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Trade Troubles

By Sasha Post

Two weeks ago yesterday, in Cancun, Mexico, a South Korean farmer turned protester named Lee Kyoung-Hae plunged a knife into his own heart and died shortly thereafter. Welcome to the fifth ministerial of the World Trade Organization (WTO), where Lee’s death provided a potent symbol of the deadly contradictions which plague our global economic order. Lee had come to Cancun to protest a trade regime which had subjected him and other small South Korean farmers to debilitating competition from rich-nation exports. Unable to compete, many of Lee’s fellow farmers lost their land and were left impoverished. Just another tragic case of free-market capitalism run amok? Not exactly.

According to an all-too-popular paradigm, the world today is split along an unbreachable ideological fault-line. On one side stands the proponents of globalization and free trade. On the other stands the forces of the “anti-globalization” movement, chomping at the bit to tear down international institutions like the International Monetary Fund (IMF), the World Bank, and the WTO. Needless to say such divisions do indeed exist. But it is becoming increasingly apparent that too often they misrepresent the numerous subtleties of today’s political landscape.

Last September, I joined thousands of other protesters at the World Bank and IMF demonstrations in Washington, D.C. A colorful assemblage, the marchers represented a diverse spectrum of concerns and movements. Global health activists (including myself), environmentalists, labor rights activists and the ever-photogenic flag-burning anarchists all gathered to voice their criticisms of the World Bank and the IMF. While some of the protesters demanded outright abolition of these institutions, many others called for changes of a different sort. They were concerned about the pernicious effects of particular policies or the adverse consequences of specific institutional structures.

Contrary to the rhetoric of news organizations covering the event, the prevailing message wasn’t simply “anti-globalization,” or any such ideological catch-all. “Globalization” per se was not the problem; rather it was a question of how globalization is being pursued, a question of who is benefiting and who is getting screwed. The demonstrators force us to ask whether the interests of the world’s poorest and most oppressed have been left unheeded. For example, although international trade has the potential to lift millions in the developing world out of poverty, the manner in which such trade is currently structured appears to have little to do with this noble goal.

Take the WTO ministerial in Cancun. The long anticipated trade talks were quickly abandoned when developing country representatives marched out en masse. One of their chief objections was the developed nations’ intransigence on the issue of agricultural subsidies. According to a recent Oxfam trade report, Northern governments currently shell out one billion dollars in agricultural subsidies every day. But perhaps the most interesting thing about the subsidies controversy is its failure to conform to any simple ideological mold. By making free trade advocates of the developing countries, it turns the usual caricature of the globalization debate on its head.

Why do developing nations care about rich country subsidies? Just ask the South Korean farmers. The subsidies allow northern farmers to flood world markets with huge quantities of their agricultural commodities, lowering world prices. Neo-classical economics tell us that free trade is a win-win situation—every country can claim a “comparative advantage” in at least some goods and become more prosperous by exporting them. But most developing countries have historically had their comparative advantage in agricultural goods. And all too often they are simply unable to compete against heavily subsidized farmers in rich countries.

In addition, many developing nations find their own domestic markets flooded with lower priced northern commodities. After NAFTA, for example, Mexican farming communities were devastated by U.S. agricultural exports. In a truly perverse turn of events, U.S. subsidies turned what should have been a Mexican comparative advantage in agriculture into a Mexican dependency on U.S. exports. Simply put, it’s hypocritical of the U.S. and the E.U. to force the world’s poorest countries to open their markets even as they themselves prove chronically unwilling to cut back their own subsidies.

While it was heartening to see the developing nations display such solidarity in Cancun, the breakdown of the trade talks means that northern subsidies will not disappear anytime soon. Worse, the rich nations will likely turn their energies to negotiating bilateral and regional trade agreements in order to circumvent the WTO altogether. These smaller scale trade deals would handicap the developing countries, picking apart the united front which they posed in Cancun. To many advocates of developing nations, the WTO suddenly doesn’t look quite so bad.

Such are the complexities of globalization today. And rather than turn a blind eye, we must shed our ideological blinders and acknowledge them. To do otherwise risks putting a knife through the very heart of the world’s most disadvantaged.

Sasha Post ’05 is a social studies concentrator in Adams House. His column appears on alternate Thursdays.

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