Prescribing heroin for alcohol withdrawal?

WTO-negotiations are accelerating, and Pascal Lamy calls for further liberalization to counter rising food prices. Spire's Trade Group worries Lamy’s policies will lead to the world’s hungry losing a bidding war against our cattle and cars.

ARKIV: februar 2011 

Delegations from all corners of the world are these days discussing trade regulations in Geneva. With the political unrest in the Middle East as a backdrop Pascal Lamy, Director-General of the WTO, addressed the delegations. Lamy proposed that something must be done to tackle the rising global food prices. He rightly pointed out that the price of agricultural commodities have risen to a level close to that of the crisis in 2008, with the disastrous effects this has on the world’s poorest souls.

Lamy continued to stress that “trade is part of the answer, not .. the problem”, because trade “allows food to travel from the land of the plenty [of food] to the land of the few”. He is partly right; free trade allows commodities to flow to the ones who can pay the most. When the market is global, and the differences immense, this means that some might starve while others feast.

Under WTO-regulations trade has however not been free. It has caused food to flow from the heavily subsidised to the unprotected. This is because countries such as the US and members of the European Union have subsidised agriculture going to exports, which has lead to very cheap food entering the world market. The world’s poorest countries were not allowed high enough tariff barriers, and they could not use subsidies of their own. Consequently their local food production was crushed under the foreign competition. That’s how the world’s poorest countries went from being food-exporters to being net food-importers in the 90’s. Now that the prices are on the rise, these countries are again suffering in a painful transition. Trade in itself is not the cause of this, the WTO’s unjust regulations are.

Lamy claims that further liberalisation is needed, he feels that the time has come to forbid export restrictions. Export restrictions have been used by major developing countries to keep food from flowing out when it is needed domestically. Such restrictions have proven to be a very important tool for keeping resources within a country, making sure that they benefit the local population. It is true that export restrictions might have contributed to the panic in 2008, but the underlying problem is not that food-exporting countries want to prevent starvation within their population. In our view the problem is that the world’s poorest people have become dependent on buying food from a fluctuating global market where they don’t have the purchasing power to compete. Compared to the bulging wallets of the global north that frequent the same market, they don’t stand a chance.

We would like to stress that the solution lies in food sovereignty, not market dependency. Let countries rebuild their own food production, rebuild food storage facilities and re-erect tariffs if they want to. Today’s system reserves food sovereignty for the rich, for the countries who can afford subsidies. Further liberalization will most likely dismantle the use of tariffs more than the use of subsidies, leaving the poorest countries as the losing party once again.

Lamy also stressed that export subsidies must be banished, we salute this, but this alone does not solve the problems of world trade. Export subsidies have been a major problem, and still are, but too low prices are no longer the main problem. Market dependency is.

On one point Lamy seems to agree with Spire, and that is on the fact that increased investment and aid is needed in the agricultural sector. If we only could agree on what kinds of investments are needed, we might just support Lamy. Alas, it seems that his solution involves heavily industrialization of agriculture, monoculture, and cash-crops. We say work with the earth, not against it; produce food, not cash crops. Growth has never come from the production of raw-materials. So-called cash crops are not a road to development but a way to dependency, especially when one considers the issue of landgrab. The countries need food production, and they need to establish processing within their borders, not export unprocessed products, only then will the resources really benefit the people. Norway’s oil would not have benefited Norwegians as much had we not insisted on developing technology and refineries within our borders. With Lamy’s proposed dismantling of export restrictions it will however become even harder for developing countries to keep their resources from being exported as raw materials.

We would like to applaud Lamy for his focus on climate change, bio fuels, and changed eating habits as reasons for the resent rise in food prices. However we don’t agree that solutions to these problems are increased liberalisation and more industrialized agriculture as he proposes. Let countries produce their own food, at their own prices. The world poorest souls cannot afford a bidding-war on agricultural products, especially when they’re up against us – wanting the products to fuel our cattle and cars.

Lamy’s remarks can be found here