John Madeley: Free-trade maze a hindrance

The World Trade Organisation Doha Development Agenda, launched in November 2001, is in deep trouble.

The agenda is supposed to give developing countries a better deal from world trade and was due to be completed by the end of last year. But negotiations are getting nowhere.

Ministers from the WTO's 148 member states meet in Hong Kong next month and will try to push things along, but a huge gap still exists between Western and developing countries.

The hopes are that the agenda will be completed by the end of next year but those involved are not holding their breath.

Even the WTO's director-general, Pascal Lamy, has scaled down his ambitions for Hong Kong, citing insufficient agreement in the key areas of agricultural subsidies, industrial tariffs and services.

Western countries support their farmers with more than US$300 billion ($436 billion) a year. But this leads to over-production and the dumping of surpluses in developing countries. Developing countries want the West to reduce this support drastically.

And four years ago there seemed to be progress. Doha launched itself on an optimistic wave: "Without prejudging the outcome of the negotiations, we commit ourselves to comprehensive negotiations aimed at substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies and substantial reductions in trade-distorting domestic support."

But little of substance has since emerged. The United States and the European Union still protect their farmers, the US through its Farm Act and the European Union through its Common Agricultural Policy (CAP).

The US said it would cut subsidies to its farmers by 60 per cent and the EU announced 70 per cent. But Oxfam says these are not what they seem, that overall support would change very little.

The sleight of hand is that subsidies account for about a quarter of total Western countries' support to their farmers. Other forms - like market price support, services and advice - are untouched and could rise.

EU trade commissioner Peter Mandelson says the EU commission would not use the Doha round talks to precipitate a new phase of CAP reform, and there is opposition anyway from within the EU to further reform.

Developing countries are furious about the way the US and EU have announced what they claim are big cuts in their agricultural supports, but in reality are offering only modest cuts - at a high price.

That price is that developing countries slash their tariffs on imported manufactured goods and open up their economies to services from Western countries.

And here lies the the root of the problem. Western countries urge free trade for the poor while maintaining protectionism for themselves. They treat the WTO as a juggernaut to force a free-trade-for-them agenda on developing countries.

As a result the WTO has become lost in a free trade maze, while, it seems, losing sight of some of the most important trade issues which face poorer countries.

The WTO is supposed to be about more than free trade. The 1995 agreement setting it up tasks the organisation with raising living standards and ensuring full employment, effective demand and steadily growing real incomes. It also was to expand trade in goods and services. And all this against a backdrop of sustainable development.

In the words of the Harvard economist Dani Rodrik: "It is clear from this preamble that the WTO's framers placed priority on raising standards of living and on sustainable development."

But the emphasis has been on free trade, and instead of promoting sustainable development the whole process has proved hugely damaging to developing counties.

Research by Christian Aid shows that sub-Saharan Africa is a massive US$272 billion ($396 billion) worse off because of free trade policies forced on it.

* John Madeley is the author of 100 Ways to Make Poverty History.