would have caused great damage to developing countries." In fact, over the past fifty years, such trade negotiations have gradually removed quotas and reduced tariffs on a whole range of goods. The result has been an increase in world trade and economic development.
But the mystery is that all parties agreed in public that this deal was a good thing. The answer is that all parties had political reasons to make the WTO talks fail.
The deal on the table was a commitment by rich countries to reduce or eliminate their enormous farm subsidies if developing nations opened up their trade. Least Developed Countries had already gained exemption, although they need trade more than anyone.
For anti-trade activists, a good deal would have meant reducing subsidies in rich countries but allowing all poor countries to maintain their own barriers to trade, not only in agricultural products but in many other sectors such as industrial goods, services and - yes, it is hard to believe - medicines.
From the beginning of the WTO's Doha Round in 2001, it was clear that agricultural subsidies in rich countries would be the main issue. These subsidies cause great harm to farmers in poor countries - as well as poorer citizens of rich countries. This taxpayers' money has also created powerful lobbies against trade liberalisation, especially in the EU, the US, Japan and South Korea.
In parallel, vested interests also prevailed in poor nations. Brazil and India, big trade players both, argued that rich countries should remove their subsidies and barriers while allowing poor countries to maintain theirs. Brazil's protectionist attitude was responsible for the collapse of the Free Trade Area of the Americas (FTAA) negotiations in 2003.
Protectionism is superficially and emotionally attractive but it means building up inefficient businesses at the expense of local consumers who could have imported the same thing cheaper and better made. Those inefficient businesses are inevitably run by cronies of the ruling cliques, further strengthening their rule.
Various European countries were quick to take advantage of the confusion - and not just France: The new Eastern European members were enticed in with large grants, while others cling to their old ones. In fact, the EU's current agreements prevent it from even discussing alterations to agricultural subsidies until 2013.
The front man for all this, the EU Trade Commissioner, Mr Peter Mandelson, was not even a full representative with a set mandate: Any EU member state could disagree at any time and derail the whole process. According to the anti-trade activists, charities and NGOs, poor countries win because they can continue to maintain substantial barriers to trade, especially farm trade.
But barriers to farm trade cause artificially high prices of food in poor countries, where malnutrition is a severe problem. Barriers to non-farm products have the same effect. But worse, this protectionism encourages farmers in poor countries to produce uncompetitive, low value products, thus feeding the vicious circle of poverty.
Barriers to trade can even kill. Many poor countries impose heavy tariffs and taxes on medicines, a policy that reduces access to drugs in countries where diseases kill many, especially children.
There are indeed winners in the collapse of the Doha round. Anti-trade activists who claim to speak on behalf of the poor can boast an ideological victory. Politicians can keep their lobbies happy. Subsidised farmers in rich and poor countries will maintain their privileges.
But poor people in poor countries have lost the chance to make, buy and sell goods and services freely and at better prices: They have lost the only way to make poverty history.
(The writer is Director of the Colombian think-tank Instituto Libertad y Progreso, in Bogotá, promoting the institutions of the free society)
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Pioneer.com
The collapse of the Doha round augurs ill for the developing and under-developed countries, says André Mejia-Vergnaud
The death of the Doha Round is a victory for rich people in poor countries, farmers in rich countries and many other vested interests. Some even claim it is good for developing countries. The biggest losers, as ever, are the poor, who have no voice.
Mr John Hilary, the policy director at the British NGO War on Want, claimed this week that "the deal on the table would have caused great damage to developing countries." In fact, over the past fifty years, such trade negotiations have gradually removed quotas and reduced tariffs on a whole range of goods. The result has been an increase in world trade and economic development.
But the mystery is that all parties agreed in public that this deal was a good thing. The answer is that all parties had political reasons to make the WTO talks fail.
The deal on the table was a commitment by rich countries to reduce or eliminate their enormous farm subsidies if developing nations opened up their trade. Least Developed Countries had already gained exemption, although they need trade more than anyone.
For anti-trade activists, a good deal would have meant reducing subsidies in rich countries but allowing all poor countries to maintain their own barriers to trade, not only in agricultural products but in many other sectors such as industrial goods, services and - yes, it is hard to believe - medicines.
From the beginning of the WTO's Doha Round in 2001, it was clear that agricultural subsidies in rich countries would be the main issue. These subsidies cause great harm to farmers in poor countries - as well as poorer citizens of rich countries. This taxpayers' money has also created powerful lobbies against trade liberalisation, especially in the EU, the US, Japan and South Korea.
In parallel, vested interests also prevailed in poor nations. Brazil and India, big trade players both, argued that rich countries should remove their subsidies and barriers while allowing poor countries to maintain theirs. Brazil's protectionist attitude was responsible for the collapse of the Free Trade Area of the Americas (FTAA) negotiations in 2003.
Protectionism is superficially and emotionally attractive but it means building up inefficient businesses at the expense of local consumers who could have imported the same thing cheaper and better made. Those inefficient businesses are inevitably run by cronies of the ruling cliques, further strengthening their rule.
Various European countries were quick to take advantage of the confusion - and not just France: The new Eastern European members were enticed in with large grants, while others cling to their old ones. In fact, the EU's current agreements prevent it from even discussing alterations to agricultural subsidies until 2013.
The front man for all this, the EU Trade Commissioner, Mr Peter Mandelson, was not even a full representative with a set mandate: Any EU member state could disagree at any time and derail the whole process. According to the anti-trade activists, charities and NGOs, poor countries win because they can continue to maintain substantial barriers to trade, especially farm trade.
But barriers to farm trade cause artificially high prices of food in poor countries, where malnutrition is a severe problem. Barriers to non-farm products have the same effect. But worse, this protectionism encourages farmers in poor countries to produce uncompetitive, low value products, thus feeding the vicious circle of poverty.
Barriers to trade can even kill. Many poor countries impose heavy tariffs and taxes on medicines, a policy that reduces access to drugs in countries where diseases kill many, especially children.
There are indeed winners in the collapse of the Doha round. Anti-trade activists who claim to speak on behalf of the poor can boast an ideological victory. Politicians can keep their lobbies happy. Subsidised farmers in rich and poor countries will maintain their privileges.
But poor people in poor countries have lost the chance to make, buy and sell goods and services freely and at better prices: They have lost the only way to make poverty history.
(The writer is Director of the Colombian think-tank Instituto Libertad y Progreso, in Bogotá, promoting the institutions of the free society)
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