The Poor Meets The Rich At Qatar Summit - World Inequities That Leave Most At the Bottom of the Pile

7th November, 2001.

As the World Trade Organisation (WTO) prepares for another round of talks, politicians in the world's poorest countries, reports Herald Tagama, are threatening to side-step negotiations unless global economic inequities are tackled.

When Ugandan President Yoweri Museveni claimed that the September 11 terrorist attacks on the United States happened "because the rich are ignoring the poor", some said the African leader was being flippant.

His comments, though sour, struck a chord in many poor developing countries.

In tandem, Tanzanian President Benjamin Mkapa accused the developed world of hypocrisy - for giving debt relief to poor countries while using trade barriers to bar their exports.

Industrialised nations, he said, pegged low prices for their products in poor countries and imposed trade barriers while forcing developing nations to slash import duties and remove government subsidies in agriculture, a major money-producing sector.

"The price of raw coffee beans has dropped by about 225 per cent in the past 20 years while a cup of coffee at a fashionable restaurant in the rich countries costs around $2, a figure more than double the average daily income of a Tanzanian farmer," Mkapa said.

Many other crops face similar downturns, threatening to throw peasants into greater poverty. And as factories in developing countries fail to withstand an influx of subsidised imports, industrial closures and massive job losses have become commonplace.

Such concerns are being highlighted by the world's poorest countries in the lead-up to the Fourth World Trade Organisation Ministerial Conference, scheduled for November 9-13 in Doha, Qatar.

Tanzanian ambassador to the WTO Mr Ali Mchumo raised these issues on behalf of the world's 49 Least Developed Countries (LDCs) during a meeting on October 2 to discuss the agenda for the coming conference.

"The LDCs have been calling for the recognition of the imbalances and problems generated by the present WTO system and rules and the need for their correction," he told the gathering in Zanzibar, where a draft declaration for the Doha meeting was being discussed.

LDC ministers are not prepared to negotiate new issues or talks on a broad agenda nor implement new obligations "due to the LDCs' limited capacity", Mchumo stated.

"Yet the draft declaration is proposing a broad-based negotiating agenda that includes many new issues that imply a heavy burden of new obligations for LDCs and other developing countries."

Among the first things that LDC leaders want developed countries to do is remove their agricultural subsidies - much like the World Bank, International Monetary Fund and WTO have pressed developing nations to do.

They argue that this will enable their own unsubsidised goods to compete on an equal footing with agricultural imports from rich nations.

"Rich countries spend more than $300 billion a year on agricultural subsidies, an amount roughly equivalent to the entire GDP [Gross Domestic Product] of sub-Saharan Africa," said Mkapa.

In Tanzania, agricultural exports are the country's major foreign exchange earner, accounting for more than half of GDP. Nearly 80 per cent of Tanzania's labour force works in agriculture. Under trade liberalisation, however, the sector has been hit hard. LDCs are also calling for technology transfer from the wealthier nations, and they want their own way of patenting plants, animals and their processes.

Like other LDC leaders, Mkapa has sworn that his country will reject any negotiations at the upcoming WTO talks that will deepen poverty.

Non-LDC developing countries, such as Egypt, India, Indonesia, Jamaica, Kenya, Malaysia, Pakistan and Zimbabwe, have also vowed to reject lopsided proposals.

Not all analysts and economists in Tanzania however agree that such demands will alleviate poverty.

"Even if the developed countries cut import duties to zero or remove subsidies in agriculture altogether, the developing countries will still fail to export large quantities of their goods there," argues analyst Prince Bagenda of Tanzania's Political Risk Analysis International Group.

Conditions such as health and safety standards - known as non-tariff barriers may bar poorer nations from selling goods to developed countries, he said.

"Two years ago, the European Union slapped a ban on fish imports from East Africa simply because of sanitary problems," Bagenda said.

"Then, how are you expecting such countries to penetrate the markets in the developed countries easily?"

He takes issue with leaders who say that political stability, comparatively good climates and arable lands are baits for foreign direct investment.

"Comparative advantage alone isn't a factor of economic development," he said.

"Rather, the poor countries have to invest heavily in human skills for high productivity and value-added products."

In places where skills are low, Bagenda said, low-quality products fail to compete in markets even when tariffs are low.

He favours continued negotiations whenever the need arises between rich countries and what he calls "the new economies" - developing countries.

This is important because "the new economics are subjected to as much non-economic factors, such as civil wars as to economic factors."

Emmanuel Makaidi, chairman of the opposition National League for Democracy, added: "Even if they (poor countries) were given a preferential treatment, they won't easily penetrate the American or European markets because they haven't the capacity."

Nor does he think foreign investment alone is the answer.

"If you create a conducive environment for foreign investors without empowering the indigenous people, poverty will simply deepen," he said.

"For example, Americans will simply invest, siphon the profits away and leave the locals poor."

Tanzania is a case in point. Privatisation has taken this former socialist economy by storm, with more and more foreigners buying into state-owned companies.

But most Tanzanians are too poor to buy shares - half the country's 32 million people survive on 50 US cents a day.

Bertha Malambugi of the Institute of Finance Management says inequities will remain if other issues are not tackled.

"The developing countries have complex problems that have to be negotiated," she said. "Subsidy removals and tariff cuts in the developed countries or having a patenting system for the developing countries will not end imbalances."

She added: "Comparing trade between the developing countries with the developed ones is like comparing a one-year-old child with a 40-year-old person. The developing countries have backward industrial bases."