Fairtrade brings tangible and invaluable benefits to producers all over the South. However, only a small percentage of the total number of farmers, craftspeople and workers who are dependent on trade receive those benefits because the Fairtrade market, although growing, is small. Most producers operate within a system of trade which is far from fair in that they cannot make a decent living from the price they obtain for their products. Fairtrade campaigners are therefore also involved in pressing for changes in this system.
Our main aim is to address the problems which developing countries face in their trading relationships with the rest of the world, especially with the rich countries of the *G7[i]. But we also look at other issues connected to world finance and their effects on developing countries.
To do this we obviously need to take a close interest in the way the rules and regulations for both trade and finance, which are largely drawn up by the rich countries, affect poorer countries. And when we find anything which has a really serious adverse impact we decide what action, if any, we can take.
*[i] The G7, Group of Seven is a forum, created by France in 1975, for governments of seven nations of the northern hemisphere: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; Russia was a member of the then G8 but was suspended in 2014. The European Union is represented within the G8, but cannot host or chair.
A trade justice topic which demonstrates the struggle which developing countries face in the area of global trade are the Economic Partnership Agreements [EPAs] between the EU and the African, Pacific and Caribbean [ACP] countries. The need for such agreements arose from the challenge made in the World Trade Organisation [WTO] to long established agreements between the EU and the ACP which has offered a degree of protection for the exports from the ACP countries, most of which were former European colonies. The agreements require trade liberalisation – the removal of tariffs – in return for continued entry for ACP goods into EU markets. There has been much criticism of the way these agreements have been pushed through under threat of the total removal of protection and diminishing levels of aid. This approach has resulted in rushed deals, removing the opportunity for appropriate expert or public scrutiny as well as debate of the content either in ACP countries or Europe.
The deadline for agreements to be signed was October 2016. There has been some fudging of what precisely needed to be agreed by the deadline, so that it appears that the one country which is holding out is Tanzania, a member of the East African Community. The ratification process is ongoing with Kenya having ratified and Rwanda having signed. All the EAC members will discuss the signature of the EPA in the next EAC Summit to consider how to move ahead as a region.
Two products of particular importance to some ACP members have been dealt with outside the EPA negotiations: bananas and sugar. Under pressure from the WTO, the EU has withdrawn protection for these two products. The Fairtrade Foundation has lobbied for protection for farmers suffering from the impact of these changes. We have supported these campaigns.
In 2015, the Fairtrade Foundation ran a campaign highlighting that 200,000 cane farmers in low income countries would be pushed further into poverty by the EU policy changes removing restrictions on production of locally-grown beet sugar in 2017. This has already had a substantial impact for cane sugar farmers in African, Caribbean and Pacific countries. In 2015 the price of sugar in the EU, at $25 per kilo, was 30% lower than in 2006. By the beginning of 2017 the price had risen again only to fall by the summer to £32 per kilo. This volatility is particularly difficult for small farmers to manage.
Protection for bananas was withdrawn after an agreement reached in December 2009. The price of bananas fell and led to bitter banana price battles between the UK’s biggest supermarkets. The Fairtrade Foundation launched a campaign, which we participated in, to tackle the impact of this ‘banana war’ on small farmers. This campaign is ongoing.
From September 2017 the restriction on EU beet sugar quotas will be lifted and EU firms can produce as much sugar from sugar beet for human consumption as they want. At the same time the EU will lift restrictions on isoglucose, a sugar replacement made from cereals and commonly used in the US for soft drinks. This will have a serious effect on sugar cane farmers who rely on exporting cane sugar to the EU.
We have for some years been following the progress of the Doha Round of talks through the World Trade Organisation. These talks drag on without coming to any conclusion as the richer nations demand concessions from the developing countries, which in turn are refusing to yield. One reason for this is that the US in particular, but also the EU, feel threatened by the rise of China as a trading nation. Another hindrance is that changes to the rules of trade require the agreement of all WTO members.
There has been just one significant agreement and that was in 2013 on trade facilitation, which is designed to cut red tape and speeding up port clearances.
The Eleventh Ministerial Conference of the WTO (MC11) took place in December 2017 in Buenos Aires, Argentina. When planning the conference members put all their issues on the table but when it came to it divergences amongst them on the important issues were simply too wide to bridge: these issues were raised but with little time and far too little willingness to work toward a conclusion.
