Freedom to trade

Freedom to Trade Coalition reaction to latest Draft Declaration

18-12-2005

 

Freedom to Trade Coalition reaction to latest Draft Declaration:

 

Julian Morris, Executive Director of International Policy Network, says “French landowners have successfully held the World to ransom. By blocking rapid removal of agricultural subsidies, the EU has undermined liberalisation in this important area, harming efficient agricultural exporters such as Brazil and Thailand. It has also delayed liberalisation in other key areas, including services – which would have benefited not only the wealthy countries, including France, but also many poorer countries, such as India.” 

Barun Mitra, director of the Liberty Institute in India added “the watered-down agreement to continue negotiations on the General Agreement on Trade in Services fails to push more countries towards a concrete series of timetables for reform. As the agreement stands, Indians’ internationally recognised capacity to provide accounting, banking, IT, legal and telecom services will not realise its full potential.”

 

How the Hong Kong text affects health

Here's a quick look at how the latest WTO draft agreement affects health.

Services. While the agreement doesn't seem to roll back liberalisation in services, neither does it do much to push it forward - particularly with regards to LDCs. 

I've already written about the huge benefits that LDCs could gain if they were to open up to genuine competition in services, so it's a shame the text is not more explicit. Moreover, the lack of positive movement on this issue is a depressing testament to the effectiveness of the ideological scaremongering undertaken by the NGOs.

Tariffs on drugs. I didn't see anything on this in the draft text. Admittedly, I only got to look at it for a few minutes before Julian swiped it (he's commenting live on CNN right about now)!

TRIPS and public health. This was done and dusted before the negotiators got together in Hong Kong this week, and is now effectively a dead issue.  This closure renders many of the activist campaigns that were set up to campaign against TRIPS null and void.

Is that why members of MSF's Access to Medicines campaign have been running around Hong Kong all week trying desperately, but unsuccessfully, to resurrect the issue? Hopefully we will be hearing a lot less from them in future.

I'll post more when I've given the text a closer inspection.

The poor get ditched again- but salvation is in their own hands.

The WTO talks are almost closed and many have given a verdict of failure.

It was heart-rending to hear the EU and the US at one point  recommend putting LDCs on an aid drip of two billion Euros a year for the next ten years, as well as a minimal attempt at lowering barriers for agricultural produce. This in effect was the EU “development package.”

But this lame development package, termed ”Aid for Trade,” means in plain terms replacing trade with more aid cash--thus defeating the fundamental purpose of the WTO’s belief that trade enhances development.

We know that 50 years of aid has impoverished Africans while propping up African leaders and making them unaccountable to their citizens.

African Members of Parliament here at the talks are suspicious of “Aid for Trade” both because they fear it might mean them accepting less protectionism and because they know that past aid promises were not fulfilled. This money, on previous form, could just be a re-statement of figures from the G8 deal reached in June 2005.

They are also suspicious some of their members will betray their cause- which is a halt on services liberalisation and enhancing non-agricultural market access. In a Press statement released on 14th December, the Members of Parliament said they were aware some of their members were being co-opted into the ‘Green Rooms’ in order to divide the African group.

To the African Members of Parliament, instead of reducing its levels of agricultural subsidies the EU is conditioning their ‘offer’ on “agreeing to extreme liberalisation commitments in services and NAMA”.

So African leaders are considering more protectionism through reciprocal tariffs. But World Bank figures show that African nations already slam tariffs as high as 33.6% on agricultural commodities from their neighbours.

Another World Bank study says removing all agricultural trade barriers would bring US$140 billion a year in benefits to developing countries. Doing away with only the barriers in rich countries, the Bank estimates would generate only US$30 billion of this figure. The rest would come from the removal of barriers in and between poor countries.

The United States Agency for International Development also calculates that 70 per cent of all tariffs in the world are erected by developing countries against other developing countries. The World Bank estimates that 92 per cent of the benefit to developing countries from liberalising agricultural trade would come not from reduced EU and US subsidies but from cutting their own tariffs.

So, although the leaders of poor countries will say that they were once again ditched by the wealthy, they would do well to look in their own backyards first.

Today, trade among African countries accounts for only about 10% of their total exports and imports.

One explanation for this is that most of all Africa’s economies are agrarian. Yes, but they do not stand much chance of diversifying or adding value unless they reduce taxes on imported technological equipment. Currently these are outrageously high.

A simple illustration with the importation of a used car in will help. Ghana's port authorities ask you to pay 50% of the original price of the car, VAT of 12.5%, and other indeterminate taxes that come up to almost 100% taxes on the used car--so imagine importing heavy agricultural machinery.

Much as we want to see this improved, another ill that plagues Africa is corruption. According to Nigerian President Olusegun Obasanjo, corruption alone robs the continent of US$ 149 billion annually--US$9 billion more than the total benefits if all global trade protectionism were scrapped. This figure seems unbelievably high but in August 2004 an African Union report gave a similar figure, representing 25 per cent of the continent’s gross domestic product.

