Post-Colonial Poverty in the Global South

It was the French anthropologist Alfred Sauvy who first used the term ‘Third World’ in reference to the ‘underdeveloped’ countries of the global south. Writing in the French magazine L’Observateur (Aug 14, 1952) Sauvy concluded a powerful critique of colonialism by asserting that; ‘in the end this ignored, exploited, scorned Third World like the Third Estate, wants to become something too’. He was paraphrasing Sieye’s famous observation about the Third Estate during the french revolution and how the peasantry had aspirations of their own beyond the aims of the aristocracy (First Estate) and the clergy (Second Estate).

In the Cold War era the phrase was adopted readily as it became a handy way of demarcating that territory that lay outside the immediate sphere of the two great superpowers. In time, with the dissipation of hostilities that followed the collapse of the Berlin Wall, this meaning too became largely redundant. Today, the ‘Third World’ is a shrunken concept as it has managed to reduce the diverse complexity of whole continents to stock images of helpless black babies with bloated bellies mercilessly surrounded by tsetse flies and barren landscapes.

As a matter of fact the phrase has been long abandoned by serious campaigners precisely because of these connotations of impotence, helplessness and passivity. The preferred terms used nowadays by activists are either the global south’ or the majority world’. This is not to say there was no merit in Sauvy’s original wording for it at least intended to confer the dignity of an active narrative, a struggle for rights and emancipation and, given the outcome of the historical events to which they alluded, a sense of manifets destiny. It is in fact perhaps more useful to retain this original suggestion of ‘the ignored, exploited and scorned’ to truly understand poverty in the global south for it is questionable whether the people in these regions have ever actually attained true independence and autonomy.

For instance, the debt crisis’ of the late 70’s and early 80’s left many countries in Africa, Asia and Latin America looking towards the IMF and World Bank as lenders of last resort. Conditionalities attached to the concessional financing needed to alleviate the debt burden amounted to the wholesale adoption of the corporate-led neoliberal model of economic development. Two prominent theories underpin this economic philosophy; (a) Friedmanite ‘supply-side’ economics which holds that lowering the costs of production is the key to economic growth (ie tax cuts for the rich and investors) and (b) the theory of comparative advantage which favours specialization over economic diversification.

The presence of both these assumptions are behind the main elements that comprise a typical IMF-imposed structural adjustment programme (SAP); deregulation, privitization, liberalisation, currency devaluation and measures to stimulate export-oriented growth. In addition to these, ‘austerity measures’ such as cutbacks in health and education and the slashing of public sector wages are advocated to release funds either to satisfy creditors or to fuel market-led growth via private sector retrenchment. The net effect of these policies is to supposedly liberate and empower the ‘miraculate’ of capital itself; which, left alone to its own majestical workings is assumed to be the panacea poverty is looking for.

For example, deregulatory policies such as lowering of constraints on hiring and firing, the undermining of trade union power, decreasing the number of bureaucratic procedures required for setting up a business and the altering of land laws to suit inward investment are all intended to create a more conducive environment under which capital can thrive. However, the problem here is that the prescriptions laid down by the international financial institutions (the IMF and World Bank) more often appear to be drafted by corporate lobby groups intent on prising open vulnerable economies for their own benefit .

Export processing zones (EPZ’s) are perhaps the most extreme form of a deregulated business environment. Begun in India in the early 80’s when the government introduced a five-year tax break for companies who wished to relocate their manufacturing base the vast majority of employees are young women. Their primary purpose is to supposedly generate export revenue and their numbers have since mushroomed. In 2002 there were an estimated 43 million people working in about 3000 EPZ’s spanning some 116 countries and producing items such as clothes, shoes, electronics and toys. Naomi Klein describes the working conditions as follows; “Regardless of where the EPZ’s are located, the worker’s stories have a certain mesmerizing sameness: the workday is long – fourteen hours in Sri Lanka, twelve hours in Indonesia, sixteen in Southern China, twelve in the Phillipines. The management is military-style, the supervisers often abusive, the wages below subsistence and the work low-skill and tedious.”

