Trade
Lawrence Seguya is a coffee farmer.
He shows us his crop of shrivelled, unpicked beans on withered bushes choked with weeds.
“I’d like to tell people the drink they’re enjoying now is the cause of all our problems,” he says. “We grow it with our sweat …
…and sell it for nothing.”
Lawrence has reason to be bitter – he abandoned his harvest because the price it would fetch was so low it was literally not worth picking.
Now he has no money to send his kids to school, or even to buy soap, or fuel to cook with.
Not everyone’s losing out – the famous-brand coffee companies are making a killing.
Something’s very wrong with world trade, and Oxfam is doing its best to put it right.
Trade – what's the big deal?
Try this scenario for size.
People in poor countries grow and make things. Other people ,in rich countries buy them, and the poor people get to work themselves out of poverty.
Sounds like a decent deal?
Then why isn’t it happening?
The answer is the unfair way the world trades.
What’s going on?
Rich countries dominate the World Trade Organisation (the WTO), which agrees the way countries should trade. And they set rules under which poor countries continually lose out.
Wealthy nations have double standards too – forcing poorer countries to keep to rules they don’t obey themselves.
The result?
Trade robs poor people of a proper living, and keeps them trapped in poverty.
How the rip-off works
Dumping
Together, rich countries spend US$1 billion a day subsidising their farmers. When these farmers produce too much, the extra produce is sold to developing countries at vastly reduced prices. This then pushes down the price of local produce, so poor farmers can’t compete.
Mozambique’s sugar industry, for instance, has been crippled in this way. Thousands of tonnes of cheap EU beet sugar are being dumped in developing countries, denying small farmers a fair chance.
World markets
Rich nations control and limit poor countries’ share of world markets – by slapping high taxes on imported goods.
As a result, many poor countries can afford only to export raw materials, which are less lucrative than finished products. For example, the rich world buys up cheap cotton and cocoa. It then turns them into expensive clothes and chocolate – and reaps all the profit.
Patents
Wealthy countries make strict rules to protect patents, often under pressure from big corporations.
Patents allow powerful drug companies, for instance, to charge high prices for their products, and to ensure no-one manufactures cheaper copies. This means vital new medicines are often priced well beyond the reach of poor people.
In Thailand, for example, a successful nationwide HIV and AIDS treatment programme is now under threat. This is because the cheap drugs it provides could soon be illegal under a new trade deal pushed for by the US.
The cost? A potentially unpayable bill for $3.2 billion for the Thai government for patented medicines – putting thousands of lives at risk.
Regional Trade Agreements
Regional Trade Agreements link individual countries or regions – and between equal partners, they can be good for both.
But between a rich economy and a poor one?
The richer, stronger economy always wins – particularly in Free Trade Agreements (FTAs), which often remove the poor country’s right to use taxes to protect its own industries and farms from cheap imports.
Peru’s 28,000 cotton farmers now face ruin because of a proposed FTA with the US.
Should it come into force, Peru's government will have to lift taxes on imports – and massively subsidised American cotton will flood their market.
Trade update
The World Trade Organisation (WTO) began talks in 2001 to make trade rules fairer, and, many hoped, to lift millions of people out of poverty.
But since then, negotiations have been suspended time and again.
Why?
Because rich countries haven’t got what they wanted. And developing countries have stood together, demanding a fairer deal.
This stalemate has led to a shift away from global talks at the WTO, to individual regional and country-to-country negotiations.
Time to make trade fair?
Oxfam’s global campaign – Make Trade Fair – demands new trade rules and justice for the developing world, now.
