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Trade Justice 

By Dr. Peter Abong Ngeh*

When John Mynard Keynes, chief architect of the Breton Woods system warned that there were dangers and social injustice in allowing commodity prices to fall to levels that could not support decent living standards, he was, in fact, strongly advocating for trade justice. He called for "a system of price support" and further suggested that  "the proper ‘economic price’ should be fixed not at the lowest possible level, but at a level which could provide producers with proper nutritional and other standards in the conditions in which they live".

Keynes was not only laying the ground work for fair trade and trade justice but envisaging a system whereby trade would be beneficial to all parties concerned. Following Keynes’ pronouncement, the UNCTAD conference in New Delhi (1968), coined out a new slogan "Trade not Aid" – the idea being to strengthen trading relationships i.e., putting the emphasis on the establishment of equitable trade relations with the South, instead of seeing the North appropriate all the benefits and only returning a small part of these benefits to the South in the form of development aid. Trade has been, and remains the engine of growth.Non-governmental organizations are at the forefront – lobbying for changes in the way world trade is conducted so that poor people and the environment benefit.

Supporters of trade justice argue that appropriate intervention in markets is necessary as opposed to no or little government role in free markets.  If the free market theory is left unchecked, Africa with its very weak and fragile structures and economic set up will continue to sink into economic woes.  Opponents argue that moving towards free trade is the best way out of poverty for poor countries; free trade would provide cheap consumer goods to people in poor countries; protection of small producers is ultimately unsustainable.

World trade is today dominated by a small group of rich nations The North would hardly work in the interest of the South. Even the WTO that overseas the implementation, administration and operation of trade agreements at global level, is dominated by this small group of rich nations.  Their poorer counterparts find the speed of the WTO quite disorienting, and this leads to general disillusionment. All these, notwithstanding, efforts should be intensified by Southern countries to honestly start making strategic plans, which can help mitigate the effects of trade injustice. It is therefore necessary for the WTO as the international institution regulating world trade, to work to adequately promote and protect the interest of every member country.

Unfair Trade Practices

The fluctuation of commodity prices on the world market strengthens the case of trade justice. OXFAM, Belgium reported that between 1980 and 2005, world sugar, cotton fibre, coffee and cocoa prices fell by 25 percent, 32 percent, and 44 percent respectively. "After considering inflation, the price falls over that period were between 69 percent and 78 percent", they concluded. According to the European Union, "producers live an unpredictable existence because the prices for a wide range of commodities are very volatile and in addition follow a declining long-term trend".

That is not all; when developing countries export to developed country markets, they often face tariff barriers that can be as much as four times higher than those encountered by other developed countries. OXFAM, UK estimates that these barriers cost poor countries US $100 billion a year – twice as much as they receive in aid. 

Subsidies

Since many sub-Saharan countries depend on agriculture, e.g. tea, cocoa, cotton, coffee etc., subsidies deserve special mention.  Coffee, tea, bananas are not grown in the European Union nor in the United States. This, notwithstanding, cotton grown in the United States frustrates the efforts of African farmers to get a fair price on the world market, due to trade distorting subsidies.  Subsidies are monies that a government or an organization pays out to reduce the cost of producing goods so that their prices can be kept low.

"Owing to the approximately US $3.4 billion in subsidy cheques, U.S. farmers in 2001 harvested a record crop of 9.74 billion pounds of cotton glutting the market, and pushing prices far below the break-even price of most growers around the world.  Under the 2002 US Farm Bill, cotton farmers received about US $0.70 per pound (in comparison with a world price of around US $0.40).  Many US cotton growers received half of their income from government in 2002" (Thurow and Kilman 2002). It is estimated that the increased US cotton production due to subsidies, and the consequent lower world prices, is responsible for a reduction in revenue to West and Central African countries of about US $250 million annually.

West and central Africa will continue to be poor even if their cotton production increases.  Farmers living in some of the poorest countries will keep growing cotton for their livelihoods (for lack of an alternative crop) but will continue to suffer serious financial setbacks i.e., reduced incomes resulting from low prices on the world market.  For example, Burkinabe farmers sold their cotton per kilogramme in 2004 at US $0.33. Farmers in Mali obtained about US $0.34 for a kiligramme. These low prices were being paid at a time when their American counterparts were receiving half of their incomes from the government.

Conclusion

The public’s understanding of trade justice as one research found out is very low.  Alice Fenyoe (2005) noted that trade justice has not "entered the public lexicon" leading Nick Sireau (2005) to conclude that trade justice is a "new coinage" whose meaning even to those within the sector is far from securely understood.  Nevertheless trade justice points to the urgent need for a level playing ground – the need to eliminate subsidies, while protecting weaker markets from the overwhelming dominance of Northern actors. Southern actors should not relent in their struggle to make their voices heard.

Dr. Abong is an elected member of the Cameroon Chamber of Commerce, Industry, Mines and Crafts

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