Another notable feature that Klein observed was that the majority of the women were migrants from rural areas; “they would have stayed at home if they could, but the choice was made for them: most of their families had lost their farms, displaced by golf courses, botched land-reform laws and more export processing zones.”  One young girl told her; “Working on the farm was difficult yes, but there we had our family and friends and instead of always eating dried fish we had fresh food to eat”. (No Logo, pg. 220.)

This brings us to the heart of the issue because if EPZ’s and large-scale plantations or monoculture farming are to be the motors through which export revenues are going to be obtained then they will require a readily available pool of cheap labour and this can only be achieved by exerting a squeeze on rural households. As we know, the majority of people in the developing countries are small-scale farmers with a few hectares of land. However, trade liberalisation means that cheap imports from the heavily subsidised large producers of the West are undercutting the capacity of these rural households to stay afloat. Recent FAO studies have noted that there has been an increasing concentration of land – ownership in a wide cross-section of countries.

 In Cambodia, for example, mirroring global patterns, 10-15% of the country’s farmers have become landless since 1989. SAP- inspired government policies have withdrawn subsidies from farm inputs that contribute towards domestic food production and instead switched them to those products that are being grown for export such as tea, cocoa, coffee and cotton. John Madeley writes “Women, who produce 60-70% of food in most African countries, have been affected disproportionately by the elimination of subsidies, the drying up of credit and the surge of food imports as a result of trade liberalisation”. In order to stay on the land many males are forced to migrate to the towns and cities or to the plantations to seek seasonal employment. This, of course, produces further hardships for women whose workload is often doubled and has a negative effect on the education of their children who are often forced to leave their schooling for long periods to help out at home.
Austerity measures such as cuts in health and education expenditure further necessitate dependency or incorporation into a cash-based economy. The introduction of user fees  for medical services and the increasing privitization of secondary and primary schooling generates more pressure for self-sufficient, subsistence based households to switch to cash-cropping. Those that cannot afford decent medical care simply don’t attend and in fact the 2005 UNDP report shows that for most African countries the maternal mortality ratio has steadily disapproved since 1990. Increasingly tight domestic budgets may also mean that some children will have to be withdrawn from school early and the preference here is usually towards the girl-child.

One of the consequences of the theory of comparative advantage is the loss of economic diversification. All too often countries in the south are streamlined towards the production of a handful of basic commodities. Stock market fluctuations can overnight halve the value of primary commodities as was the case for instance in the mid-80’s when the international price crashed for major exports such as coffee and cotton. The neoliberal response is a currency devaluation to make exports more attractive to international buyers.

But what this creates over time is a huge gulf in purchasing power parity between countries of the north and those of the south. It also exacerbates the brain drain’, encouraging those with a university education to seek employment in the North and to sustain their hard-pressed families through remittances thereby depriving the south of the very talents that it so obviously requires in the years ahead. Many women, anxious to keep their children in school are faced with little option but to secure working visas for foreign posts in childcare or nursing, straining the family unit and further eroding the social fabric.

It is these varied elements of SAP, still expounded today, that, when stripped of their beguiling veneer are seen to achieve their true ends; providing an army of cheap labour and relaxing barriers for the extraction of raw resources. At this nether end of the flows of late capitalism it is the impoverished themselves who have become the anti-miraculate, the unspoken and the disenfranchised, frozen timelessly in our images of dispossession.

Is Foreign Aid the Solution to Global Poverty?

Foreign aid is one of many solutions to the multi-faceted problem of global poverty and would of course make a more telling difference than present if it were properly administered, divorced from political praxis (arms transfers to client states), specifically targeted (white elephant projects), untied from ideologically determined conditionalities (the push for privitisation in the water sector) and, moreover, actually in accordance with internationally agreed commitments (the famously defunct .7% of GNP).

