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| In Praise of Discrimination By Romilly Greenhill March 19th 2002 Last week, US President George Bush announced the imposition of tariffs of up to 30% on steel imports. His decision sparked an outcry in the mainstream economic press. The Financial Times of March 11th 2002 claimed that 'low politics are the only excuse ' for Mr Bush's decision, while the Economist was even more scathing, stating that 'Mr Bush and his advisors should be ashamed.' Mr Bush's decision, coming in the wake of the Doha Trade Round, is almost breathtakingly hypocritical. This is all the more so given the endless droning of the free trade mantra by the US's main servants - the IMF and World Bank - in developing countries. In today's climate, no poor country could even dream of making the same decision as Mr Bush - not if it needed aid, or debt relief, in any case. Nevertheless, the mainstream commentators are wrong to elevate 'high' economics over 'low' politics. Politics matters. No country, rich or poor, should be expected to sacrifice the livelihoods of its workers to some global ideal of 'free trade.' The European Union has long protected its own farm workers through its Common Agricultural Policy (CAP.) Despite the EU's indignant claims to the contrary, the US is no worse. The point is that countries must be allowed policy autonomy to meet their own democratic obligations. This is true in the US as in Benin, in France as in Fiji. But at the same time, countries should not neglect the impact that their trade policies have on poor countries. According to the United Nations, developing countries are losing around $100bn a year through unfair protectionist policies in the north . The question remains, therefore: how do we organise the global trading system so that all countries are able to exercise their democratic rights, but that poor countries do not suffer? One answer would be to over-turn one of the fundamental rules of the World Trade Organisation - that of non-discrimination. According to this rule, countries cannot discriminate in their trading practices between different producers: they cannot favour domestic over foreign producers; or one country's producers over another. Ironically, the decision of the US to exempt some South American countries from the new steel tariff will violate this very rule - and thus make the US liable for challenge in the WTO. But why should the US not discriminate in favour of South American countries, those same countries which are experiencing their worst economic and political turmoil for a decade? In a similar case, why wasn't the EU allowed to discriminate in favour of small Caribbean banana producers, over large South American plantations? In a broad point of principle, why should we not discriminate in favour of the poor, and against the rich? Cynics may state that discrimination will be abused - or that no objective standard for discrimination is possible. But these are technicalities. If the world wants to combine democracy with equity; justice with poverty reduction, discrimination is essential. Without it, the world trading system will remain unjust, unstable, and unbalanced. |
