Published on Sunday, July 20, 2003 by the New York Times
The Rigged Trade Game
Put simply, the Philippines got taken. A charter member of the World Trade Organization in 1995, the former American colony dutifully embraced globalization's free-market gospel over the last decade, opening its economy to foreign trade and investment. Despite widespread worries about their ability to compete, Filipinos bought the theory that their farmers' lack of good transportation and high technology would be balanced out by their cheap labor. The government predicted that access to world markets would create a net gain of a half-million farming jobs a year, and improve the country's trade balance.
It didn't happen. Small-scale farmers across the Philippine archipelago have discovered that their competitors in places like the United States or Europe do not simply have better seeds, fertilizers and equipment. Their products are also often protected by high tariffs, or underwritten by massive farm subsidies that make them artificially cheap. No matter how small a wage Filipino workers are willing to accept, they cannot compete with agribusinesses afloat on billions of dollars in government welfare. "Farmers in the United States get help every step of the way," says Rudivico Mamac, a very typical, and very poor, Filipino sharecropper, whose 12-year-old son is embarrassed that his family cannot afford to buy him a ballpoint pen or notebooks for school.
The same sad story repeats itself around the globe, as poor countries trying to pull themselves into the world market come up against the richest nations' insistence on stacking the deck for their own farmers. President Bush deserves credit for traveling to Africa and trying to focus attention on that continent's plight. But meanwhile, struggling African cotton farmers are forced to compete with products from affluent American agribusinesses whose rock-bottom prices are made possible by as much as $3 billion in annual subsidies. Sugar producers in Africa are stymied by the European Union's insistence on subsidizing beet sugar production as part of a wasteful farming-welfare program that gobbles up half its budget.
Instead of making any gains, the Philippines has lost hundreds of thousands of farming jobs since joining the W.T.O. Its modest agricultural trade surpluses of the early 1990's have turned into deficits. Filipinos, who like referring to their history as a Spanish and American colony as "three centuries in the convent followed by fifty years in Hollywood," increasingly view the much-promoted globalization as a new imperialism. Despair in the countryside feeds a number of potent anti-government insurgencies. Leaders who hitched their political fortunes to faith in the free market have grown bitter.
They include Fidel Ramos, who was Washington's staunch ally when he managed the Philippines' economic opening as president in the mid-1990's. Now, Mr. Ramos blames rich nations' unfair trade practices — especially their "hidden farm subsidies and other tricks" — for much of the suffering in the countryside. Given how long the world's economic powers have been trying to persuade the rest of the world to embrace a more open global economy, Mr. Ramos said in an interview, he was taken aback by their unwillingness to level the competitive playing field. "Poor countries cannot afford to be on the short end of this deal for long," he said. "People are in real need. People are dying."
Mr. Ramos's plea could have emanated from any number of countries in the developing world, home to 96 percent of the world's farmers. It is a plea that needs to be heeded, before it is too late.
The United States, Europe and Japan funnel nearly a billion dollars a day to their farmers in taxpayer subsidies. These farmers say they will not be able to stay in business if they are left at the mercy of wildly fluctuating prices and are forced to compete against people in places like the Philippines, who are happy to work in the fields for a dollar a day. So the federal government writes out checks to Iowa corn farmers to supplement their income, and at times insures them against all sorts of risks assumed by any other business. This allows American companies to then profitably dump grain on international markets for a fraction of what it cost to grow, courtesy of the taxpayer, often at a price less than the break-even point for the impoverished third-world farmers. If all else fails, wealthy nations simply throw up trade barriers to lock out foreign commodities.
The system is sold to the American taxpayer as a way of preserving the iconic family farm, which does face tough times and deserves plenty of empathy, but it in fact helps corporate agribusiness interests the most.
By rigging the global trade game against farmers in developing nations, Europe, the United States and Japan are essentially kicking aside the development ladder for some of the world's most desperate people. This is morally depraved. By our actions, we are harvesting poverty around the world.
Hypocrisy compounds the outrage. The United States and Europe have mastered the art of forcing open poor nations' economies to imported industrial goods and services. But they are slow to reciprocate when it comes to farming, where poorer nations can often manage, in a fair game, to compete. Globalization, it turns out, can be a one-way street.
