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from issue no. 12 - 2005

The free competition of the powerful only

by Giovanni Cubeddu

At the close of the UN Summit in September 2005 it could already be guessed that it would take a very long time still before there would be greater agreement on international trade. And those who understand Realpolitik had an easy time forecasting that the much awaited VI Ministerial Conference of the World Trade Organization, held under the spotlights of the world in Hong Kong, last December, would leave everybody with the image of a time-out in a game of basketball: all stationary, both attack and defense, and no final result, but at least it can be said “the game’s still on”. Waiting for the moment of truth, that is the negotiations begun again at the end of January in Geneva, at which the true number of victors and vanquished will emerge in the coming months.

What, however, did the Hong Kong Conference, the starting point of the negotiations, produce?
The less developed nations find themselves in a much weaker negotiating position, and could be forced very soon to accept an obligatory calendar for eliminating the restrictions on the “invasion” of cheap industrial products from the affluent world. And they could also be forced to open their doors to the Western corporations who will come to buy, without limits, quotas of their services market. The reward for the poor countries would be renunciation by the rich countries of subsidies granted for the export of agricultural products, subsidies that wholly falsify the world market at the expense of the farmers in the poor countries, unable to compete on an equal footing. But this renunciation, should it occur, is to come into force only from 2013 and will not eliminate other kinds of domestic subsidies – not formally catalogued as aid to exportation – which will continue to favor the Western exporters.
But they didn’t want to touch the heart of the question (apart from some concessions more nominal than actual in the cotton sector), that is getting rid of the mechanisms that protect a handful of US producers at the expense of the thousands of small farmers in West Africa. It was thus established that 97% of the products coming from the fifty poorest countries in the world will have entry to the richest markets, without limitation, but the block to stay on the remaining 3% is precisely on the products politically more sensitive for the advanced industrial economies, still therefore well protected. No trespassing here.
What of the so called “Aid for trade”, that is, all the aid directed to poor countries, essentially to allow their economies to develop? This was talked about in Hong Kong, certainly, but it was established, in the end, merely to set up a task force to provide “recommendations” for action.
All the possible and imaginable negotiations are distorted by a deadline not written in the timetables of the WTO, one dictated by the fact that in little more than a year the US Congress will not be obliged to accept or refuse en bloc what the Bush government agrees at the WTO. And when Congress can once again introduce amendments on single points, it begins all over again…

Unfortunately it is in the nature of the WTO itself to view any move in terms of the freedom of the global market, a fact that ensures that the privileges of the stronger are maintained and reinforced, and ensures that the industrial economies win over those on the way to development. Unless some corrective is introduced in the name of a minimum of democracy and international solidarity. Because if the WTO ceased to function, there would be room only for bilateral agreements in which the impositions of the affluent would be even heavier and more constricting. So there’s no point in throwing one’s hands up in horror if the problem of foreign debt continues to exist since there has been no real concern about closing the divide between those who produce raw materials and those who produce industrial goods.
Furthermore we must bear in mind that the ever greater development of economies such as those of Brazil, India and especially of China (which by now is fourth in the world in terms the GNP), might result in the assemblage of countries of the Southern hemisphere against the rich countries becoming ever less compact, as the games of the delegations in Hong Kong have shown. In fact a new “economic Yalta” is shaping, in which China is maneuvering to turn East Asia into a huge market, with a world trade quota greater than that of the United States and the European Union.

To conclude, let’s return to the UN summit of last September. I’ve already mentioned that in the final document, in the section relating to world trade, mention of the fortunate WTO Conference in Doha in 2001 was cancelled – a conference that had raised many hopes in the developing countries – and instead there was a high-sounding addition on the «significant liberalization of trade». We know what was meant by liberalization.
If that is the way things are, the only real comfort comes from the quotation made by a delegate at the Exhibition and Convention Center of Hong Kong, during one of the WTO sessions: «The consent of the parties, if they are in a situation of excessive inequality, is not enough to guarantee the justice of the contract, and the law of free agreement remains subordinate to the necessities of natural law. What was true in respect of the just individual wage is also so as regards international contracts: an exchange economy can no longer lean exclusively on the law of free competition, itself too frequently the cause of economic dictatorship. Freedom of exchange is not equitable if not in subordinate manner to the exigencies of social justice» (Paul VI, Populorum progressio).

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