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TRADE AND THE POOR
by John Madeley, UK, in "The Guardian"

As trade ministers from member countries of the WTO struggle to find a common position for the World Trade Organisation Ministerial meeting in Seattle later this year, some rather sizable holes are beginning to appear in the good ship "Trade Liberalisation".

It isn't just that non-governmental organisations concerned with Third World development, who once marched under the banner "Trade not Aid", have taken to the lifeboats with other interest groups in opposing the idea of another round of trade liberalisation talks. Like Consumers International, a federation of 247 consumer groups in 111 countries, traditionally a strong supporter of liberalisation, most recently of the Uruguay Round of trade barrier reduction talks, which now opposes further trade negotiations.

What must be worrying ship's captain, the WTO, is the evidence that is beginning to emerge. Trade liberalisation was supposed to benefit us all. And for many it has brought considerable benefits; most of us in the West now enjoy a wider range of goods at reasonable prices, for example. But what's it done to developing countries?

As agriculture provides most of the employment in developing countries, it seems a good place to start. The UN Food and Agriculture Organisation recently published the findings of 16 country case studies which documented experiences with the trade liberalisation that has been implemented under the 1993 Uruguay Round Agreement on Agriculture. The findings are little less than a bombshell.

Food imports into the 16 countries were reported to be rising rapidly, but food exports were flat. "There was a remarkably similar experience with import surges in particular products in the post-UR period", says the document, "but these countries were not able to raise their exports".

One of the case studies, on Sri Lanka, highlighted an acute human problem - the displacement of people from rural areas. The document says of Sri Lanka: "Food imports have witnessed a significant increase since 1996...the surge in imports was also followed by a decline in domestic production in a number of food products, resulting in a clear drop in rural employment. It was reported that a loss of 300,000 jobs occurred following the recent drop in the production of onions and potatoes".

Not all those jobs were lost because of liberalisation. Other factors, including the withdrawal of most government supports for farmers, played a role. But trade liberalisation is undoubtedly leading to cheap food imports into developing countries which are forcing local farmers out of business, out of the countryside and into the urban areas.

Mr Osorio Londono, the Colombian Chairman of the WTO Committee on Agriculture, recently told an FAO symposium on trade and food security that many developing countries "are not in a position to further open their markets (to food imports). In India, the further opening up of markets could cause tremendous disruption to rural life, and lead to bigger urban conglomerates".

And there seems nothing to compensate for this "tremendous disruption". European Union countries still block the entry of much farm produce from developing countries. Which highlights a fundamental problem with trade liberalisation, post-Uruguay Round - it has all been so one-sided. Developing countries have opened their markets, while the European Union has done little or nothing to open its markets to developing countries, and only tinkered with the Common Agricultural Policy. The EU has handsomely increased its food exports to developing countries, benefiting from the trade barrier flattening it has refused to implement itself.

Another recent report from a group of church-based organisations, including Christian Aid, "Trade and the hungry: how international trade is causing hunger" again uses country case studies to show the impact of trade liberalisation.

A study on Ghana says that farmers have produced maize, rice, soybeans, rabbits, sheep and goats, but "cannot obtain economic prices for them, even in village markets. Their produce cannot compete with imported maize, rice, soybean, chicken and turkey." Several of the case studies show how the EU's "dumping" of foodstuffs (selling below the cost of production) in developing countries is causing havoc for smallholders. Cheap food for urban areas there may be, at least for a while, but at the cost of ruining agriculture.

With the free trade gleam in their eye, the WTO and EU trade ministers might prefer not to know about this. Trade liberalisation is after all supposed to contribute to the more efficient allocation of resources, ensuring that the cheapest producer wins. But how much longer will the devastation of Third World agriculture go on, and how far will the trek of people from countryside to town have to stretch, before trade liberalisation is tempered so that it does not ruin the livelihoods of some of the world's poorest peoples?

Unless it can be steered away from the icebergs, the "Trade Liberalisation" vessel risks being holed below the waterline.

John Madeley is author of "Trade and The Poor: the impact of international trade on developing countries".