There are also powerful arguments to be made from those who suggest that the focus on aid detracts from other initiatives. We may look no further than the support for the removal of agricultural supports for producers in the West as they drastically lower the international purchasing price for sellers in the global south. Likewise, there are those who maintain that the “dumping” of these often subsidised goods on developing markets drastically undermines the ability of domestic producers to maintain their livelihoods. Also, shouldn’t consumers in the rich world be made more aware of the existence of the fair trade label and how that delivers real and lasting benefits to the communities involved.

In international trade policy, attention has been paid by campaigners in achieving preferential trade tariffs and quotas for exporters in the developing world. Some have argued that the World Bank and IMF should reorientate its loan strategy and instead focus on encouraging the development of tertiary industries that can exploit these countries own natural resources. For example, why hasn’t West Africa which produces three quarters of the world’s cocoa beans not established its own Hershey’s or Cadbury’s?

Or why hasn’t there been sufficient capital raised to develop domestic refining capacity for nations dependent on crude oil export revenues. In all too many cases they are simply importing the finished version of what they have previously exported. Others again argue that the World Bank has become irrelevant in dealing with global poverty and should actually be abolished. Also, shouldn’t workers in Export Processing Zones producing textiles for foreign markets be entitled to a minimum wage under international law since they are producing for a global market? And what about the crippling debt still being paid by so many developing countries? Is it right that Kenya pays back $600 million annually to international creditors while it only receives $100 million in bilateral aid disbursements.

Foreign aid is a vital component of a multi-pronged attack on what still remains a scandalous state of affairs and we should not be blinded by superfluous arguments which pit the merits of “Aid” against those of “Trade”, “Debt” and other socially progressive initiatives. With respect to the above mentioned internationally agreed commitments on aid it may be said that the benchmark for official development assistance (ODA) was set almost forty years ago when the UN General Assembly voted for a commitment of .7 per cent of GNP from the developed countries. This was reiterated at the Rio Earth Summit in 1992 with the adoption of Agenda 21 where developed countries agreed to; “augment their aid programmes in order to reach that target as soon as possible”.

Ten years later an international conference on “financing for development” sat in Mexico and produced the Monterrey Consensus wherein signatories agreed to “urge all developed countries that have not done so to make concrete efforts toward the goal of .7 percent of gross domestic product as official development assistance”. In that year, 2002, ODA was around $53 billion or just .2 percent of rich-world GDP. If, therefore, rich countries had met the target, aid that year would have reached $175 billion or .7 percent of the $25 trillion rich-world GDP. It as well to bear these figures in mind because they are used as reference points by those, such as Jeffrey Sachs, who contend that poverty can be alleviated almost exclusively through the transfers of financial largesse. Leaving this aside for the moment we may say that though non-binding legally, these agreements are neither a “letter to Santa Claus” to borrow from Jean Kirkpatrick’s infamous dismissal of the UN Declaration on Human Rights nor are they mere vaguely worded aspirational documents. This is mainly because, despite all their foot dragging and rhetoric, OECD governments have at least been shoehorned into making public avowals of their commitment to adjust incrementally upwards their donations to reach .7 by 2015. This is all meant to coincide, happily enough, with the completion of the Millenium Challenge goals.

Now, the point about Sachs’ work, and he is the world’s leading academic proponent of boosting foreign aid, is that he must demonstrate almost beyond dispute the eventual effectiveness of these massive disbursements if and when they do arrive. Hence Sachs’ task in “The End of Poverty” is to produce what project managers everywhere will be familiar with, though not on such a grand scale; a full cost-benefit analysis – for ridding the world of poverty.

