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Global Issues: Trade, Hunger and Poverty
(Last updated February 15, 2008) Trade relations between developed and developing countries are structured in favor of the developed countries: the United States and Canada, countries of Western Europe, and Japan. This is because some of the developed countries have been in charge of making the rules for a very long time--since before the 1700's. The way that the rules are made have certainly changed. At one time, Spain with colonies and control of the seas, established the rules. Later, Great Britain took control of the seas, had colonies and did the same thing. (For example, Great Britain had colonies and defined (limited) how the United States and other nations could trade with these colonies.) Now we have the World Trade Organization, quite a number of regional or specialized trade agreements, and the operation of country legal systems, which can be used to enforce business practices such as contracts and patents.
This article, concerned with trade issues in 2007, deals with the following topics:
- the World Trade Organization (WTO) (and general trade issues)
- intellectual property rights
- other trade agreements, including the Central American Free Trade Organization (CAFTA) and the United States' Generalized System of Preferences (GSP)
- realigning representation on global organizations, including the International Monetary Fund, the World Bank and the WTO, that establish and control important parts of the international economic and non-economic framework toward poor countries and (ideally) poor people.
WTO After World War II the General Agreement on Tariffs and Trade (GATT) was established to set rules for international trade. The successor to the GATT is the World Trade Organization. It was established, in Hunger Notes view, in large part so that developed countries could extend their control of international transactions into key new areas, especially including intellectual property rights (e.g. Microsoft didn't want people in developing countries copying computer code) and foreign investment (by developed countries in developing countries. While legal safeguards were presumably in place to protect these property rights in developing countries, this was viewed as not sufficient. Much better--from the point of view of firms in developed countries and their active supporters, developed country governments--to make the right of trade dependent on compliance with a broad range of controls embodied in the "new and expanded" WTO. This would mean "one stop shopping" with respect to rules enforcement. While the developed countries are ostensibly in favor of free trade--free trade is a mantra with the George Bush administration and Republican law makers for example--developed countries are not in favor of free trade when it does not suit their interests. The key example is agriculture. The United States, Japan, and European countries have giant agricultural subsides and even quota limitations--the U.S. sugar quota is a major example. How do they get away with it? Well of course they wrote the original WTO rules which provide for "differential treatment" for agriculture. The Doha round of trade negotiations is supposed to take major steps to reduce barriers to the export of developing country agricultural products. Developed country governments do not much want to do this, and so a major theme for at least the last four years has been a struggle over agricultural trade rules.
End nears for era of presidential trade authority Peter S. Goodman Washington Post June 30, 2007 (You will leave this site and be required to register [once] with the Post.)
Latest world trade talks collapse BBC News June 21, 2007 (You will leave this site.) Meetings fail to revive World Trade Organization 'Doha' agreement BBC News May 18, 2007
Illustrations of U.S. subsidies (and other legal advantages) to agriculture: World Trade Organization agrees with Brazil that U.S. cotton subsidies violate trade rules BBC News July 27, 2007 USDA outlines a plan to cut farm subsidies. Proposal would close many loopholes. Dan Morgan and Gilbert M. Gaul Washington Post February 1, 2007 (You will leave this site and be required to register [once] with the Post.) Farm block digs in on farm subsidies Dan Morgan, Sarah Cohen and Gilbert M. Gaul Gilbert M. Gaul, Sarah Cohen and Dan Morgan Washington Post December 22, 2006 Harvesting cash: the myth of the small farmer. Federal subsidies turn farms into big business Gilbert M. Gaul, Sarah Cohen and Dan Morgan Washington Post December 10, 2006 Harvesting cash: the milk lobby strikes back. Dairy industry crushed innovator who bested price-control system. Dan Morgan, Sarah Cohen and Gilbert M. Gaul Washington Post December 10, 2006
The following articles give fairly clear examples of how the current trade and legal system can lead to injustice. Trademarks, in these cases, and patents in others (in the case, for example of patenting of traditional herbal remedies or crop varieties), are used to appropriate the good name and knowledge of others. A similar phenomenon was called 'claim jumping' in the American west.
Johnson & Johnson (US company) sues American Red Cross over use of Red Cross emblem! IRIN August 24, 2007 (You will leave this site.)
Starbucks agrees to surrender copyrights on Ethiopian coffee names to Ethiopia BBC News June 21, 2007 (You will leave this site.) Starbucks and Ethiopia on the verge of coffee trademark deal Oxfam May 3, 2007 Ethiopia tries to trademark its coffees in the European Union, in the face of opposition from Starbucks Tarjei Kidd Olsen IPS News April 3, 2007 Ethiopia and Starbucks talks fail BBC News November 30, 2006 (You will leave this site.) Ethiopia tries to trademark the names of its most famous coffees/coffee regions but Starbucks resists, as it has already applied for the same names in the United States Aaron Glantz OneWorld December 2, 2006 Starbucks in Ethiopian coffee dispute. U.S. coffee chain Starbucks is denying Ethiopia earnings of $88 million a year, according to Oxfam. BBC News October 26, 2006 (You will leave this site.)
Kenyan activists fight to retain cultural designs that have been developed in East Africa but are being patented by companies in rich countries. After losing the kiondo basket trademark to Japan, the popular kikoi fabric design is currently at risk of being patented by a British company. Joyce Mulama IPS News March 30, 2007
More complicated issues are involved with intellectual property rights. The following article gives a flavor of the intellectual property debate. China slams U.S. piracy complaint BBC News April 10, 2007 (You will leave this site.) What is piracy in this case? Is it robbery of a ship on the high seas? No, it is using someone else's ideas.