Ministerial Decisions were reached on just five issues but with limited scope and mainly the agreement was to keep talking! On Fisheries there was agreement to secure a deal on elimination of fisheries subsidies by the next ministerial in December 2019, and to continue work on the current text. There was agreement on e-commerce to continue with the work on ecommerce under the current work programme with a two-year extension of the moratorium on taxation of electronic transactions. There was agreement on small Economies to continue the work program.
On other major issues (Agriculture, Non Agricultural Market Access, Services, Development, Investment Facilitation and Small and Medium Enterprises) there were no outcomes nor agreed work programmes. There was no agreement even on a Ministerial Declaration.
The US opposed any mention of the Doha and argued there was no Development Round shared understanding of development. Many developed countries, especially the United States, supports a paradigm that asserts that the way to enhance development is that all countries abide by the same set of rules, on the same level and standard; and with very little or any differentiation. These countries argue that some countries see development only as exemptions from rules and that it is incorrect to see rules as impediments to development.
Most developing countries support a paradigm that it is absolutely necessary and imperative that developing countries have an opportunity to industrialise, diversify and move up the value chain and not remain stuck as producers and exporters of primary commodities. This would mean that developing countries would have access to the very same tools that the developed countries used in their journey to become developed. Developing countries need a differentiated set of obligations, a differentiated set of rules that deals directly with the problems of development.
Different views on development arises in the context of the Special & Differential (S&D) treatment agenda in the WTO to address the constraints imposed by multilateral rules. The full scope of S&D in the various WTO Agreements includes differential rules and capacity building. There was no progress at the Conference to the agreement at the previous Ministerial Conference in 2015 to hold further talks on a new “special safeguard mechanism” that developing countries would be able to use to raise tariffs temporarily in order to protect domestic producers from sudden import surges or price depressions. Nor was there – as agreed at the previous Conference- a “permanent solution” to the problems that some developing countries face under WTO farm subsidy rules when buying food at government-set prices as part of their public stockholding programmes for food security purposes.
Although the Director-General of the WTO, Roberto Azevedo, insists that this is not the case, there seems to be widespread, if unofficial, agreement that the Doha Development Round, initiated in 2001, with its promise of a multilateral deal on trade measures for development has been abandoned and replaced by interstate treaties.
At present Donald Trump is ignoring WTO rules and threatening to withdraw the US from the WTO. The US has hit China with $200 billion tariffs. Cases have been brought by China and other countries the US as threatened with tariffs to the WTO Dispute Settlement Body [DSB] against the US for the new tariffs. But part of his case against the WTO is that the US has had unfair treatment by the DSB: these complaints are unjust. He has also argued that China has not obeyed WTO rules. However, the overall picture of China’s response to WTO complaints looks very much like the situation of other governments who face such challenges. China has made efforts to comply, although some issues are still contested. There are no cases where China has simply ignored rulings against it, as has happened with some other governments. For example, the United States has not complied in the cotton subsidies complaint brought by Brazil, and the EU still does not allow hormone treated meat to be sold there even after losing a complaint brought by Canada and the U.S.
What Trump has succeeded in doing is putting WTO reform on the agenda: in October 2019 Canada hosted trade officials from the European Union, Japan, Australia, Brazil, Chile, South Korea, Kenya, Mexico, New Zealand, Norway, Singapore, and Switzerland for two-day talks aimed at shaping reforms to the global trading system.
Reform will prove difficult because criticisms come from countries with different perspectives, and for any change in the rules there needs to be agreement between all 164 members. Wealthier countries are critical of China’s self-identification as a ‘developing country’: it sees its role as preventing any bullying of the poorer countries by the EU and US. Poorer countries have for years attempted to challenge the ability of the richer countries to get round the rules as far as agricultural subsidies are concerned. The U.S. government presently pays about $25 billion in cash annually to farmers and owners of farmland. the largest 15 percent of farm businesses receive 85 percent of the subsidies. The EU spends 59b Euros on farm subsidies in the form of Single Farm Payments, and this is a link to a video telling you whom they go to! https://farmsubsidy.org
Trump has been particularly critical of the Dispute Settlement Body: a tribunal of three judges that reviews rulings by a lower panel. US officials say the AB, which heard nine cases last year, displays undue judicial activism, seeking to fill holes in the WTO rule book rather than interpreting existing law. The EU has put forward reform proposals to make dispute settlement more efficient, agree new rules on investment, competition and tech transfer and make subsidies more transparent. Lu Xiankun, a former senior Chinese trade negotiator and now professor at the University of International Business and Economics and Wuhan University, argues that the rulemaking parts of the EU’s WTO reform proposals are widely viewed in China as ‘appeasement’ of Washington, ‘a vivid reflection of what Mr Trump wants’.”
