World Trade Talks Collapse; Australian Farmers Lose Out

Australian farmers have suffered a setback following the collapse of the World Trade Organisation negotiations over the weekend.

According to the Financial Review agricultural exports are worth $25 billion to the Australian economy. The Australian Bureau of Agricultural and Resource Economics has predicted that a 36% reduction in all forms of global farm assistance would see Australian exports of rice grow by 54%, wheat 15%, meat 16% and sugar by 12%.

The collapse of the talks in Seattle, and the likely delay of another couple of years, most benefits French and Japanese farmers.

Queensland sugar growers, currently experiencing the lowest world prices in 30 years, will be hardest hit by further delays in global trade liberalisation.

What Is the World Trade Organisation?

The World Trade Organisation was established on 1st January 1995, arising out of the so-called Uruguay round of negotiations. It replaced the General Agreement on Tariffs and Trade and consists of 135 countries, has a staff of 500 and a budget of 122 million Swiss francs.

The WTO styles itself as “the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible”.

The WTO has a consensus-style one-country, one-vote structure and this appears to have been part of the problem in Seattle. Developing countries now comprise 3 in 4 of WTO members and are demanding a greater say than they have had in the past. This is partly because these poorer nations have what the richer nations need most: a market for their products.

All Politics Is Local

A report in today’s Financial Review, (“No trade-offs in a sleepless Seattle”, page 14) provides an interesting account of how the United States pulled the plug on the World Trade Organisation talks in Seattle.

It is even argued by some that the talks were deliberately sabotaged by President Clinton in an interview he gave to a newspaper on his way to Seattle. Clinton said he favoured the eventual imposition of punitive sanctions on countries that failed to meet core labour standards. The US Trade Representative, Charlene Barshefsky, is quoted as saying “my god, he’s blown it” when told of the comments.

Poorer countries see demands for labour and environmental safeguards as a ploy by richer nations to advance their own economic interests in the guise of freer trade.

Some see the Clinton remarks as part of an attempt to win the support of labour and environmental groups in the lead-up to the 2000 presidential and congressional elections.

At a broader level, the impact of local politics can be seen in the huge protests that took place outside the WTO conference last week. Furthermore, the recent New Zealand election can be seen as part of an electoral reaction against globalisation. The protestors, ironically, took advantage of the globalisation of communications by conducting a large part of their campaign via the Internet.

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