World trade – neither free nor fair

When the G8 countries meet in Gleeagles in July they will discuss ways of reducing poverty in the ex-colonial countries (the so-called ‘third world’). Anti-poverty campaigners argue that this won’t happen until these countries are allowed to trade on equal terms with the rich countries. Ken Douglas looks at how the G8 countries protect their privileged position in the world market.

A fierce debate erupted at the EU summit in Brussels over the EU budget for 2007-2013, particularly the issue of Britain’s annual £3 billion rebate from the EU and the question of the Common Agricultural Policy (CAP).

This followed World Trade Organisation (WTO) talks in Paris (a continuation of the WTO talks in Doha, where they failed to reach agreement) on the rich countries reducing state subsidies and import tariffs.

The 30 richest countries in the world subsidise their own agricultural industries by $305 billion, compared to the $50.6 billion they pay in aid to poorer countries.

The CAP and the subsidies that the rich countries of the G8 pay to their own farmers is a key part of the debate on world poverty that is due to be discussed at the G8 meeting in Gleneagles on 6 July.

Organisations such as Oxfam argue that this system of subsidies enables the rich countries to undercut the prices of farmers in the ex-colonial countries.

Subsidising the rich 

Moreover, these subsidies overwhelmingly benefit rich landowners and big companies. In Britain, the top individual beneficiary was Sir Richard Sutton, whose estates received nearly £2.2 million over two years plus subsidies for estates in Scotland and Ireland.

The Duke of Westminster, ‘worth’ £5 billion, has received £799,000 in subsidies on his 1,200-hectare Cheshire farm in the last two years. One top farmer insisted that the subsidies weren’t too high. “This is quite boring. The subsidy is based on area. As it happens, those with the largest areas get the largest cheques”.

Helped by these subsidies, EU countries export so much sugar, cereals, dairy and livestock at prices way below production costs that prices for agricultural goods produced by millions of poor farmers in Africa and other developing countries are cut.

Six big sugar refineries, including Britain’s Tate & Lyle, received e819 million (£568 million) in export subsidies in 2003 to make the EU the world’s second largest sugar exporter. This drove down world sugar prices by up to 23%, hitting the trade of sugar-producing countries like Malawi, Ethiopia and Brazil.

In the US, 10% of the biggest, and often most profitable, producers received 72% of the US government’s agricultural subsidies ($20 billion) paid out between 1995 and 2003. 60% of farmers get nothing.

Oxfam campaigns to make trade fair, calling on governments to change the rules and remove subsidies and tariffs so that trade can become part of the solution to poverty, not the problem. However, this is like asking for capitalism not to be so capitalist.

Even if subsidies were withdrawn, the huge multi-national companies that dominate world trade in commodities such as coffee, grain and other agricultural products can drive down prices paid to producers. But in reality, countries like the US are always going to protect their own farmers and manufacturers.

Fair trade products, which undertake to support small-scale producers, work by charging a premium for the product, which is passed on to consumers in countries like Britain. These small, inefficient producers are not going to supplant the big companies and are always going to be undercut by cheaper products.

Democratic control 

The working class, the peasants and the poor across the world can only change this situation by uniting and changing the system. This would include democratic, public ownership and control of the major corporations which dominate world trade. The production of goods to meet the needs of the world population could then be planned on a national, continental and world basis.

Food, commodity production and trade could be geared to sustaining and conserving food supplies to ensure that everyone had an adequate diet - to producing goods that people need, rather than profits for shareholders.

Public services such as health, education, housing, transport, water and energy could be developed using the enormous wealth that would be created; that wouldn’t be swallowed by the arms industry or the banks or the rich. All the world’s scientists could combine to find solutions to the massive problems facing humanity, such as global warming, environmental catastrophe and the AIDS pandemic.

Only socialism can ensure this outcome. Protest against the capitalist G8 but go further – build a socialist movement that can change the world.

Come to the ISR international youth camp

2nd to 7th July

Travel to and from Edinburgh & camp including food and transport to all G8 counter-summit events

£85 unwaged/ low-paid, £105 waged

If you can’t make the whole week join ISR on the demonstration in Edinburgh on 2 July

Travel to and from 2nd of July Make Poverty History demo in Edinburgh from London

£35 unwaged/low-paid, £55 waged

For details of transport from your area to the 6 July demonstration phone 020 8558 7947 or email anticapitalism@hotmail.co.uk