Don't give a starving man a fish, give him a fishing rod. That
used to be the mantra in foreign aid circles. The message that came
out of the collapsed World Trade Organization negotiations in
Cancun, Mexico, last week took the metaphor one step further; Don't
let him export that fish once you have taught him how to catch
it.
"We are told that free trade brings opportunity for all people, not
just a fortunate few," U.N. Secretary General Kofi Annan said at
the opening Wednesday of a five-day meeting of the 146 member
nations of the World Trade Organization. "Sadly, the reality of the
international trading system today doesn't match the rhetoric.
Instead of open markets there are too many barriers that stunt,
stifle and starve. Instead of fair competition, there are subsidies
by rich countries that tilt the playing field against the
poor."
The criticism is fair. It was, in fact, the purpose of the meeting
to give new impetus to the Doha WTO round, which was launched in
2001, and to level that playing field. The Doha round is intended
to deal with agricultural subsidies, among the thorniest of issues.
At the request of the EU, investment and government procurement
were added. The mixture turned out to be explosive.
By the time the weekend rolled around, the developing countries -
now organized under the name of the G-21 -- had decided that the
United States, Europe and Japan were not prepared to make
sufficient cuts in their agricultural subsidies. Meanwhile G-21
countries had balked at setting investment rules they thought would
favor the rich countries.
While the rich nations agreed to end export subsidies on farm
products of special interest to developing countries, the G-21
called for an to all agricultural subsides. On Sunday, the
developing countries walked out and the talks collapsed amidst
plentiful demonstrations and even a suicide by a Korean
protester.
Now, Americans and Europeans are clearly both guilty of protecting
their farmers at the expense of developing countries, whose exports
are overwhelmingly in the agricultural sector. According to the
Economist "World in Figures," the countries most economically
dependent on agriculture are in Africa, Southeast Asia, Central
Asia, and Latin America.
In African countries like Congo, Burundi or Tanzania between 45-60
percent of the GDP derives from agriculture. These countries cannot
compete in high tech or services. Meanwhile, in the United States,
agriculture accounts for 1.4 percent of GDP. In most European
countries, it is less than 3 percent.
And yet, for political, emotional and other reasons, our farmers
are protected against competition by huge and expensive subsidies
and tariffs. While American farmers also benefit from subsidies and
export guarantees, the European Union is the worst offender. The
European Common Agricultural policy accounts for 85 percent of the
world's agricultural subsidies.
So, if the G-21 are mad, it's understandable. The question is how
they can get even, and walking out on trade talks is not
productive. As Dennis Kabaara of the Institute of Economic Affairs
in Nairobi told the BBC, "In the long run, we lose out. It means
that the developed world, the EU, America and Japan will take even
longer to reduce subsidies."
Already, here in Washington, Sen. Charles Grassley has promised
congressional hearings on the collapse of the Cancun talks and even
raised the possibility that the negotiating authority for a WTO
agreement conferred on the administration by Congress in the Trade
Act of 2002, might not be extended beyond 2005. This would be a
great mistake.
The fact is, however, that more flexibility is needed on all sides
if the still-young WTO is to work. Since the failed negotiations in
Seattle four years ago, the developing countries have been getting
their act together, and are getting tougher about pressing their
demands. Americans and Europeans have not arrived at a strategy of
their own, in part because of mutual differences.
Critics of the WTO will be inclined to take the evidence of Seattle
and Cancun and declare the organization useless, a dead letter. Let
us not forget that the liberalization of global trade has been a
huge engine for wealth creation since World War II. Nor that the
last world trade round, the Uruguay round, took seven years to
complete. The squabbling parties have agreed to gather in Geneva in
December to assess the damage. They all could do with some soul
searching before then.
Helle Dale is the Deputy Director for the Davis Institute for International Policy Studies at The Heritage Foundation.