The issue of cotton has been on the agenda of the WTO since The Cotton Sub-Committee was set up in November 2004 to focus on cotton in the Doha Round talks (see below) as a result of the decision earlier that year which stated that cotton would be addressed “ambitiously, expeditiously and specifically” within the agriculture negotiations. This commitment remains unfulfilled. Although the briefing note on the WTO website gives the impression of positive moves at Nairobi to assist these farmers, the international Fair Trade Advocacy Office has published a report entitled Power to West African Farmers which identifies the weak position of the farmers. The report makes recommendations to West African Governments, the European Union Institutions and the G7 counties for actions which would empower them. Among these are that cotton-producing countries should consider launching a dispute settlement case at the WTO and, at the same time, try to find a political solution as the US found with Brazil. This solution made available reparations which could be used to promote measures towards the improvement of cotton supply chains, in particular to guarantee a living income for small cotton farmers and living wages for their workers.
In November 2016, the chair of the agricultural negotiations in the WTO , Ambassador Vangelis Vitalis of New Zealand, reported during the WTO’s latest consultations on cotton welcomed “recent submissions” and “intense debates” among members, but said that “none of the new submissions enjoyed consensus so far”. The Cotton-4 group of countries recognised that “The Nairobi Ministerial Conference marked an important step to arrive at a negotiated global solution for cotton,” but they regretted the lack of progress so far, particularly on issues where no binding commitments were made in Nairobi in December 2015. Ambassador Vitalis claimed that for “the overwhelming majority of WTO members” an outcome on domestic subsidies for farmers at the Eleventh Ministerial Conference in December 2017 should include a decision on cotton.
All the aspects of TTIP which are troubling are likely to be included in a Trade Treaty between the UK and the US after Brexit. Campaigners are calling for transparency and openness in trade agreements, a strengthened role for parliaments with opportunities for revisions before and after the conclusion of agreements, an expanded role for civil society organisations and the prevention of corporate capture of trade negotiations. http://tjm.org.uk/trade-issues/developing-an-alternative-trading-system
The UK won’t automatically be able to keep its current WTO terms of membership on leaving the EU: the UK cannot simply ‘cut and paste’ the terms of its current membership (as part of the EU) and carry those terms over. Depending on the terms of Brexit, at least some of these schedules will need to be rewritten, because leaving the EU will affect the EU’s own commitments to other WTO members. Agreeing the UK’s new schedules will involve negotiations between the UK, the EU and other WTO members to resolve sensitive issue such as limits on agricultural subsidies and the size of tariff quotas (where certain quantities of imports are charged lower tariffs).
There will be questions about how existing EU-wide quotas – of which there are currently almost 100, mostly on agricultural products – are divided up between the UK and the EU post-Brexit. In theory this will allow the UK to take an independent and supportive position on tariffs with developing countries. Traidcraft have published a briefing paper putting forward a range of measures which the government could implement to mitigate the risks and maximise the opportunities of Brexit for trade with developing countries. This paper can be sent to MPs to awaken them to this possibility: http://www.traidcraft.co.uk/media/63f90f7d-ec2a-4394-a604-b4cfef0e438f
The Government has stated that the UK will continue its relationship with the Least Developed Countries which has been expressed in the Everything But Arms agreement giving LDCs duty free quota free access. The offer beyond that is vague.
It is likely that the UK will seek to transfer its existing agreements as a member of the EU – for example the Economic Partnerships – into its own law in the first instance and, at some future point, negotiate new trade arrangements with developing countries. It is unclear whether this is legally feasible or straightforward, or whether developing countries will accept this arrangement.
There is an opportunity after leaving the EU for the UK to ensure a better deal for developing countries in trade agreements by ensuring that such agreements do not undermine developing country competitors, and that UK trade and investment policies are compatible with international commitments on the environment, climate change, human rights and the Sustainable Development Goals. The UK could try to ensure that trade treaties recognise developing countries needs, such as the boosting of regional trade and value-added production.
As campaigners we can only play a very small part in these global issues. But do contribute when we can to the activities of NGOs such as Oxfam, Christian Aid and Global Justice Now which are all part of the Trade Justice Movement.
So how do we lobby? We write letters to ministers, MPs and MEPs, and sometimes to companies. We also take part in public protests at local and national level to bring the problems of developing countries to the attention of the press and to those who can influence negotiations.