As we give money to help the world’s poor onto their feet, the WTO is kicking them back to the ground
Ah, Christmas time, mistletoe and wine … As we begin to drink ourselves into a gleeful Yuletide coma, our minds whizz through an array of reassuring festive customs – cheese-soaked Cliff Richard lyrics, mince pies (why? why?), and giving to charity. Some 40 per cent of our charitable giving takes place in the month when the snow should fall and the turkeys should die. This week alone, millions of people will give money to help the poorest people alive – and from the barrios of Latin America to the mud-towns of sub-Saharan Africa, I’ve seen how this cash keeps people alive.
But as we give money to help the world’s poor on to their feet, this month the European Union – acting on demands from the World Trade Organisation (WTO) – is kicking millions of them back to the ground. We are in the middle of a trade negotiation that is undoing our charity and setting great swaths of Africa up to fail.
The story of how this came to pass begins 50 years ago, as the European colonial powers were being forced to leave the African colonies they had pillaged and ruined. In a parting spasm of guilt, we Europeans gave our ex-colonies a handful of special trade deals. We agreed, for example, to let Kenya sell us its green beans without charging any tariffs or taxes. Over time, these niches collectively became some of the most thriving parts of Africa’s economy, employing hundreds of millions of people. These special deals continued uncontested until the year 2000 – when the WTO demanded they be axed forever, by the deadline of 1 January 2008.
Why? The WTO was following a tightly-prescribed and blinkered ideology. Since the 1980s, it has enforced the market fundamentalist belief that all tariffs, all subsidies and all protections for poor countries are “market distortions” that need to be abolished. Never mind that every rich country protected its own industries while they were taking their baby-steps. Never mind that the electorates in poor countries democratically oppose this premature crow-barring open of their economies. The WTO – backed by the World Bank and the International Monetary Fund – demands they must go, for all but the impossibly weak.
The practical effects of forcing this ideology down the throats of poor countries has been plain for decades now. It kills. Look at Malawi’s recent experience. The country’s soil has been depleted and corroded by desperate overuse, so the government adopted a sensible policy of subsidising fertiliser. The country’s desperately poor farmers were given sacks of fertiliser at a third of the real cost, because without it their plants couldn’t grow. Then the market fundamentalists of the World Bank arrived, and announced this was a “market distortion” that had to stop if Malawi wanted to continue receiving loans and aid. So the subsidies were ended – and the crops began to fail in feeble soil, en masse, year after year. The country descended into famine. Mothers watched their children starve.
Then, two years ago, the Malawian government finally had enough. It told the World Bank and IMF and WTO to stick their conditions and their loans, and began to subsidise fertiliser once again. The result? Malawi is now the single biggest seller of corn to the World Food Programme in southern Africa, and so successful it is actually giving hundreds of thousands of tons of corn to Zimbabwe. The nightmare of famine has been replaced by an embarrassment of plenty, showing once again that mixed social democratic economies work best.
We all know about the famines caused by communism – Stalin’s starvation of Ukraine, Mao’s 30 million murdered by collectivisation, and Mengistu’s Ethiopian sequel to them both. But who knows about these, the famines of market fundamentalism?
And yet this month, the WTO has forced the EU to ram this failed ideology further into Africa. For hardline free traders, there is no difference between the poor world protecting its feeble industries and the rich world protecting its fattened lobbies. They demand there has to be parity between the two – as if they are competing as equals. So they have ruled that if the African countries are to be allowed to retain their protected access to European markets, they have to give something equally precious in return: they have to “liberalise” their economies by a whopping 80 per cent, allowing EU goods in untariffed and untaxed. Only the very poorest are exempt.
This leaves African countries with a vicious dilemma. If (say) Kenya wants to save its green beans and flower-growing industries – whose protected export to Europe employs millions – it has to now allow European industrial goods to flood into their country in return. This will crush any attempt to develop an industrial base of its own, because there is no way fledgling Kenyan companies can compete with the swish products churned out cheap by Europe. This isn’t even a Hobson’s choice, it’s Sophie’s choice – which of your children do you condemn to economic death? The farmers, or the industrial workers?
As if that was not harsh enough, the victim-countries are also being forced rapidly to abolish their tariffs on incoming European goods. For Ghana and Cape Verde, this is 20 per cent of their income – more than their entire health budget.
A few African countries are independent enough of Europe to resist. Nigeria has oil, so it can say no. South Africa has enough trade with other developed parts of the world to hold out. But most African countries have been forced – with the gun of being locked out of European markets after the 1 January deadline at their heads – to give in and sign. Tetteh Hormeku, one of Africa’s most distinguished trade campaigners, says: “The EU is a bandit in international negotiations. It is no different to the Americans. The Americans say, ‘Give me your beer, or I’ll shoot you.’ The Europeans say, ‘Give me your beer, it is for your own good.'”
The result will be more poverty and more hunger – and you will end up guiltily sending some cash to the victims in Christmases to come. But it makes no sense to give to charity this way and yet not campaign against the acts of economic mutilation by our own governments that make that charity necessary.
I’m not saying you shouldn’t give to charity, but it’s not enough. We need a global movement, building on Make Poverty History, to replace this WTO-led market fundamentalism of free trade. The alternative is fair trade: an end to subsidies and tariff walls protecting the rich, but a careful extension of them to the poor, where their governments ask for it. Now that would make for a very merry Christmas present – instead of the stinking package Europe has left under Africa’s bare and battered tree.
* The Independent