There is an exhaustive case study made of Sauri, a group of eight remote villages with a 5,000 strong population in Nyanza province, western Kenya. We are spared the ghantt charts and log-frame analyses but the procedure is still one of an admirable clinical efficiency and each projected “output” comes with a readily quantifiable price tag. Thus the “Big Five” development interventions for Sauri are assessed roughly as follows (1) agricultural inputs: fertilisers and improved fallows for the five hundred arable acres will cost roughly $100 per hectare per year which comes to $50,000 per year for the community. (2) in health: a proper clinic staffed by a doctor and nurse providing free malarial care and other necessities – $50,000 (3) for power, transport and communications – $25,000 (4) for water and sanitation; a combination of protected springs, bore wells and community taps – $25,000 (5) investments in education – school meals would be paid for through increased grain yields through the application of fertilisers . and so on.

This is just a snapshot to give readers an idea of the detailed planning involved. The eventual cost of all these improvements was estimated to be around $350,000 per year for a an initial few years until the village complex became self-sufficient. The progress of Sauri can be viewed from the website of the Earth Institute and is an important pilot project which is ultimately intended to dispel the doubts of sundry naysayers and foot draggers who bemoan the supposed waste of our tax dollars. In a few short years it has reduced the incidences of malaria tenfold, tripled food yields, drastically reduced chronic hunger and malnutrition and given birth to small cottage industries such as horticulture, carpentry and animal husbandry. As Sachs himself says “sooner rather than later, these investments would repay themselves not only in lives saved, children educated, and communities preserved, but also in direct commercial returns”.

In short, we can conclude by saying that “Aid” can work miracles, it is demonstrably effective in saving lives but let us not forget also that it is but one strategy among many that should be deployed to address a complex ethical imperative.

UNCTAD and the New International Economic Order

The early successes of the G-77, a lobbying bloc of developing countries within the UN, and the Non-Aligned Movement (NAM), a group of independent nations attempting to retain sovereignty amidst cold war intrigues, culminated in the formation of the United Nations Conference on Trade and Development (UNCTAD) in 1964 under the helm of Raul Prebisch, its first Secretary-General. Prebisch was an Argentine economist who wrote extensively in the 50’s on the worsening terms of trade between the industrialised countries of the North and the non-industrialised countries of the South. Basically, his research concluded that the South required more and more of its own raw materials and resources to purchase ever fewer manufactured goods from the North. This structuralist critique in fact soon became the dominant viewpoint within the UN, effecting policy decisions in ECOSOC, the UNDP and elsewhere.

With his appointment the ‘Third World’ countries saw UNCTAD as the principal vehicle within which a more equitable restructuring of the world economy could take place. Three related goals were immediately adopted by Prebisch; (1) the establishment of a commodity price stabilization mechanism, (2) a scheme of preferential tariffs for goods from Third World to First World markets and (3) a demand for greater foreign assistance, viewed by many not as charity but rather compensation or reparations  for decades of declining commodity purchasing power. The immediate impetus for convening the April 74′ Special Session of the UN General Assembly which passed the charter of the New International Economic Order and the Charter of the Economic Rights and Duties of States was the summit of NAM held in Algiers in September 73′. It was attended by an unprecedented 33 heads of state, including key delegates from OPEC.But these advances must be seen within the context of a strong bargaining hand.

Two years before, huge US deficit spending to finance Vietnam led to an overvalued dollar forcing Nixon to decouple and suspend dollar-gold convertibility thereby ending the 30 year Bretton Woods arrangement. The global financial system eventually convulsed with the stock market crash of January 73′, a death by a thousand cuts affair which only bottomed out in Dec 74′. But most of all the G-77 were emboldened by the success of the ex-colonies within OPEC whose embargo in late 73′, a protest over the Yom Kippur War being waged by Israel, compounded this misery. In the two years from 1972 to 1974, the US economy slowed from 7% growth to -2.% contraction, with inflation jumping from 3% in 1972 to 12% in 1974 and by 75′ in the UK it had hit 25%.

