Free trade full of hypocrisy

TOM LAMBIE offers a Kiwi view as the World Trade Organisation goes into session


The start of the Millennium round of the World Trade Organisation this week is an important event for New Zealand: much bigger than the Rugby World Cup or the America's Cup.

We do not overestimate our importance on the world stage. Our small size means we are neither an economic nor a security threat to anyone. But we do have a particular perspective to offer.

The key point is that we are both a developed country and an agricultural exporting country. Agriculture accounts for over half our total merchandise exports.

While we understand the rich world's temptation to subsidise farmers, we also have much in common with developing countries. We, like them, face formidable barriers and market distortions. With them, we have to compete against subsidised overproduction and subsidised exports lavished on rich countries' farmers by indulgent Governments.

When we consider the three sectors most likely to provide a stepping-stone for their future economic progress, we understand the developing countries' suspicions. The three are agriculture, textiles and clothing. And these are the three sectors for which import barriers into the rich countries are highest.

Is it any wonder that people in developing countries are cynical when confronted with this unpalatable truth about the rich world and its supposed commitment to free trade?

Of course, they receive aid - "a sort of guilt-offering" from the rich countries. This financial assistance to agriculture in developing countries amounts to around $US11 billion a year. This sounds like a lot of money. But compare that figure with the $US350 billion ($690 billion) the OECD countries give to their own farmers every year.

To put it another way, the rich countries spend $US350 billion making life difficult for farmers in the developing world, and a tiny fraction of this amount trying to help them.

Recently, at the United Nations Food and Agriculture Organisation conference in Maastricht, I heard much about the "multifunctional" character of agriculture. Not only does it involve food production - it also, for example, generates employment, keeps people living in rural areas, maintains the environment and stimulates tourism.

Yes, it is true farmers have many roles other than food production. But Governments in the developed countries must realise that they will not achieve multifunctional outcomes unless they bring prices for farm products into line with market levels.

It is the price supports given to farmers that encourage production beyond demand. Subsidised overproduction - and accompanying export subsidies - damage efficient food-producing countries and developing countries; generate more waste, which is difficult to dispose of; and place the environment under stress.

We in New Zealand have no objection to farmers in the rich, developed countries receiving subsidies for fulfilling environmental or other criteria. But what we and our colleagues in the Cairns Group of agricultural exporting nations insist on is that these so-called "multifunctional" payments do not stimulate production or distort markets.

My language is intentionally strong. New Zealand farmers are sick of the rich world's hypocrisy over trade. Would-be exporters in the developing world are sick of rich countries slamming doors in their faces when they try to export farm products to them. Like us, they are sick of the rich countries preaching free trade, and failing to practise it on the goods that matter to us.

We all know the theory of free trade. We know the reality of how free trade has greatly boosted some sectors and some economies. Why shouldn't agricultural products be treated like industrial goods and traded in relative freedom?

We know that we, together with the developing countries, are the potential customers of the rich countries' exports. They have things they want to sell, and things we want to buy.

But often we cannot afford them because we lack the money. And we don't have the money because they will not allow their consumers to buy our exports.

We know all this. And we know the leaders of the rich world know it. If these people were prepared to show real leadership and vision, they would bear the short-term costs of liberalisation (costs that could easily be avoided by redirecting spending) and open their borders to agricultural products, textiles and clothing.

But what do these so-called "leaders" do? They make timid efforts at reform and cave in at the first hint of demonstrations against them.

New Zealand, along with our Cairns Group colleagues, is committed to a freer trading system; one that is freer for all countries and for all goods and services, and one that does not handicap developing countries by discriminating against their exports.

The countries in the Cairns Group produce one-fifth of the world's agricultural exports and have a population equal to that of the US and European Union combined. We promise that if there is no movement on agriculture, then there will be no movement anywhere else.

The days of colonialism and economic imperialism are over.

* Tom Lambie is vicepresident of Federated Farmers of New Zealand and an organic dairy farmer.