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The rich countries won’t give up subsidies

The aim of the WTO is to liberalise world trade in order to boost the growth rate of the world economy. They argue that the ex-colonial countries will then benefit as they will be able to develop their own economies, boost exports and thus reduce poverty.

However, according to Oxfam the rich countries will not have to reduce their subsidies until 2016 at the earliest and that they will still make hidden subsidies. The US pays the equivalent of $6.6 billion of hidden export subsidies (200 times the amount it declares to WTO) to its farmers every year and the EU $5.2 billion (four times the amount it reports).

A reduction in subsidies and tariffs will only come at the price of these countries opening up their domestic markets and services – in other words privatisation and sale to western companies.

In reality, there is no such thing as free trade. A few financially powerful countries or blocs have a stranglehold on the world market. The dominant economies will still try to protect their own producers. The top five exporting countries (pop. 646 million) have 100 times more trade than the 49 least developed countries (pop. 648 million). The US particularly will use its dominant economic and military position in the world to resist any attempt at regulation.

Take the example of shrimp farming. The leading producers of farmed shrimps are all in south east Asia and Latin America. Shrimp farming was promoted by aid agencies, banks and governments as a way for poor countries to develop and alleviate poverty. The US has now placed duties of 112% on shrimps from China and Vietnam, 67% on Brazilian exports and various amounts on other countries, claiming that the products were being sold at “less than fair value”.

Following the scrapping of the Multi Fibre Agreement in 2004, exports of textiles from China exploded, both to the EU and the US. For example, exports of pullovers increased by over 400%. Agreement has now been reached to limit Chinese textile exports after the US imposed tariffs on them, a move incidentally opposed by US retailers but clearly supported by manufacturers!