At the meeting of UNCTAD IV in Nairobi in 1976 the Integrated Programme for Commodities (IPC) was set up guaranteeing protection from excessive price fluctuation for 18 specified commodities through the creation of a common fund. 

The resolute language within the NIEO/CERDS documents certainly sprang from what must have been pragmatic assessments of what was attainable under the prevailing climes – and should not be viewed as a species of charitable concession granted by Western powers in the grip of some inexplicable egalitarian fever.

Eventually, it is true, the documents became anachronistic’ their long funeral cortege marshalled by the Brandt Commission throughout the 70’s with last rites applied by Reagan at Cancun in 81′ as he re-symmetricalised the cosmos under the Washington Consensus’, but at the time there must have been every expectation that an epoch stirring breach’ was on the horizon.

So the highpoint of UNCTAD’s success was the fourth trade conference in Nairobia in 1976 after which right-wing think tanks such as the Heritage Foundation became increasingly vocal over what they saw as a disturbing realignment of global economic power through the medium of UN mechanisms. Disputes became more rancorous and bitterly contested and in the end no new commodities were added to the IPC. UNCTAD was eventually wound down and defanged through G7 lobbying and today concerns itself only with analysis, technical advice’ etc. surviving on a relatively minuscule budget of $100 million per annum. The issues that were its bread and butter are now debated within the – far from democratic – green rooms’ of the WTO, viewed by many critics as a neoliberal Trojan horse created by corporate lobbyists and their legal teams. The principle of preferential tariffs however still holds good today and their compatibility with WTO regulations are a source of contention for instance between the EU and the African – Caribbean – Pacific (ACP) countries in the current Economic Partnership Agreements. Likewise the Monterrey Consensus has tried to get a meaningful commitment (.7% of GNP) on overseas development aid by the OECD countries.

But the bottom line with respect to the protection of indigenous labour and resources is that the spirit of this compact as signalled by the 1962 GA Resolution on the Permanent Sovereignty of Natural Resources has not been met. Though these principles then became customary international law and have subsequently been imposed on developed states through arbitration awards it is sadly the case that without the support and funding of UNCTAD the power of the IPC and other like initiatives has withered substantially over the years along with the living standards of millions of primary commodity producers across the developing world. Nowadays the call for reparations and the acknowledgement of the injustice of declining terms of trade has been replaced by the promotion of fairtrade; conceived as a species of charity.

Here is a link for those interested in how the IPC is doing today;

Collapse of the WTO’s Doha Round of Trade Talks

The World Trade Organisation was set up as a replacement to the General Agreement on Trades and Tariffs in 1994 during the latter’s Uruguay round of trade talks. It was conceived as both a permanent forum for trade negotiations and as an arena within which the mediation of multilateral dispute resolutions could take place. Lori Wallach, trade lawyer for Public Citizen Watch, in her ground-breaking book “Whose Trade Organisation” is less charitable, describing it as a “neoliberal trojan horse” designed ostensibly to push through Friedmanite policies of unrestricted “free trade” but which in reality operates as a corporate-controlled vehicle for further prising open weakened economies – a “slow motion global coup de’tat“.

The attempt to launch a new trade round in Seattle in December 1999 concluded in general disarray, with rich and poor countries stalemated amidst much acrimony and scenes of often violent protest by what the media simplistically dubbed as “anti-globalisation” supporters. The breakdown in fact occurred over the hubristic top-down management of the globalisation process with key issues being the developed countries protectionist barriers to agricultural imports from the developing world, the inflated subsidies paid to rich-world farmers, particularly in the US, EU and Japan, the call by developing countries for greater protection against the “dumping” of heavily subsidised agricultural produce and the refusal of the poor countries to accept an expansion of the WTO’s remit to include certain non-tariff related trade issues; the so-called “Singapore Issues”.

