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Global Trade Watch E-Newsletter #41 - July 2006

NB: This is an archived newsletter. Information may no longer be current, and links to other sites may not always work.


1) News from Global Trade Watch
2) Good News for (a) Change
3) Upcoming Events
4) Take Action!
5) Global Trade News



* Editorial: WTO Talks Heading Down in Flames - But What Will Replace Them?

According to the WTO’s Director General Pascal Lamy, the “Doha Development Round” of global free trade negotiations are now in “crisis”. But rather than seeing this as a bad thing, civil society groups, small farmers and workers around the world are actually celebrating the talks’ failure. Why?

Well, after the WTO’s Seattle ministerial collapsed amid complaints from developing countries that previous rounds of trade negotiations had benefited only the rich countries of the world, the WTO met in Doha in 2001, and developing countries were promised that the new round of negotiations would be a “round for free”. This would be a round where the rich countries would finally let their poor neighbours have some crumbs from the feast which the rich world had been having at the poor’s expense.

But it did not take long for the US and EU – the WTO’s two most powerful players – to go back on their promises, and to again demand huge sacrifices from the world’s poor in return for reductions in the massive subsidies which the US and EU use to undercut poor farmers.

The latest offer from the US in the WTO negotiations would actually allow an overall increase in the almost US$40 billion in subsidies it pays its farmers every year, and in return, the US is demanding tariff reductions by poor countries so US farmers and manufacturers can force their way into new markets at the expense of struggling industries in the developing world.

Summarising the US position, the President of the American Soybean Association said that "reductions in, and limitations on, domestic support for U.S. agriculture are only acceptable if the negotiations yield an important net gain for American farmers and ranchers through commitments on market access and other trade-distorting policies by our trading partners”.

To add insult to injury, the US is also using the latest WTO negotiations to demand the return of the “Peace Clause”, a controversial element of the WTO’s Agreement on Agriculture which protected countries which subsidised their farmers (ie: the US, EU & Japan) from challenge within the WTO (even if their subsidies broke WTO rules). The Peace Clause expired in 2003, and since then, a number of African and Sth American countries have challenged US subsidies within the WTO system. The return of the Peace Clause would be another big blow to the poorest farmers trying to eke out a living in the face of subsidised US produce which floods their markets.

Finally, the US and EU are using the carrot of slight reductions in their massive agricultural subsidies and increased “aid for trade” to push developing countries to open up their service sectors - water provision, healthcare, education etc. - to ownership by US and EU multinational corporations. The victory which the US and EU won on the GATS (services) agreement in Hong Kong last year (see ) means it will be much more diffucult for any country - Australia included - to limit their commitments under the GATS, if the negotiations are eventually successful.

But while ordinary people across the world celebrate the break-down of the WTO talks, the US continues to forge ahead with an alternative strategy of negotiating smaller trade agreements with dozens of individual countries and country groupings. These agreements probably constitute an even greater threat to the developing world than the WTO, since in bilateral negotiations, smaller countries can’t band together to defend themselves against the US’s army of experienced negotiators. Just as Australia was convinced by US negotiators in 2004 to accept an economically, socially and environmentally damaging trade agreement which was obviously not in our interests, so many smaller and weaker countries are getting the same treatment.

Of particular concern is a new US focus on a trade agreement with Africa. In 2000, the US Congress passed the African Growth and Opportunity Act (AGOA), which the government is now aiming to turn into a fully fledged US-African Trade Agreement.

Like in the WTO negotiations, the AGOA uses the carrot of offering to reduce US import barriers to African exports of goods and services. But like the WTO negotiations, the AGOA makes onerous demands of African countries. In order to qualify, African countries must first liberalise their economies, privatise their public assets, deregulate rules on private business practices (like environmental and labour laws) and created a U.S.-style legal and intellectual-property system.

An of course, reductions in US tariffs will have almost no impact for African countries while the US continues to subsidise its farmers by tens of billions of dollars every year, inflating prices and undercutting African producers.

We can only hope that as with the WTO negotiations, African leaders manage to see past the carrots and recognise the long-term consequences of accepting such a policy future.

* ActionAid: WTO must reform to stop rich countries’ underhand tactics

Threats, deception and manipulation are among the negotiating tactics used by rich countries in the current round of trade talks reveals a new ActionAid report, The Doha Deception Round: How the US and EU cheated developing countries at the WTO Hong Kong Ministerial.

The report warns that power politics, exclusive gatherings, diplomatic arm-twisting and 'take-it-or-leave-it' ultimatums will only intensify as talks move towards a conclusion to the Doha round of trade negotiations, leading towards an unjust trade deal that could have a devastating impact on millions of poor people.

ActionAid says poor countries should not be forced to accept a deal that would allow dumping to continue and ruin poor farmers, workers and fisher folk. Developing countries should stand firm against the manipulative tactics and reject this bad deal. If the trade talks fail, the blame will lie with the US and EU which have not honoured their promises to agree trade rules that will help fight poverty.

