The Rigged Trade Game: The WTO in the Philippines

NY Times
July 20, 2003

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.

http://www.nytimes.com/2003/07/20/opinion/20SUN1.html?ex=1059666175&ei=1&en=76eab72bf076d0a5