In an increasingly interconnected world with rising trade volumes Western advocates of neoliberal free trade have consistently pointed to the need for a global set of trade rules and the dismantling of trade barriers, yet too often they fail to apply these standards on their own trade distorting protectionist activities. Rich countries of the industrialised North, whose politicians appear to be hopelessly aligned with farming lobbies spend over $300 billion annually supporting their domestic agricultural markets – a figure equal to the GNP of sub-Saharan Africa and six times the amount given in bilateral aid.

Before Doha even began the EU wished to include three new areas for discussion; investment and competition policy and new rules governing trade and the environment even though many developing countries don’t even have competition authorities. However, of these new issues, the environment-related provisions proved the most difficult point of contention with the EU looking for assurances that the “precautionary principle” would be written into WTO law thereby protecting their citizens from the potential dangers of uncertain science as with GM foods. Developing countries on the other hand saw the EU’s environmental concerns as a back door to further protectionism; envisaging in a low-tariff environment the blocking of their exports over “green” issues through the insistence of eco-labelling and so forth.

The reluctance to embrace this expanded agenda at the expense of a focus on developing world concerns was seen in the months leading up to the Doha Ministerial by the October 23rd 2001 statement by the G-77 and China warning that the rich countries must put helping the poor at the centre of discussions. Mike Moore, Director-General of the WTO, reiterated these sentiments the following week endorsing the call for a development-focused round of talks.

There was also some outstanding issues left over from the Uruguay round. The agreement on Trade Related Intellectual Property Rights (TRIPS) needed to be revised in light of the AIDS crisis – South Africa, Brazil and India wanted a blanket exemption so they could supply their populations with affordable generic drugs whilst patent-holding lobbyists sought guarantees against their re-export into Western markets. In addition there were also over a 100 agreements identified by developing countries which had as yet to be effectively implemented. The most important of these “implementation issues” from the point of view of the global South related to the North’s obligations to open their markets more fully for developing country exports.

For example, many African, Asian and Latin American countries still faced restrictions in areas where, in the absence off trade-distorting domestic subsidies provided by the EU, US and Japan they would otherwise have a competitive advantage due to their low-cost environment. In addition to this subsidy regime they had asked that provisions governing the practice of “tariff escalation” be revised as promised to allow for greater access of Southern products into industrial nations. Tariff escalation simply entails the successive raising of import levies indexed on the amount of processing underwent by basic commodities. Some decried the practice from the point of view that it encouraged developing countries to produce only those goods which would receive a lower tariff;and thus discouraged the development of local industries in the global South that focused on providing highly processed end-products. One need only look at the number of Fortune 500 companies in the agri-business sector that source their raw materials cheaply from producers in the South to realise the kind of lobbying power opposed to any changes which would realign the “natural” competitive advantages here.

Related to this, was the call by the poorest African states, prior to Doha, to be exempted from the Trade-Related Investment Measures (TRIMs), set for implementation by 2003. Under these measures, they were obliged to remove from their statute books legislation protecting local businesses and industry – the very agents that would be poised to take advantage of an environment more conducive to the export of highly processed goods – from open competition with those foreign companies who would avail of a more liberal FDI regime. Prior to the commencement of the Doha round the US continued to state that it supported the “full and faithful implementation” of the WTO agreements, meaning that developing countries must meet the obligations they took on in Marrakech (where the Uruguay round was completed in 1995), and within the agreed-upon time frame.

Yet, despite all these reservations and unfinished business left over from the Uruguay round on November 14th 2001 in Doha, Qatar, the WTO’s 142 members agreed, 18 hours after their talks deadline, that they were ready to begin a new round of trade talks. African countries were eventually won over by a declaration that the TRIPS agreement should not prevent them dealing with the AIDS crisis; i.e. they could produce generics and exceptions to patent controls could now be made on public health grounds. Other poorer countries were given more time to work on the “implementation” issues and promised help with “capacity-building”.