So what we really need is transparent, accountable and decentralized governance in order to pursue a coherent regional trade policy. This would translate into reducing economic intervention, freeing financial markets, removing obstacles to starting businesses, establishing property rights and bringing all Africans under the rule of law. That’s the kind of trade we need and the kind of justice we need.

Hong Kong shines

I am proud of our police force.  Like any other organisation, it is staffed by people who are human, and err, on occasion.  But they by and large are one of the Hong Kong element's I proudly describe to visitors.  Now I can add their bravery and proffessionalism in the face of the experienced welfare rioters, the Korean Peasants' League.  Had I been in charge, there would have been much less restraint.  But that's one of the million reasons I don't get to be police chief.

So here's to the Hong Kong police force that stood strong in the face of an assault that the SCMP described in turns as 'brutal' and 'savage'.  Our men in green and blue make us proud.

Last day update

As we're sitting here in the press centre, dare I say twiddling our thumbs, the latest is roughly as follows:

Last night, a story first put out by the AP quoted the Indian Trade Minister as saying that there was a deal agreed upon by all parties to fully liberalise agricultural trade.  The EU quickly rebutted by saying no deal had been reached.  Now, it seems that the consensus is that the agreed target date to remove market distortions in the agricultural sector is 2013.  Agreed upon, that is, by all but one important player in global trade talks, Brazil.  Apparently they're pushing for an earlier date, which would seem to put the Mandy and the rest of the EU negotiators in a bit of a bind.

There are still about 20 or 30 people staging a peaceful protests outside where the most violent activity took place last night.  Inside, a handful of NGOs who are chanting about the importance of Korean rice.  And the perils of corporations.  No word yet on whether they manufacture their own clothes and harvest their own food.  Or whether they took their canoes from Europe or decided to swim.

Rumours are flying around the press centre and no one can be sure of what exactly is going on.  More news as it comes.

Yes, we have bananas. We just can't ship them.

Tim Harford, featured on this blog before, has an excellent op-ed in today's IHT.

While there is a moral imperative to reduce them, all the ills of the world will not be solved by reducing tariffs on agricultural goods.  There are still far too many internal barriers to trade in the world's poorest countries.

The Group of 20, composed of developing countries like Argentina, Brazil, China and India, has been pushing hardest of all for an end to rich countries' agricultural subsidies and tariffs. Paradoxically, some of the most vocal members of the group impose regulatory barriers that are just as crippling to exporters in their own countries.

Wan Chai Protests

By now everyone has heard of the protests gone bad last night in Hong Kong's Wan Chai.  Here is one personal take on the events by the National Review Media Blog writer.

Most members of the F2T coalition were affected by the protests last night.  Tales will be posted throughout the day/night.

Wackos

You don't need us to tell you about the violent protests outside the WTO venue this evening in HK -- predictably, the MSM is all over it.

However, what they might not have told you is that people from the inside, accredited NGOs from a German group called "BUND", as well as others, used the riots to try and generate publicity, i.e.  as Thomas Sowell put it: They are feeding their own egos by hindering poor Africans from feeding themselves.

Now that is bad enough, in and of itself -- but what really got me boiling was that these people wantonly obstructed police in the execution of their duties. As a result, the police were prevented from stopping the protestors from getting too close to the convention centre for safety.

I will be reporting these people both to the police and to the WTO Secretariat as the individual concerned, as well as their respective groups, should NEVER be allowed access to any WTO event again, ever.

Free trade party!

Members of the Freedom to Trade coalition got together in SoHo on Friday night for a bit of a bash to mark the close of a successful week fighting for free trade.

Andrew Work (2nd from left) of the Lion Rock Institute pulled in a favour from the Barco bar staff, and managed to get a sweet deal on the drinks. He obviously goes there too much.

Here are Lion Rockers (on the left) and staffers from International Policy Network (on the right, obviously).

Thanks again to Andrew Work for being a splendid Hong Kong host.

Free trade myths and realities # 3

Myth: Environmental regulations should take precedence over trade rules, and these should be harmonized and enforced by international agencies

Reality: If regulations are imposed on poor countries, it will slow their path of development and will prolong poverty.

Environmental groups want to make international environmental rules superior to trade rules, and they want to “link” trade rules with environmental rules. Their goal is to stop trade which they deem to be environmentally harmful. Vested interests (such as businesses) support these measures because they can also be used as trade protectionism. The purpose of trade rules is to eliminate discrimination – either blatant or inherent.

If international regimes are used to impose environmental standards on poor countries, their poverty will be prolonged. Instead of focusing on the desires of environmental groups, poor countries should pursue a strategy to eliminate poverty. This means enabling everyone – not just corrupt politicians and the elite – to create, innovate, and build wealth. Free trade and the removal of onerous regulations which prevent exchange between people are two fundamental steps in this strategy.

If specific environmental goals are deemed important enough to merit international action, then these policies should exist alongside trade agreements, without a need to make one or the other superior. The purpose of trade rules is to facilitate trade between people, and the purpose of environmental rules is to protect the environment. These are mutually supporting policies, because trade leads to wealth creation, which leads to better environmental protection.