The glaring credibility gap dividing the developed world's free-trade talk from its market-distorting actions on agriculture cannot be allowed to continue. While nearly one billion people struggle to live on $1 a day, European Union cows net an average of $2 apiece in government subsidies. Japan, a country that prospered like no other by virtue of its ability to gain access to foreign markets for its televisions and cars, retains astronomical rice tariffs. The developed world's $320 billion in farm subsidies last year dwarfed its $50 billion in development assistance. President Bush's pledge to increase foreign aid was followed by his signing of a farm bill providing $180 billion in support to American farmers over the next decade.
A fair shot, more than charity, is what poor nations need. According to International Monetary Fund estimates, a repeal of all rich-country trade barriers and subsidies to agriculture would improve global welfare by about $120 billion. An uptick of only 1 percent in Africa's share of world exports would amount to $70 billion a year, some five times the amount provided to the region in aid and debt relief.
The rigged game is sowing ever-greater resentment toward the United States, the principal architect of the global economic order. In the aftermath of 9/11, Americans have desperately been trying to win the hearts and minds of poor residents of the Muslim world. Somehow, we expect other nations to take our claims to stand for democracy and freedom more seriously than they must take our insincere free-trade rhetoric.
The beleaguered Philippine island of Mindanao is crawling with Communist and Islamic fundamentalist guerrillas, and links between Al Qaeda and the local insurgents have made the island a battlefield in President Bush's war on terrorism. There is talk of sending in American troops. But to farmers on Mindanao, home to more than two-thirds of the Philippines' corn production, subsidized American imports loom as large as any other threat. Since the Philippines joined the W.T.O. eight years ago, American corn growers have received an astonishing $34.5 billion in taxpayer support, according to an analysis of government data by the Washington-based Environmental Working Group. This helps explain how America is able to export — the less polite word in the patois of trade would be dump — corn at only two-thirds its cost of production.
The resentment is intense. "The common view here is that the United States, our former colonial master, is a destructive force," said Lito Lao, the chairman of the Alliance of Farmers group in the Mindanao province of Davao Oriental. Farmers' despair, he adds, fuels the Marxist New People's Army insurgency.
The global economy is supposed to change the world for people like Rudi and Nelly Mamac, who live with their seven children in a two-room shack on the edge of a massive plantation in Davao Oriental. The Mamacs are lucky if they clear the equivalent of $1 a day. Mr. Mamac, the sharecropper, was ready to imagine the better future promised by the great global trade game. He wishes he could afford a television and, when drawing a blank upon being asked about life beyond his corn-and-coconut-filled existence, he will wave vaguely, somewhat apologetically, toward the corner of their living space where they imagine the tube should stand.
But none of their dreams are happening. Arnel Mamac, 12, already skips plenty of school days, when his family cannot afford to buy rice. His parents don't want him making the two-mile trek on an empty stomach. One thing the Mamacs seem to realize, even without the benefit of a TV, is that the global economy they are forced to compete in is no level playing field. "It's very unfair that the American government takes so much care of its farmers while abusing those in the third world," Mr. Mamac says.
The United States and its wealthy allies will not eradicate poverty — or defeat terrorism, for that matter — by conspiring to deprive the world's poor farmers of even the most modest opportunities. And the threat of a devastating antiglobalization backlash set off by a widespread resentment of "northern" trade practices is enormous. Acknowledging the imminent crisis, W.T.O. negotiators labeled the current round of trade liberalization talks, begun in Doha, Qatar, in late 2001, the "development round." Any success depends on a commitment by the United States, Europe and Japan to reduce barriers to agricultural imports by 2005, and to cut subsidies. But several deadlines have already been missed. The European Union and Japan are particularly reluctant to make the painful reforms needed to make trade a meaningful two-way street, and the Bush administration has little credibility to prod them along, given its own outrageous farm subsidies. So a crucial September meeting of the W.T.O. in Cancún threatens to be a reprise of its Seattle meeting in 1999, when the last round of trade-liberalization talks stalled, and protesters outside famously threw their anti-globalization fest.
Back on Mindanao, it's a shame Rudivico Mamac cannot have his TV set to watch all those trade delegates gather in picturesque Cancún come September. After all, what they really will be discussing, notwithstanding all the mind-numbing trade jargon, is whether a global economy has room for the world's poorest farmers.
Copyright 2003 The New York Times Company