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Those
who shout the loudest about the virtues of free trade are more often
than not the most protectionist when it comes to shielding inefficient
industries at home from international competition. Those who tend
to be extremely vocal about the benefits of free movement of capital,
goods, and services across the globe are usually also the most conservative
when it comes to the removal of restrictions on movement of labour
across nations.
Take the case of the world's most powerful
country, the US. More than three-fourths of the anti-dumping investigations
initiated by the American government are directed against the products
of developing countries while the bulk of US trade is carried on
with developed nations. The point to note is that such complaints
of undue protectionism coming from rich countries do not always
emanate from do-gooding non-government organisations or bleeding-heart
liberals. The guys who are cribbing are the same fellows who are
frequently described as dogs of neo-imperialism by their critics
on the left.
Consider some findings from a joint study conducted by the World
Bank and the International Monetary Fund that was released in September.
The study said trade barriers, mostly erected by rich nations, were
eating up a stupendous sum of $ 650 billion that could otherwise
have been used to improve the livelihood of the some of the poorest
of the poor. It pointed out that subsidies and tariffs slapped on
agricultural produce and textiles were doing the maximum harm. ''In
Canada and the US, tariff peaks are concentrated in textiles and
clothing; in the European Union and Japan, in agriculture, food
products and footwear,'' the report remarked, adding: ''The effect
of these tariffs is aggravated by the subsidisation of agriculture
in OECD countries, by the remaining quotas in the textiles and clothing
trade and by high barriers in inter-developing country trade.''
The Fund and the Bank today acknowledge that
agricultural markets are among the most distorted. This, in turn,
directly impacts three-fourths of the world's poor who live in rural
areas and are greatly dependent on agriculture. Those in India who
crib about high subsidies to rich farmers often do not realise the
extent to which agriculture is subsidised in Europe and America.
In May 2002, US President George W. Bush signed a farm bill that
would provide subsidies worth more than $51 billion to cultivators
of corn, sorghum, barley, wheat, soybean, oilseeds, cotton, and
rice. The governments of almost all European countries pump in huge
amounts of money to assist farmers, ostensibly to prevent the frequent
occurrence of mountains of butter and lakes of wine. As for barriers
on trade in textiles and clothing, the joint Fund-Bank study estimated
that restrictions by rich countries have prevented the creation
of as many as 20 million jobs in the developing world.
During a November meeting organised in New
Delhi by the National Council of Applied Economic Research, the
World Bank's Chief Economist Nicholas Stern cited an amazing story
about the tiny sub-Saharan African country, Mauritania, which happens
to be among the poorest nations in the world. It seems tribals of
this country had, with the help of European dairy specialists, developed
some cheese made out of camel milk to be sold in fancy stores in
London, Paris, and Zurich. Since camel cheese did not figure in
the tariff manual, bureaucrats decided to impose the highest possible
import duty on the product on grounds of ''hygiene'' since the camels
were being milked not by machines but by humans. The economist joked
that he had never heard of a camel-milking machine.
So, would you still believe the likes of Stern
when he argues in the same breath that developing countries like
India have much more to gain from trade liberalisation than high-income
nations and that trade plays an important part in promoting growth,
which is the ''most powerful mechanism to remove poverty''. Sounds
great in theory, doesn't it? The reality on the ground is, unfortunately,
not that simple.
The author is Director, School
of Convergence at IMI, New Delhi, and a journalist.
He can be contacted a paranjoy@yahoo.com
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