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Hungry for Trade:
Statue of Liberty is Crying

by Devinder Sharma
New Delhi, India

Devinder Sharma.
Devinder Sharma. Photo by Nic Paget-Clarke.

Every time I fly to New York I make it a point to visit the Statue of Liberty. What was once a symbol of freedom no longer inspires the American nation to carry the flames of liberty across continents. Tired and depressed with untold sadness in its eyes, it speaks volumes of the way corporate America has usurped freedom and democracy -- both human and economic.

The agony on the face of Statue of Liberty is so remarkably telling.

For corporate America, freedom means ‘free’ markets, ‘free’ trade and investment. Freedom actually provides unrestricted global access to US capital to do what it likes, where it likes and whenever it likes. Freedom means dwarfing democracy, trampling with the rights of the people, and ensuring that the rich stay rich. The survival of corporate America hinges on the success of ‘free’ trade and investment.

Strange, that America, the world’s most indebted country, is able to run its economy by encouraging the dependence of major economies (and now even the smaller ones) on exports to the consumption-led and credit-led United States, makes sure that they invest their supluses in the US dollar bonds. Speculation in currencies, which increasingly and now wholly, dominates the foreign exchange markets, has become the driving force behind globalisation. ‘Free’ trade in reality has become a vehicle of economic illusion.

The decade of economic liberalisation and free trade -- some call it the 'great decade' -- has actually pushed the poorest of the poor into the dark age. “In the so-called great decade, a very significant hard core of countries ended further behind with more poor people,” says the recent annual Human Development Report of the UNDP. Fifty-four countries, almost half of them in Africa, are poorer now than in 1990, and some will not meet the development goals for 50 years. The destructive fallout from the emerging global trade paradigm are being felt all over the world, though not in the same magnitude.

"As leader of the delegation from the United Kingdom, I was convinced that the expansion of world trade had the potential to bring major benefits to developing countries and would be one of the key means by which world poverty would be tackled. But my mind has changed,” Stephen Byers, a former British trade secretary wrote in The Guardian (May 19, 2003). “I now believe that this approach is wrong and misguided." Not many of the world leaders will however have the courage and sincerity that Stephen Byers had in at least acknowledging the flaw in his thinking. Nor do political leaders want to accept the realities lest it exposes and reaffirms their visible and invisible connections with the industry.

Citing a number of examples to prove how the economists and policy makers are misguiding the people to believe in free trade mantra, Stephen Byers says: “Taiwan and South Korea are often held out as being good illustrations of the benefits of trade liberalisation. In fact, they built their international trading strength on the foundations of government subsidies and heavy investment in infrastructure and skills development while being protected from competition by overseas firms. On the other hand, there are an increasing number of countries in which full-scale trade liberalisation has been applied and then failed to deliver economic growth while allowing domestic markets to be dominated by imports. This often has devastating effects.”

Zambia and Ghana are both examples of countries in which the opening up of markets has led to sudden falls in rates of growth with sectors being unable to compete with foreign goods. Even in those countries that have experienced overall economic growth as a result of trade liberalisation, poverty has not necessarily been reduced. In Mexico during the first half of the 1990s there was economic growth, yet the number of people living below the poverty line increased by 14 million in the 10 years from the mid-1980s. This was due to the fact that the benefits of a more open market all went to the large commercial operators, with the small concerns being squeezed out, he explained.

It certainly is an unequal world, and perhaps the most debasing and demeaning of all the world’s inequalities is the manner in which the cattle in the rich countries are pampered at the cost of several hundred million farmers in the developing world. When I first compared the life of the western cow with that of the Third World farmer, I didn’t realize that this would hit the sensibilities of at least some of the economists and policy makers. It has now been worked out that the European Union provides a daily subsidy of US $ 2.7 per cow, and Japan provides three times more at US $ 8, whereas half of India’s 1000 million people live on less than $ 2 a day.

Trade liberalization has already exposed developing country farmers to ruinous competition, driving down prices, undermining rural wages and exacerbating unemployment. In the Philippines, opening up of corn market in 1997 reduced corn prices by one-third. At that time, US corn growers were receiving US $ 20,000 a year on average in subsidies, while Filipino farmers in Mindanao had average income levels of US $ 365. Between 1993-2000, cheap corn imports from US into Mexico increased eighteen times, leading to accelerated migration from rural areas to urban centres.

In Central America -- Colombia, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua -- the price of coffee beans have fallen to just 25 per cent of its level in 1960, and the region lost an estimated US $ 713 million in coffee revenues in 2001. In these countries, the international charity Oxfam says, traditionally dependent upon coffee exports, over 170,000 jobs were lost the same year with the loss in wages computed at US $ 140 million. The negative impact was also felt in sub-Saharan Africa, where Ethiopia and Uganda reported huge losses in export revenues. In 2000-01, Uganda exported roughly the same volume, but it earned the country $ 110 million, a steep drop from $ 433 million that it notched five years earlier in 1994-95. Ethiopia reported the export revenues dropping from US $ 257 million to US $ 149 million between 1999-2000. Ironically, in January 2002, the EU and USAID warned of increased poverty and food insecurity in Ethiopia not realizing that much of the fault rests with their own policies.

The list is endless. I can go on and on citing more examples, explaining how the ‘free’ trade regime is pushing out small and marginal farmers out of agriculture, and allowing the take-over of farm lands by the industry. The focus of the international trade paradigm is therefore very clear. It is all meant to force open the developing country agriculture markets to the American farm produce. In the name of efficiency and quality, it paves the way for the control of agriculture in the majority world.

Developing countries are being asked to shift from growing staple foods to more remunerative cash crops. Whereas, corporate America goes on producing more and more of wheat, corn, soyabean, cotton and rice -- crops which dominate the world.

‘Free’ trade is meant to ensure that no developing country remains self-sufficient in meeting its own food needs. ‘Free’ trade is fast pushing the world towards a food apartheid -- where staple foods are produced by countries on either side of the Atlantic and the rest of the world produces cash crops which meet the luxury requirement of the people in the rich countries. Once the production capability (for staple foods) of the developing countries is destroyed, it will make it easier for corporate America to control the global food chain.

After all, food is the biggest political weapon. No wonder, the Statue of Liberty has tears in its eyes. If only we could see.

Published in In Motion Magazine July 25, 2004

About the author: Devinder Sharma is a New Delhi-based food and trade policy analyst. Among his works are GATT to WTO: Seeds of Despair and In the Famine Trap. Responses can be emailed to:

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