Poor Nations May Not Buy Trade Talks Third World Chafes Over Curbs Imposed by U.S., EU and Japan By William Drozdiak Washington Post Foreign Service Tuesday, May 15, 2001; Page E01 AIN EL SEBAA, Morocco--For more than 50 years, the Delassus farms and orchards scattered across the rugged landscape of this North African country have earned renown at home and abroad for the impeccable quality of their fruits, flowers and vegetables. Carnations are cut the day before delivery and packed into boxes that keep stems immersed in water as they are flown to markets in Europe and Asia. Seven types of citrus fruits are grown year-round and carefully monitored to minimize pesticides and optimize flavor. Potatoes and tomatoes are tailored through state-of-the-art agronomy to appeal to gourmet tastes. Indeed, the family-owned enterprise has evolved into something of a model for Third World agriculture. But instead of thriving in what is supposed to be a golden age for global commerce, Delassus is struggling to make ends meet. The biggest obstacle to its fortunes is posed by the various protectionist measures used by wealthy nations to suppress farm exports from poor countries. While espousing the virtues of free trade, the United States, Japan, members of the European Union and other rich countries continue to employ various means - including high tariffs, export subsidies and hygiene restrictions - to shelter their own industries, effectively preventing developing countries from gaining greater share in the markets in which they can compete most effectively. The rich do this largely because of the political clout of certain domestic industries and unions that worry about losing jobs. "Europe says it wants to boost living standards in Morocco through greater trade so our people will no longer have to emigrate across the Mediterranean to find work," said Kacem Bennani-Smires, 40, general manager of Delassus, a family business. "But when it comes to selling our products there, the Europeans make life as difficult as possible. How can anyone believe in global markets in the face of such hypocrisy?" Like other African exporters, Delassus is burdened by domestic problems such as a weak banking system, an overvalued national currency and an onerous tax structure that helps sustain a bloated government bureaucracy. But when viewed from the company's fields, it is clear why the current global trading system is deeply resented in many developing nations, which are balking at U.S. and European calls for new trade talks. The Delassus group exports 20,000 tons of tomatoes and 50,000 tons of fruit each year, mostly to Europe. But under EU rules, Morocco is limited to selling its tomatoes from October to March so that its products will not compete during the prime growing season for Spain, Italy and France. Similarly, Moroccan oranges and tangerines face strict quotas and other restrictions in the lucrative EU market. "There is no question but that we could double our sales almost overnight if we had access to free markets in Europe," Bennani-Smires said. "But we have no voice at the table. Our Spanish competitors get export subsidies and can sell their products all year long, yet we get no financial assistance and face nothing but trouble in getting our fruit into European markets. It's no wonder that the gap between rich and poor nations is getting wider." Critics of globalization have many complaints about the increasing integration of the world economy. But one of their broadest charges is that the current system has evolved to benefit the rich - including countries, companies and individuals - at the expense of the poor. The critics cite as an example the world trading system. Although global trade grew 12 percent last year - the fastest pace in more than three decades - the export share of poor countries has continued to slide, contributing to deteriorating living standards for hundreds of millions of people in Africa, Asia and Latin America. The United States, Japan and the EU continue to maintain some of their highest tariffs on sugar, milk, meat, fruits and vegetables, as well as textiles and footwear - precisely the kinds of basic products in which developing countries enjoy a comparative advantage because of low labor costs. For example, the United States slaps a 244 percent tariff on sugar imports and 174 percent on peanuts, two products grown cheaply in poor countries such as Swaziland and Sudan. Meanwhile, the EU discourages beef imports with a tariff of 213 percent, while Japan limits wheat with a 353 percent charge and Canada restricts butter with a 360 percent tax. "This kind of protectionism as practiced by the wealthiest industrialized countries is simply indefensible," said Nicholas Stern, chief economist of the World Bank. "The cost to developing countries is much greater in lost export opportunities than the amount of official aid they receive each year." The problem is compounded by "tariff escalation," in which the tariff rate increases when value is added through the processing of a product. For example, Morocco's attempts to sell packaged orange juice or Ghana's efforts to export chocolate candy instead of raw cocoa beans can encounter tariffs that run as much as 50 percent higher than those on the raw commodities. While this method may preserve Western manufacturing jobs, it prevents poor countries from taking the first steps to augment their wealth by moving into more advanced products. Food safety standards are a big source of complaints by poor countries. Thailand, for example, has sued Australia for insisting that its exports of poultry parts must be precooked at such high temperatures that the finished product is rendered virtually inedible. But the most egregious practice, say Third World advocates, concerns the use by rich countries of agricultural subsidies that provide unfair advantage to their own farmers while depressing prices and reducing markets for the products of developing countries. Last year, the 25 wealthiest nations in the Organization for Economic Cooperation and Development spent more than $360 billion on agricultural subsidies - a sum equivalent to the gross national product for all of sub-Saharan Africa. The EU alone spent close to $300 billion last year on export subsidies that reward its farmers for creating surpluses which are then dumped in many Third World markets - at prices below production cost. This practice often destroys an important pillar of the farming community in poor nations and undermines their food security because local growers can't compete. Faced with such problems, many developing nations are reluctant to help the World Trade Organization launch new multilateral trade talks this year. "Any new round must put the grievances of the developing countries at the top of the agenda," said Alec Erwin, South Africa's minister of trade and industry. The WTO's director general, Mike Moore, argues that the global trading body provides the best forum for handling these conflicts. "These injustices are real, but I believe they are best addressed in a collective way through a new trade round," Moore said in an interview. "Rich countries may think of poor countries as potential customers, but poor countries need to realize that the big guys must ensure their own growth or else we will all be in trouble." Moore said he hoped rich and poor nations alike would want to avoid a repeat of the failure of the WTO summit in Seattle in 1999, when efforts to embark on a new round of trade talks collapsed amid much acrimony. Meanwhile, United Nations Secretary General Kofi Annan opened an international conference in Brussels on Monday to improve the plight of the world's 49 least-developed nations with an appeal to rich countries to review their trade policies and expand their imports from Third World countries. "They don't want your charity, they simply want the right to sell their products in your markets at a fair price," Annan said. Conscious of brewing resentment in the Third World, the European Union decided in February to open its markets to all products except weapons from the world's 48 poorest countries. Although the EU initiative will delay duty-free access for such sensitive items as bananas, rice and sugar, the move was welcomed as a step toward improving the plight of the most indigent Third World nations by the world's biggest and most powerful commercial bloc. "For too long, we have talked about the need to give better market access to the world's poor countries, while often failing to deliver in areas where they can actually export," said Pascal Lamy, the EU's trade commissioner and architect of the "everything but arms" policy. "It does not help Chad much if we free up their exports of sophisticated computer equipment, at least not in the short run." But Nasser Benjelloun, Morocco's chief trade representative, contends that such measures by wealthy countries amount to little more than "grandstanding" in order to persuade developing nations to consent to new trade negotiations. He said the real test will come when rich countries live up to their professed faith in free trade by opening their markets to farm products from all 144 nations of the Third World, not just the most desperate cases. "This is not just about rich countries living up to their principles, but also recognizing what is in their own self-interest," Benjelloun said. "We represent the markets of the future. The best way to solve problems like poverty and immigration is not to marginalize developing nations, but to give them a substantial stake in the global trading process."
