Eric Naki

Eric Naki

The relevance of the World Trade Organisation has been questioned as the body continues to slide further into hopelessness while bowing to US pressure to undermine the economic needs of poor and developing nations.

Mziwakhe Hlangani, national spokesman for the National Union of Metalworkers of South Africa (Numsa), is concerned about the usefulness of the 153-member world negotiation forum.

This is after the collapse of its recent talks in Geneva, Switzerland, mainly over the contentious question of agricultural subsidy cuts and agreement on tariff reductions.

Hlangani was responding to the impasse that has dashed hopes of a deal expected to help cut agricultural subsidies, free global markets and ease international trade activities.

The Geneva situation resulted from the failure of India, China and the US to reach a compromise on measures to protect farmers from poor nations.

India had no qualms about speaking on behalf of the G33 nations, that includes China and Brazil, whose farm producers' livelihood was adversely affected by the rigid US farm produce subsidies.

Some of the richer countries like Canada are also concerned about the attitude of the US, which affects its farmers too.

The past seven years have seen public spats between rich and poor nations over specific trade issues that often pit the West against the East and the North against the South.

India and China saw the "special safeguard mechanism" designed to protect poor farmers against surges in prices of cotton and rice imports, as a way out. But their demand was greeted by America's intransigence.

The US "protectionism" has been a bone of contention since Washington started to apply the agricultural subsidies, amid a global outcry over the negative effect of this on their counterparts in poor, developing and even European Union countries.

Under the subsidy scheme, US farmers increased their domestic production and profiting, affecting foreign agriculture imports negatively. While US farmers enjoyed an unfair advantage because imports are shut off from the US market, developing countries felt the pinch on their agricultural exports, hence India and China decided to stand up and fight.

Such a fight should be joined by members of the Association of Caribbean States (ACS), or all of South America, which are the hardest hit by US protectionism.

According to Norman Girvan, the ACS general secretary, 63percent of agricultural exports of the association's member states went to the US market in 1999. Girvan said smaller economies in the region will suffer because they export to the US.

ACS figures show that the US farm bill authorises about R1,28trillion in subsidies for a 10-year period, about R539billion for 2002-2007 alone, an increase of 70percent over the previous level.

The WTO impasse once again demonstrated the continuing stand-off between the economic superpowers and the developing world.

This manifested itself at the UN Security Council recently when Russia and China used their veto power to side with Africa to prevent the US and Britain from imposing political sanctions against Zimbabwe prior to the recent signing of a memorandum of understanding in that country.

This David and Goliath clash started at Hokkaido Toyako, Japan, when South Africa, India, China, Brazil and Mexico, the so-called Group Five, took part in the G8 talks.

The presence of the G5 was an uncomfortable challenge to the global economic dominance by the eight most industrialised nations, and the US and Japan openly expressed reservations about the visitors.

The WTO is no different, as the forum has always been the playground for the US and some of its partners. It is against this backdrop that at times the forum is seen as just an old talk shop.

Hlangani sees the WTO's role as deteriorating, saying its failure to conclude trade agreements has tipped it into triviality, adding that the collapse of the talks raised questions about the continued existence of the forum.

"The forum failed time and again for the past seven years to reach agreement on tariff reductions and subsidy cuts on agricultural goods," he said.

"Numsa is concerned that our country and industries should pin its hopes on the deteriorating organisation, which the US commanded to accept its continued increase of agricultural subsidies at the expense of developing countries, while it interfered and sought to control the manufacturing industries of these countries."

Numsa believes the collapse of the talks threatens the stability of the global economy and undermines the future competitiveness of developing countries.

"The failure to improve ease of access to European Union and US markets for emerging and developing economies will result in major job losses as the unfair and imbalanced trade talks would leave industries, including auto manufacturing, no alternative but to outsource some operations and new model designs to developed economies because of the lack of conformity to tariff cuts," he said.

Hlangani echoed a global sentiment about the impasse, which even the Brussels-based European Commission described as a "massive blow to confidence in the global economy".

The other grave implication for the regional economies, says Hlangani, was that demands by the US and other developed countries had the potential to undermine industrial development objectives and attempts to regain the losses of previous talks.

Numsa is concerned about developments at the WTO because its members are organised in sectors that depend mainly on import-export trade activities.