Read the full report here (PDF).



* A People's Trade Agreement is Signed

In May, the Presidents of Venezuela, Bolivia and Cuba signed a People's Trade Agreement (PTA) proposed by Bolivian Head of State Evo Morales. Opposing most existing free trade agreements (FTAs), the PTA considers trade and investment not as ends in themselves but rather as "potential paths to development." Most FTAs lead to exploitation of natural resources and destruction of poor countries' small and medium size industries. The PTA stands opposed to this model, and, to transfer economic benefits to the people, the PTA states that governments should regulate foreign investors and transnational companies on their territories.

Whether this agreement will deliver tangible benefits to the people of these three countries remains to be seen, but the sentiment expressed is a good start, and stands in starck contrast to the pro-corporate, anti-people language of the vast majority of modern trade agreements.

You can read more about the PTA here or read the text of the Bolivians President’s PTA proposal here (PDF).




* Wednesday August 16, 6.30pm - Trade Justice Dinner for the Australian Fair Trade and Investment Network - Feast on a delicious four-course Chinese banquet with vegetarian options, and support trade justice in Australia. MC: Julian Morrow, from the ABC’s Chaser’s War on Everything. Speaker: Sharan Burrow, President, Australian Council of Trade Unions and President of the International Confederation of Free Trade Unions. Auctions: Cartoon by Bruce Petty, painting by Rachel Szalay. Raffle prizes of fair trade products and wine. Price: $55 per person. Where: Marigold Restaurant, Level 5, 683 George St, Sydney 2000. Bookings close August 9. For more, email jemma[at]

* Please email in your upcoming events!



* Tell the Australian Government: Stop forcing open developing country markets!

The Australian government has been using the current WTO negotiations to push poor countries to open their markets to big corporations from the rich world. Tell them to stop! Send an email here.

* Don't Buy Nestle Until Nestle Buys Fair Trade!

As a leading exporter of cocoa from the Ivory Coast, Nestle has also been implicated in the ongoing abuse and torture of child cocoa labourers. But rather than embrace Fair Trade as a comprehensive and proven solution to child labour abuse, Nestle continues to hide behind its failed and floundering industry protocol and refuses to source any portion of its cocoa from the only farms that can be proven not to have employed abusive child labour - those that are Fair Trade Certified. Send a message to Nestle to demand justice for cocoa child laborers.




* The crisis of Doha (Jul 4) - The pathological definition of a crisis is a sudden change, for better or worse. In a critical case, either the patient recovers or dies. This may have been what Pascal Lamy, the director-general of the World Trade Organisation, had in mind when he told a meeting in Geneva: "We are now in a crisis." More...

* Trade talks on brink of failure: Lamy (Jul 3) - As yet another meeting of trade ministers ended in failure at the weekend after brinkmanship replaced bargaining, World Trade Organisation director-general Pascal Lamy has been given the job of trying to broker in four weeks the agreement that has eluded ministers for almost five years. More...

* The Doha talks must fail for the sake of the world's poor (Jul 3) - Forcing through very low tariffs on industry will not lead to a more even global distribution of income and wealth. More...

* Wealth of difficulties (Jun 28) - The way the rich countries are behaving at the moment, it looks as though they are approaching the WTO talks like a poker game in which they could win large sums of money if the play their cards aggressively. More...

* Anti-globalisers want WTO trade round "buried" (Jun 27) - More than 100 non-governmental organisations (NGOs) opposed to trade liberalisation on Tuesday demanded the WTO's troubled Doha round be "buried" as ministers prepare to fly to Geneva in a bid to revitalise it. The group said current negotiations "preclude any possibility of benefiting the majority of the world's population". More...

* Farm Aid Poison for World Trade Aims (Jun 23) - On the eve of what should be the decisive meeting of the five-year Doha Round negotiations to slash global trade barriers, a study has found that the OECD's 30 member countries still pay farmers direct and indirect support worth almost half their output - last year totalling $US280 billion ($A380 billion). More...

* Poorest Nations Warned Against Aid Traps (Jun 22) - A much-touted "development package" offered recently to the world's least developed countries is "rife with tricks" and could be far more limited than originally publicised because the US maintains the right to deny the promised duty-free access to some of those countries' most important exports, a new study says. More...

* Africa calls for a 'coffee Opec' (Jun 11) - African countries are demanding the right to form cartels, like the oil producers' group Opec, to push up the price of coffee, cocoa and other agricultural commodities, as part of any deal in fragile World Trade Organisation talks. More...


* China trade plan wins few friends (Jun 29) - Fewer than a quarter of Australian manufacturing companies support a free trade agreement with China, according a survey by the Australian Industry Group. More...