India almost pulled out of negotiations citing their wariness of embracing the EU’s insistence on including the Singapore Issues (investment and competition policy, trade and the environment) on the talks agenda along with the US reluctance to liberalize textiles and soften their anti-dumping measures, particularly with regard to steel which is protected by powerful lobby groups in Washington. Activists from the South perhaps understood something of the bind Robert Zoellick, the US Trade Representative was in, in this respect, given that Congress had yet to approve Fast-Track negotiating authority for the Bush Administration. Later called Trade Promotion Authority this had been pulled by Congress in 1994 and if approved in 2002 would grant the Bush Administration the ability to present a negotiated trade agreement as a “yes” or “no” vote to Congress. Without TPA it was considered doubtful whether a Doha Trade Agreement would survive a process of congressional nit-picking given the powerful political connections of the cotton and steel lobbyists.

The EU for their part were forced to accept a stronger commitment to phase out their export subsidies and to make cuts in their domestic supports, despite fierce opposition from the French. But as one African said at Doha, issues that “may lose elections in France are life and death in Tanzania.”

Commitments from the North were also made to reduce their peak tariffs on heavily processed or industrial goods such as textiles. This was a key concession as Lesser Developed Countries (LDC’s) were hitherto obliged to specialise in the export of primary commodities because of the lower import tariffs. This had the effect of help driving the overall price for commodities down as they were competing against other LDCs who were likewise taking advantage of the lower tariff band. It also addressed one of the main grievances that developing countries felt were largely due to the Uruguay round – in the nine years from the birth of the WTO in 1994 to 2003 nonpetroleum primary commodity prices plunged to historic lows falling on average by more than a quarter.

This was disastrous in terms of generating foreign currency since 70% of export revenues for developing countries comes from agriculture. According to the September 2002 Journal of International Trade Statistics in the period from 1995-2001 cereal prices were down 31%; coffee was down 65%, cocoa 24%, food commodity prices were down 24%, timber was down 18%, cotton 51%, wool 26% and rubber prices were down 62%. Likewise, in UNCTAD’s 2002 Trade and Development Report it was noted that extreme dollar-a-day poverty rose for people in these primary-commodity exporting countries where the percentage of people earning less than a dollar a day grew from 63% of the population in 1981-83 to 69% in the 1997-99 period.

However, the success of the Doha talks was limited to the adoption of a framework for discussion and the setting of a timeline to accomplish an agreement. Nothing as yet had been decided. As the Economist put it;

“The Doha agenda is based on a gamble: that poor countries, who felt they were given a raw deal by the previous Uruguay round of trade negotiations that ended in 1994, will now feel that rich countries are prepared to open their markets. If poor countries are not convinced of this, the Doha round will fail.”

So, given that the Doha round was now accepted as being a pro-poor “development round” with liberalization of agriculture as its central plank the first nail in its coffin was surely provided by the 2002 US Farm Bill. This election year extravaganza passed by the House and Senate in May 2002 was a remarkable boon for farmers comprising an additional 80% boost in agricultural spending for market losses amounting, roughly, to a figure of $82 bn over ten years. The bill, as the Economist remarked “extended or re-introduced subsidies for a host of farm products”. For America’s biggest crops; soybeans, wheat and corn it invented new payments related to price and production and thus were highly trade distorting; exactly the opposite of what Doha was supposed to be about. Moreover, three quarters of the cash would go to the richest 10% of farmers making US subsidies per farm three to four times that of European levels. In the Uruguay round countries had agreed to cut and set ceilings for their trade-distorting subsidies. At this time, America’s had been $19.1 bn. The 1996 Freedom to Farm Act had aimed to phase out subsidies for most agricultural products but as prices fell in the late 90’s (see above) farmers cried foul and Congress capitulated with emergency payments pushing up total support which threatened US commitments under Uruguay. As the Economist put it at the time;

“The political clout of farm states in an election year led to this gross subsidy-fest, with lawmakers falling over themselves to dole out cash to farmers The signal to the rest of the world is unambiguous. American officials in Geneva (WTO H.Q.) may be talking about freer trade in agriculture, but Washington politicians are sending American farmers exactly the opposite message.”

