Protectionists without borders edit

Jan. 16, 2006

Representatives from 150 member countries of the World Trade Organization met in mid-December in Hong Kong, aiming to expand trade flows and improve trade rules. The city's enormous convention center welcomed thousands of delegates representing governments, the private sector, NGOs, journalists, and multilateral organizations. Outside the huge facility, tens of thousands of anti-globalization activists once again protested, against neo-liberalism and trade liberalization. An unnecessary protest, since the gathering proved there is no great conceptual difference between the views of those inside and outside the great WTO bi-annual media theater.

-->In a curious twist, the «globophobic» protests happened at the precise location considered to be the epicenter of the region that reaped the biggest benefits from the expansion of global trade and investment in recent years. Defending «national sovereignty» for rice and other agricultural commodities was on the minds of those battling to invade the building. But if we observe from a higher vantage point, it becomes easy to conclude that the majority of the population in that region of the world would panic if that same concept were to be applied to the consumption of clothing and electronic products throughout the world.

Inside the convention center, hundreds of negotiators exhausted their energies in overnight sessions, attempting to defend half a dozen inefficient sectors from their domestic economies - all of it, of course, cloaked by the banner of «national interests». While this is a decidedly different world, the rules of the diplomatic game have unfortunately remained for the most part unaltered since the 18th Century. It comes down to striving for access in more competitive sectors and protecting the less competitive ones, no matter what the cost for the society. A replay of the old mercantilist notion that exports are good, and imports are bad.

Such is the case involving French farmers, who benefited extensively from the opening of markets elsewhere to value added foods and beverages, to export their wonderful wines, champagnes, cheeses, hams, and foie gras. At the same time, they emphatically defend food security when it comes to sugar, corn, and meat imports - curiously, products from sectors in which the French are pathetically inefficient.

Clear across the North Atlantic, we find the great nation that created the Land Grant Colleges in 1862 - an efficient, integrated system of schools of agriculture - and led the greatest technological revolution of world agriculture in the history of mankind. Its farmers, however, are increasingly dependent on highly protective government subsidies, handed out primarily to large producers through complicated price and income support programs that have a way of «changing colors» to smartly avoid the different WTO boxes that try to discipline domestic support policies. When subsidies are this huge and generous, why on earth would competition have to be expanded?

At the southern end of the planet, dozens of poor countries demand that the WTO offer them multiple flexibilities for the impossible task of copying the worst instruments of subsidization applied by developed countries. The Hong Kong meeting entrenched a series of new methods of protection for developing countries: it created a list of «special products» that will not be the target of tariff cuts at any time, and allowed for the use of «special safeguards measures» that guarantee additional protections when international price fall and/or import volume increases. The fact, however, is that half a dozen similar protection mechanisms will now accumulate, without need, over the same small group of «sensitive» or «special» commodities. There is a real risk that some countries will expand food insecurity for poorer consumers, without a real solution for small farmers. Instead of pursuing the false solution afforded by additional border protections, developing countries would do much better if they implement the only policies indeed capable of improving the welfare of rural areas: education, research, technology, extension, infrastructure, land property rights and better organized rural communities.

The same make-believe routine is visible where other themes of the Doha Round are concerned. Dozens of negotiators put up a great deal of resistance when it comes to handing over to the WTO a third of the opening they already practice in their domestic markets, or are already offering without resistance in the complex net of bilateral agreements that are exploding in the world. Industrial tariffs currently in place, which are far lower than those bounded at the WTO, are a perfect case in point.

The outright truth is that, after a global wave of unilateral openings during the 1980s and 1990s, protectionists have returned and are now in a dominant position, both inside and outside events like the one in Hong Kong. Six days of meetings produced a hermetically sealed declaration, that demands an enormous amount of expertise in order to be understood and interpreted. It is an incredibly creative text when it comes to loopholes and exceptions, that does little more than accomplish the preservation of the status quo of trade policies in all corners of the world. At the end of the meeting most trade experts celebrated with phrases like «it could have been worse!»

Meantime, in the real world, there is a growing distance between the exuberance of trade flows and the consistency of trade rules. Global commerce is exploding in a world ever more integrated by globalized finance, technology and communications, while multilateral rules are spinning their wheels and encouraging numerous governments and NGOs to ignore and even despise them, as well as the poor referee of this ungrateful match - the WTO. No game can move forward without rules clearly defined. The Doha Round would be concluded by now if those in a position to make decisions would only focus a bit more on society's global welfare, instead of worrying so much about the pressures of their most archaic domestic lobbies.