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Summary, Overview & Development Report 5.3

On Poverty & the Keynes Doctrine

Summary, Overview & Development Report 5.3
The Case for WTO-QATAR: November 2001
By Emmanuel.K.Bensah, ICDA Secretariat
Related: SOD Report 5.4: "ACP Group and Agriculture Before WTOMC4"

It comes as little surprise that at the heart of all the campaigning surrounding the reform of the World Trade Organisation and its attendant institutions and policies lies the issue of poverty, and how the adverse effect of trade liberalisation greatly impacts it. Small wonder, then, that with a view to better informing representatives of civil society and activists, November's focus on WTO touched on these two issues.

The first article to address this issue featured in WTOIL 7 November. Written by Earthtimes.org journalist, Brij Kindaria, it wondered as the title suggested whether there was "Any Gain for the Poor"?

They say necessity is the mother of invention, so it is hardly surprising that trade liberalisation is the obligatory factor that will lift 1.2 billion people out of poverty. At least that's what the West would like most of the developing countries to believe. And what better place to promulgate this idea than at a global conference specifically designed to facilitate trade liberalisation. Even better if it happens to be the fourth Ministerial Conference on the WTO.

Kindaria, however, was not convinced by the sincerity of the West's intentions at Doha. He maintains that despite the fact that "world trade is a time-tested vehicle for narrowing [the] gap [between the rich and the poor] and access to markets [being] the most important accelerator", "inequality between the rich and the poor has become too great." Doha, in theory, would be a good chance to redress that imbalance. The reality is that it has transformed into what Kindaria calls "an element of sleight-of- hand because [the West] will try will try to make people believe that they can direct the confidence factors which fuel investment bubbles and economic cycles." (WTOIL, 7 November).

Surely, he intimates, if the West is sincere about tackling poverty, then they should go all out and adopt an all-encompassing approach whereby AIDS, food security, agriculture - all contentious issues - would be resolved with some degree of compromise. That, he argues, "is the powerful argument for the 1.2 billion people who live on less than $1 a day and another 1.6 billion who live on less than $2 a day." The source of what actually renders the West's pronouncements about poverty so disingenuous can be traced back to another nettlesome issue of agricultural subsidies. Kindaria argues that the $10billion "needed to fight HIV/AIDS" alone "is equal to just 12 days of agricultural subsidies in OECD countries."

This ultimately begs the question of whether there was any gain for the poor? It appears not so if the United States has anything to do with it. Especially having been two months away from the 9/11 attacks, it was so very easy for this superpower to argue the usual rhetoric of "if you're not with us, then you're against us". It is currently undergoing a review of how to ensure that aid and trade is conditional on one thing -security needs as prescribed by the US. Kindaria contends that the EU "is following those leads to a lesser degree but enough to skew the entire world economy away from faster transactions with less rigidity."

The end and short of the whole process surrounding Doha is that it is not a deal for the poor - neither before, and with the benefit of hindsight, did it aim to be. That new issues that remain a considerable source of frustration for developing countries when it comes to negotiations was introduced at Doha is sufficient to indicate that there is clearly a lack of commitment to the development agenda that has been so promulgated. The promise, as the author so aptly puts it, is to "complete what was pledged but left undone after previous rounds."

The only thing that is left, really, is a scene in which the West is actually tinkering with poverty.

George Monbiot, whose article appeared in WTOIL 21 November, would be quick to agree with this idea. Not because of who he is, or the ideas that he has expressed in the past, but because this was the title of his article. The piece, "Tinkering with Poverty", sought to address the issues' surrounding the Qatar conference, especially in the context of the war in Afghanistan, which was quite fresh in November.

The eponymous title was apt. True to form, Monbiot exposed some very trenchant truths about how the catalyst that precipitated the war in Afghanistan is inexorably linked to other matters of world inequality: "to thunderous cheers, speaker after speaker linked the war to the other means by which the rich world persuades the poor world to do as it bids: namely its power over bodies such as the WTO."

If that argument sounds a tad reactionary, it is worth remembering that it is not only authors and activists, like Monbiot, who are arguing this point, but there is a sense of unease among the DCs, too, as evidenced by Monbiot when he writes of how "the poor nations evinced an unprecedented skill in forcing the rich to listen to their demands." (WTOIL 21 November).

In fact, Monbiot also touches on the new ploys that the West is utilising to pull the wool over the DC's eyes - and, here, too, the operative word is "new". It's about advocating issues on international competition policy; it's about calling for investment opportunities. The DCs just don't have the capacity for it (please see SOD Report 5.4: ACP Group and Agriculture Before WTOMC4). The previous author argued that their delegations were insufficiently funded to stay in Geneva, because they did not have the money, or the capacity. Let alone tempt fate by hiring lawyers that come with 100-dollar-an-hour price tags.

That said, Monbiot makes particular effort in elaborating not only on the dynamics of the WTO negotiations, but also providing very useful insight into its history.

He argues that "one of the striking aspects of the debate about globalisation is how little the defenders of the status quo know about the history of the institutions they champion." He maintains that it's not just the International Trade Organisation (ITO), mooted in 1944, that has been "comprehensively forgotten", but, he argues, "also another body proposed at the Bretton Woods conference in 1944."

Tracing the history of the WTO back to GATT, Monbiot argues that the latter started off as a provisional response to the original mandate of the abortive ITO. Its principal objective was not only to work to reduce tariffs, but also to transfer technologies to poor countries, "protect the rights of workers and prevent big companies from controlling the world economy." This prompted the ire of US corporations which, according to Monbiot, "went berserk." The project turned into a stillborn idea - never to take off because of US recalcitrance. Consequently, "the poor were left to rot."

As for Keynes, the theory that it is he that was behind the neo-liberal principles of the IMF and World Bank is apocryphal. Monbiot believes that there is a fallacy inherent in this argument, and strives to redress it by providing historical insight.

In fact, Keynes "bitterly opposed" such policies. Monbiot advances the view that Keynes made a prediction that "if the world economy was managed by [such] means, the wealth and power of the creditor nations would be massively enhanced, while the debtors would sink ever further into poverty and dependency." Instead Keynes apparently "called for an 'international clearing union', which would automatically redeem imbalances in trade and cancel debt, by the ingenious means of forcing creditors to pay interest on their international currency surplus at the same rate as debtors."

Again, the US refused to comply by threatening to withhold its war loan if the Keynes-led British delegation persisted with the proposal. Ultimately, Keynes was forced to back down "and agree to the formation of the bodies, which later became the World Bank and IMF."

But it was too late.

Keynes would decry the policies as "foolish" in a letter to the Times, arguing that they would be "so destructive of international trade that, if they were adopted, Bretton Woods will have been rather a waste of time." (WTOIL 21 November)

Thus, Pandora's box was re-opened - and not for the last time either.

E.K.Bensah, 2002

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