And all it seems to win over tight seats in the November Senate elections in states with powerful farming lobbies such as Iowa, Missouri and South Dakota. Clearly the Farm Bill sent all the wrong messages to other OECD WTO signatories who had been hard-pressed under the Doha framework of talks to relinquish their support to farmers. Europe, who were loathe to make any commitments on CAP reform could now point to the example of the US’s most recent protectionist surge and, in fact, the following October, the French president, Jacques Chirac, made a deal with the German chancellor, Gerhard Schroeder, to keep CAP spending broadly unchanged until 2013. After the Farm Bill, US support to farmers amounted to 25% of the value of agricultural produce. This, however, still lagged behind the coddled European farmers who still accounted for half the EU’s budget of $200 bn and who receive 35% of the value of agricultural produce in supports and Japan who give their farmers an outrageous 60% of its value in 2002.

In August, Congress voted 215-212 to grant Bush Fast-Track negotiating power but this authority now appeared devoted to the pursuit of bilateral trade agreements such as CAFTA, NAFTA and the FTAA rather than the multilateral “development round” of Doha. The slow motion coup detat was evidently giving itself a bilateral makeover pressing for regional negotiations in an attempt to dilute LDC bargaining power. Meanwhile, poor countries became increasingly skeptical before the Cancun ministerial. Apart from the US, EU and Japan’s seeming unwillingness to do anything to liberalize their agricultural sectors they were actively reneging on the solemn promises delivered in Doha which got the second round of talks going in the first place. The tariff reductions to allow easier access to their imports never materialized along with the promises of cheap access to medicines for TB, malaria and AIDS; America refused to endorse a formula for transfer agreed upon by all the other parties.

On August 30th , less than a month before the Cancun ministerial, a deal was cut which allowed poor countries to import generics ‘in case of emergencies’. The tepidness of this solution on such an emotive issue was lost on no-one. By April 03 James Wolfenssohn, the World Bank president was prompted to describe the talks over subsidy cuts as “a dialogue of the deaf”. For many, a litmus test of the supposed pro-poor agenda of Doha was the fate of the West African cotton exporter group – Burkina Faso, Mali, Chad and Benin. America gives 36% ( of its 25,000 cotton farmers $3bn a year in trade-distorting subsidies that produce $4bn worth of cotton that depress world prices and wreaks havoc on the livelihoods of traditional exporters. That the draft text produced half-way through Cancun could make only vague pledges “to review the textiles sector” and then suggested that perhaps the African countries may be “encouraged to diversify out of cotton”, told participants in other discussion groups all they needed to know – nothing had changed since the Uruguay manipulations; US and EU politicians were still shamelessly in hock to their pampered robber baron farmers.

The Singapore Issues were next on the agenda. The South refused to budge still reeling over the extent of the betrayal on cotton subsidies. Two days later 90 countries signed a letter saying they were not prepared to move into talks in these areas. Pascal Lamy, the EU’s chief negotiator whittled them down to three then two and finally just before the talks imploded insisted they should at least discuss “trade facilitation”. In the end the outraged African countries refused to discuss any of the four Singapore issues and South Korea said it could only accept negotiations on all four. At this point, Luis Ernesto Derbez, Mexico’s foreign minister and chairman of the Cancun meeting canceled the conference under the premises of an impasse of interests.

Clearly, the developed countries had either completely misread the South’s determination to end the scandal of subsidies or they had no intention of ever coming to an agreement; being happy with the spoils they had already received after Uruguay. Bilateral trade agreements now appear to be the order of the day and why not as from the rich country perspective this dilutes their counterparty’s bargaining power and makes it impossible for them to apply the leverage required to phase out the scandalous system of subsidies.