Trade war looms as West faces Third World uprising

Bush and Blair talk of Iraq’s liberation, but they and their Western partners are keen to hobble the developing world with repressive trade agreements. By George Pitcher

As US marines became bogged down on the road to Baghdad earlier this week, a far less dramatic but no less important engagement by an international coalition was also stalling. The Doha round of talks by the 145-member World Trade Organisation (WTO) looks set to founder on the inability of leading Western representatives to reach any sort of agreement on agricultural tariffs and subsidy cuts.

The message that the WTO’s collapse sends to world trade is a profound one, but also one that is drowned by the noise of bombardment in Iraq. The concurrence of these events could not illustrate better the folly of the belief among hawkish Western leaders that war is a more practical solution to discord between developed and developing economies than the resolution of trade disputes.

There is almost apocalyptic significance in the name that was given to the WTO’s round of global talks some 18 months ago. Doha is the capital of Qatar, whence the US high command is today ordering its ill-conceived assault on Iraq. The WTO’s negotiating caravan has moved on, but the name will continue to echo the refrain, as the US military fuels broader Arab resentment over decades of trading hostility, “When will they ever learn?”

It is now eight years since the WTO replaced the similarly frustrated General Agreement on Tariffs and Trade (GATT). Not much has changed, other than that there are more poorer nations now at the negotiating table to witness how the wealthy West rigs the talks and vetoes progressive plans, the better to serve its own commercial interests.

It was hoped in 2001, by what now look to be starry-eyed idealists, that the WTO could make some progress by 2005 towards a global trade integration that would result in rich nations providing services, such as insurance and telecommunications, to developing economies more effectively.

But that would require an open co-operation on agricultural policy and the West simply cannot bring itself to reform its subsidy-laden ways in order to provide a sensible market for the farmed products of the Third World.

The American decision last year to follow its raising of tariffs on steel imports with new subsidies for its farming industry demonstrated its real attitude to the rest of the world. For all its recent talk of liberation of foreign peoples, there is precious little evidence that the US believes in the liberation of markets.

Then there is France. Some of us were mildly exhilarated when France stood up to the US, simultaneously demonstrating that Europe was not to be co-opted as a united state of America and torpedoing any residual plans of Tony Blair to become a president of Europe.

But France will guard its heavily subsidised agricultural systems and will torpedo the WTO too in order to do so. France must be today’s most scandalously protectionist nation on earth, beating even the US to that title and, in doing so, contributing to the kind of economic resentment that will increase the desire of under-developed nations to attack the West in whatever ways they can.

A very large part of the problem here, quite simply, is the personalities of world leaders and the divisions of power between them and those in their governments who hold responsibility for economies and markets.

So it is that, while Blair has grown frustrated – even bored – with the domestic UK agenda, Chancellor Gordon Brown is charged with cleaning up behind him. Not only is Brown meant to find an open cheque in next week’s Budget to subsidise the Iraq war, he must also endeavour to hold the line on international trade while his boss prosecutes that war.

Brown made an attempt on Monday, in a speech to the British Chambers of Commerce, to keep the WTO on the road by calling on member states to abolish tariffs, while concurrently indicating that our economic future lay in making common cause with the US. These twin aspirations will, I fear, prove unduly optimistic.

He probably knows that, but he has to say it anyway. Doubtless it also suits Blair, in competitive political terms, to have Brown’s butt in the economic sling while he exposes himself to the risks of war. These are facts of political life, but they are neither statesmanlike nor edifying.

We can but hope that there will be renewed efforts at the European Commission (EC) to enact reforms to the Common Agricultural Policy addressing the production-linked subsidies that dog the progress of world trade. This is where British political attention should be focused, rather than on whether or not to nuke Baghdad.

Again, it falls to the business community to make a case on tariff reform and to drive through some substantive initiatives at the EC and at the WTO. The stakes are high, but politicians are dancing to a more belligerent tune for the time being.

It’s patronising at the moment to talk of the cost of the war to the Iraqi people – it is unquantifiable. By comparison, the cost to the UK will be negligible, in terms of the forthcoming Budget sums and Blair’s career prospects.

But unless we get world trade right, we are looking at war with the developing world well into the century. There are economic solutions available for that prospect. And it’s time to call up some reinforcements to deliver them.

George Pitcher is a partner at communications management consultancy Luther Pendragon

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