When do ideas become the 'intellectual property' of a person or corporation? Almost all our knowledge is based on the knowledge of others. We rely on English and other languages to communicate. Languages are certainly a powerful tool, developed by others. The sermon on the mount certainly did a lot of good. Mathematics? Developed by others! Most good ideas that we use are developed by others and also not charged for. There is an extremely large cultural and intellectual heritage of the human race. Why then is it permitted that some may charge for their ideas and, if not paid, restrict the use of their ideas? We take it as a fact that someone, if they get a patent, are able to charge others for the use of that patent. It is a fact (of our current situation) but it is a cultural artifact, and actually was extensively debated with the founding of patent systems, which have as a key feature patent protection offered by the legal system. And enforced by the legal system. Humans will work to develop good ideas without the protection of the patent system. Newton developed the laws of gravity and motion without the need for patent protection, for example. The idea in offering patent protection, always thought of as protection for a limited term, was that patent protection would spur invention and technological change. But the central idea in the development of patent law was how to promote overall human welfare, not to just secure advantages for a few. When developed countries seek to apply patent protection for their new ideas in developing countries, the idea of patent protection must be considered in terms of its overall human usefulness. The market for drugs in developed countries may well be sufficient to lead to the development of new drugs; if so, why should very poor people in developing countries have to pay a royalty fee to use these drugs? Our automatic response is --if you get a patent--then you can charge or prohibit use of the information patented. But the deeper question is: what system of patent arrangements will best promote human welfare? This is compounded when developing country firms, backed by their governments, try to strengthen their position. For example, U.S. firms in China (or any other country), faced with piracy, have the option to pursue this through the Chinese (or any other country) legal system. Instead firms, backed by developed country governments, have successfully established intellectual property rights in international trade law. This permits them to ratchet up enforcement and sanctions enormously, using not normal country legal systems, but the international trade system, which countries must participate in, or loose the benefits from trade.
Brazil to break AIDS drug patent BBC News May 4, 2007 (You will leave this site.
Supreme Court rulings weaken patents' power--'obvious' advances not patentable Robert Barnes and Alan Sipress Washington Post May 2, 2007 (You will leave this site and be required to register [once] with the Post.)
The following articles describe the breakdown (thus far and probably permanently) of the World Trade Organization Doha round of trade talks, which were supposed to address the issue of developed country subsidies to agriculture.
Other trade agreements There are other trade agreements, often regional, such as the Central American Free Trade Agreement (CAFTA). European countries are also negotiating regional trade agreements. To Hunger Notes, the regional trade agreements seem to be a case of "divide and conquer"--get better terms by negotiating with a subset of developing countries rather than, as in the WTO, the larger group. Certainly in CAFTA, the United States got Central American countries (and the Dominican Republic) to sign off on a modest increase in their U.S. sugar quotas rather than quota abolition.
US Senate passes Peru trade pact. Oxfam says the agreement to expose Peru's small farmers to "massive dumping" of subsidized US farm goods. BBC News December 5, 2007 (You will leave this site.) See Oxfam statement
A shift in Bush's trade politics--Congressional compromise sought on deals for Latin America Neil Irwin Washington Post October 10, 2007 (You will leave this site and be required to register [once] with the Post.)
Costa Rica votes on Central American Free Trade Agreement--White House pressed for approval as heated campaign closes Manuel Roig-Franzia Washington Post October 8, 2007
CAFTA in Costa Rica would cause deepening inequality Maria Eugenia Trejos September 24, 2007
US Senate backs trade agreement with Peru VOA News September 21, 2007 (You will leave this site.)
U.S.-South Korea trade pact signed BBC News June 30, 2007
The U.S Congress and Administration agree on new trade standards with significantly greater labor and environmental protections BBC News May 4, 2007 (You will leave this site.)
The European Commission offers to scrap most of the quotas and tariffs it still imposes on exports from many African, Caribbean and Pacific nations BBC News April 5, 2007 (You will leave this site.)
United States and South Korea agree to trade deal BBC News April 2, 2007 (You will leave this site.)
Signing away the future: how trade and investment agreements between rich and poor countries undermine development Oxfam International March 20, 2007
Realigning representation on global organizations
The principal international institutions, including the International Monetary Fund (IMF), the World Bank and the World Trade Organization, allocate power within these institutions on the basis of economic and political power. This marginalizes/disenfranchises poor countries and poor people. In the IMF, for example, voting power is based on economic strength calculated many years ago. Even though economic strength (size of economies) has changed greatly in the intervening years, voting power in these international institutions has not changed to reflect these changes. Much less has it changed towards a more democratic ideal--one country, one vote (a la the U.S. Senate), or proportional voting by population. The control of these institutions greatly helps the developed countries impose their will on other countries--for example through sanctions or through the granting or withholding of loan approvals.
The forced resignation of Paul Wolfowitz as president of the World Bank has highlighted the fact that in an unwritten deal (a 'gentlemen's agreement'), the United States gets to select the president of the World Bank while the European nations get to select the managing director of the International Monetary Fund. Similar deals appear to hold in the United Nations, where the United States appears to be able to select the head of UNICEF, among others. Not democratic.
United States nominates Robert Zoellick, former U.S. trade representative, as new World Bank president. Election is assured as 'that is the way its done.' BBC News May 30, 2007 (You will leave this site.) See our commentary Announcing the candidacy of Muhammad Yunus to head the World Bank
The following articles describe and evaluate the voting reform efforts in the IMF.
Still the rich world's viceroy. If the IMF wants to reform itself, why not try democracy? George Monbriot (Op ed. You will leave this site.) Four developing countries to have International Monetary Fund voting rights increased; major voting inequities remain Paul Blustein Washington Post September 1, 2006 (You will leave this site and be required to register [once] with the Post.) Reform on the cards for the IMF Malcolm Borthwick BBC News August 11, 2006 (You will leave this site.) .