KONGOxfam, the British development advocacy group, has launched an
international Make Trade Fair campaign with a report on trade, globalization and
the fight against poverty titled "Rigged Rules and Double Standards." But
supporters of trade may well ask: "With friends like these, who needs enemies?"
The report's coverage of the unfairness
of many of the rules in international trade is mostly accurate and is a welcome
reminder of the hypocrisy which underlies so much Western free trade rhetoric.
However, Oxfam shows double standards of its own and the net effect of this
report could be to increase opposition to freer trade, especially in the rich
world which is the primary target of its campaign.
On the one hand the report points to the
losses that poorer countries have sustained as a result of developed country
protection, especially of agriculture and textiles. On the other, it casts doubt
on the benefits of free trade, as well as on those of foreign direct investment.
Its legitimate criticisms of the 1990s
Washington Consensus, the one-size-fits-all rapid trade liberalization policies
pushed by the World Bank and the International Monetary Fund, merge into tearful
accounts of how competition has damaged this or that poor group. Indeed, running
through much of it is not just an antipathy to transnational capital that seems
an echo of 1970s "South" rhetoric, but also to the freeing up of domestic
This is a shame because it will find an
echo not in the countries that have been relatively successful in decreasing
absolute poverty levels but in those most in need of excuses for failure. It
will also strengthen those who do most damage to developing countries: Western
critics of globalization.
There is a contrast between Oxfam's
complaint that most trade-generating foreign direct investment has flowed to
relatively few countries and its highlighting the negative impact of such
investment in countries such as China. Complaints about sweatshop conditions in
China sound more likely inspired by Western worker interests than those of the
escapees from rural bondage to paid employment who staff the factories of
The damage done to agricultural prices
and rural incomes throughout the world by European, U.S. and Japanese subsidies
to cereal, sugar and meat production and exports is well documented by Oxfam.
But its impact is lost as the report takes up much space complaining bitterly
about low prices for crops such as coffee which cannot be blamed on the rich. It
ignores the role that increased plant productivity - surely a good thing - has
had. Instead of over-production, it blames transnationals.
The report also emphasizes the harm done
to poorer groups within developing countries when internal agricultural trade is
liberalized, as in China and India. In doing so, it shows a concern for relative
poverty levels - which is a Western obsession - compared with the focus on
absolute levels and overall incomes favored by the majority of successful
Oxfam points to the fact that, as in
parts of India, abysmal primary educational levels, lack of roads and power can
increase income gaps and prevent people from taking advantage of trade
opportunities. True. But why not focus on tackling those issues, or the
governance problems in countries like Haiti, which is cited as having done
poorly despite rapid trade liberalization?
The report bemoans the ill-effects of
reliance on cash crops instead of focusing on the choice that they provide
between security and higher income, the risk/reward equation. It makes much of
some ill-effects on women of trade-based development but understates the
liberating role of industrial employment for women in much of Asia.
On the one hand, too, it points out the
iniquities of textile industry protectionism yet complains about the dangers to
Bangladesh should it lose out to China once the Multifiber arrangement is gone.
Oxfam's characterization of the Asian crisis as resulting from a flood of
imports caused by trade liberalization is wrong. The problem was capital flows
into countries that already had fairly open trade regimes.
There are plenty of half truths in the
document. Trade and foreign direct investment are not panaceas. Some countries
are disadvantaged by geography and resources. The IMF has abused its role in
forcing trade and capital liberalization. Countries like Korea have taken
different routes to success, including fierce protection of infant industries
and wariness of foreign investment. Foreign direct investment can create
tax-exempt enclaves with no linkages to the rest of the economy.
But Oxfam misses the central point that
trade cannot be blamed for abuses that result from decisions by national
governments, such as pollution and infringement of workers' rights.
If Oxfam was more sympathetic to the
benefits of trade it would be more effective in combating the trade abuses -
such as Europe's Common Agricultural Policy - that so damage development. Many
will treat this document more as an example of Western anti-globalization
sentiment than as a contribution to freer and fairer trade.