* Crisis to worsen under FTA: union (Jun 26) - The crisis in the automotive components sector will only increase if the Government enters a free trade agreement with China, said national secretary of the Australian Manufacturing Workers Union, Doug Cameron. More...

* Is the Pacific ready for trade talks? (Jun 21) - Pacific Trade Ministers begin annual talks in Fiji on Wednesday, amid claims New Zealand is pressuring Pacific Forum countries into starting free trade negotiations they are not ready for. More...

* Free trade fears in Snowy backflip (Jun 12) - The last-minute scrapping of the $3 billion Snowy Hydro float, attributed by the Government to the public outcry at the prospect of losing control of an "icon", may have been partly prompted by fears it would contravene Australia's free trade agreement negotiated with the US last year. More...

* FTA hurting Thai farmers (Jun 9) - A recent study led by Thammasat University academic Rangsan Thanapornpan claims that the Australia-Thailand free trade agreement has benefited only a small group of industrialists, while people in the agricultural sector have been adversely affected. More...


* Challenging conditions: A new strategy for reform at the World Bank and IMF (July 5) - Christian Aid's latest report shows that the continued use of controversial economic policy conditions, such as trade liberalisation and privatisation, by the World Bank and IMF directly contradicts the policy the UK government made last year, which states ‘we will not make our aid conditional on specific policy decisions by partner governments’. Full Report...

* World Bank and IMF Conditionality: A Development Injustice (Jun 06) - This Eurodad report critiques IMF and World Bank lending policies. The conditions that these institutions impose on already impoverished borrowers further the administrative and economic burdens of these governments. Eurodad suggests that the IMF and the World Bank reconsider the conditionality requirements for loan approval. Full report...

* Beware the big, bland wolf: The first year of Paul Wolfowitz at the World Bank (June 6) - What has most surprised World Bank watchers is how little Paul Wolfowitz has changed the institution he took over one year ago. On Africa, infrastructure, and debt relief, he has stayed the course - for better or worse - set by his predecessor James Wolfensohn. More...


* U.N. disputes U.S. position on free trade's impact on poverty (Jul 5) - In a new report the U.N. Development Program (UNDP) disputes the US position that busting down trade barriers is the surest way to reduce poverty. Instead, the U.N. agency advises poor Asian countries to do what Japan and South Korea did successfully in the 1970s and '80s: protect key industries temporarily with tariffs before exposing them to foreign competition. More...

* Canning industry in a tight jam (Jun 30) Australian manufacturers are losing the battle against imports, a range of agricultural and industrial subsidies in Europe and other areas have made it possible for Coles and Woolworths to flood their shelves with imported canned foods, replacing Australian-produced and packaged foods. More...

* US-Jordan free trade agreement descends into human trafficking (19 Jun) - Tens of thousands of foreign guest workers are stripped of their passports, trapped in involuntary servitude, sewing clothing for Wal-Mart, Gloria Vanderbilt, Target, Kohl’s, Thalia Sodi for Kmart, Victoria’s Secret, L.L.Bean and others. More...

* African Nations Wary of Closer Embrace with U.S. (Jun 8) - A chorus of U.S. officials is signaling that Washington wants to turn a controversial programme giving poor African nations partial access to U.S. markets into a full-fledged free trade agreement that would open Africa's economy to U.S. corporations. More...

* Fairtrade and Global Justice (Apr 22) - Gone are the days when fair trade goods were available only at charity shops and church bazaars. Yet with multinationals moving to cash in, and supermarkets approaching fair trade as just another niche market, can it avoid being co-opted by the market system it was set up to challenge? More...

* Further Steps toward Long-Term Oil Contracts (Apr 06) - In January 2005 the IMF agreed to cancel 30% of Iraq's debt in exchange for Iraqi compliance with IMF conditioned economic policies. Nestled in the fine print, the agreement forces Iraq to pass an oil law by the end of 2006 and allow the IMF to help draft the law. With little public oversight or discussion, Iraq's Oil Ministry has begun negotiating with multinational oil firms, and may soon sign long-term production sharing agreements, which could result in Iraq losing up to US$ 200 billion in revenue. More...

* Global Business and Human Rights (Apr 5) - Since national governments regulate human rights standards, multinational corporations often abuse human rights and labor in countries with weak legislation. While some corporations adhere to a reasonable labor standard, others may claim to do so just as a public relations stunt intended to further corporate profits. The author calls for binding international standards to create and enforce labor standards throughout the world. More...

* Social Justice and Global Trade (Mar 06) - This article by Nobel Laureate Joeseph Stiglitz weighs the benefits of trade liberalization against the costs. While the WTO cites complete liberalization as a means towards achieving economic growth, trade agreements such as NAFTA demonstrate that it can have detrimental consequences on poor countries. Economist Joseph Stiglitz calls for a reformation of the WTO as an initial way to increase worldwide welfare. More...

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