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Oxfam's Free Trade Recipe For The Third World

Dr. Vandana Shiva 14 May 02

Oxfam International's report "Rigged Rules and Double Standards" on Trade, globalisation and the fight against poverty is a brave attempt at combining two paradigms. However, when two paradigms are incommensurate, putting them together only creates a schizophrenic analysis. And this is the fate of Oxfam's report on globalisation.

Oxfam International makes a failed attempt to mix two paradigms -- one which gives precedence to people's democracy, another which gives precedence to trade, commerce, markets. The first paradigm on globalisation is based on principles of justice, democracy, sovereignty and sustainability and is held in pluralistic ways by the anti-globalisation movement which has exposed the distorted and unjust rules of trade in the W.T.O. and the World Bank/IMF trade liberalisation programmes, the second paradigm of globalisation as promoted by these organisations.

The first paradigm contextualises and embeds trade in more fundamental policies based on people's rights, democratic participation, and ecological sustainability. The second paradigm dismantles democracy, sovereignty and sustainability as "trade barriers", puts trade above other policy instruments. In disembedding trade from its social and ecological context, it dismembers society and disintegrates ecosystems. It creates poverty by destroying the fabric of economic and ecological security.

Ninety per cent of the Oxfam's report reproduces the critiques of globalisation, even though it fails to acknowledge its debts to the anti-globalisation movement and attempts to ridicule it by coining the term "globo phobe". The anti-globalisation movement is not globo phobic, it is based on deep internationalism and solidarity. What it is against is the rules of free trade unregulated by ethics, justice, democracy and ecological limits.

Oxfam also seems to be against these "rigged rules" of trade except when it comes to chapter 4 on Market Access and Agricultural Trade". In this chapter trade liberalisation and unregulated markets become the be all and all of economic policy. The chapter begins with the standard W.T.O./World Bank assumption -- Trade can provide a powerful engine for economic growth and poverty reduction. For that engine to function, poor countries need access to rich-country markets. Expanding market access can help countries to accelerate economic growth, while at the same time creating new opportunities for the poor. This is especially so for agricultural products and labour intensive goods, since the livelihoods of so many people living below the poverty line are concentrated in these sectors.

Market access is supposed to be magic potion for pulling the poorest out of poverty. However, market access is just another word for export orientation and export domination. Trade is after all a relation between an exporting country and importing country. By putting all focus on market access to rich importing countries Oxfam hides and renders invisible the economic, social and ecological costs generated by export obsessed and export dominated policies of agriculture in poor Third World countries. While the market access suggests that rich countries are being called to make a sacrifice, it is the poor in poor countries from whom the real sacrifice is being demanded.

Increased exports in agriculture and market access also implies increased consumption in countries where non-sustainable consumption is already pushing the earth's limited resources beyond carrying capacity. How many more shirts and jeans can rich consumers wear, how much more green beans and strawberries can they eat? The Oxfam report is blind to the implications for non-sustainable consumption based on increased exports from poor countries to rich countries. And it ignores the fact that in agriculture more consumption in rich countries is based on less consumption of basic needs and hence more poverty in poor countries.

Since agricultural trade is based on land, water and biodiversity, and supply of land and water is limited, export oriented agriculture policies divert land and water from production of staple foods for local consumption. Export domination shifts natural resource use to produce luxury products in poor countries at cheap cost for rich consumers in rich countries. It shifts control over resources from small farmers and fishermen to agribusiness corporations, destroys the natural resource base through non-sustainable use and in the process destroys livelihoods of the small producers and creates poverty instead of removing it.

All Third World countries are being required by the World Bank to shift their agriculture to export oriented agriculture with a focus on exports of meat, marine products and flowers and vegetables. Oxfam's "new" recipe is the old World Bank recipe of export first. The only difference is that Oxfam labels it in the W.T.O. jargon of "market access" while the Bank calls it trade liberalisation and economic reforms. The recipe fails the poor on 3 counts.

Firstly, it diverts scarce land and water resources from meeting local food needs to providing for export markets thus creating hunger and conditions for famine of the most vulnerable and marginal communities. This is what happened during colonialism and is happening under the recolonisation of globalisation. As Utsa Patnaik, a renowned Indian economist has shown, under British rule per capita consumption in India declined from 200kg/ha in 1918 to 150 kg in 1947. Non-food grain crops expanded 10 times faster than food grains, feeding export markets. The Great Bengal Famine which killed 2 million people was the result. In Java, under Dutch rule, export crops expanded by 600% while paddy consumption declined from 199kg/cop in 1885 to 162 Kg/cop in 1940.

The inverse relation between increasing exports and declining food consumption locally and nationally has been exhibited under export led strategies of World Bank Structural Adjustment Programmes. In Nigeria, Ethiopia, Sudan, Kenya, Tanzania and Zaire which account from 60% of the population of sub-Saharan Africa, there has been a 33% decline in cereal output per head and 20 per cent decline in overall food per head in less than a decade. All the countries saw rising agricultural exports per head along with declining food output of food consumption per head.

Oxfam which started as a famine relief agency seems to have forgotten its roots and has not once raised the issue of food entitlements and famine in its chapter on agricultural exports.

Secondly, the figure of an added $100b income for exporting countries hides the costs to local ecosystems and local livelihoods when peasants and fishermen are displaced by export corporations and agribusiness who use non-sustainable systems to maximize gains and profits. In the preferred sectors of meat, flowers and shrimps, a shadow cost of 10$ is left in terms of ecological, devastation and ruined livelihoods for each $ of export earnings to companies. Oxfam's magical figure of 100b$ increased export earning thus hides one trillion dollars of social and ecological destruction in local economies, leaving local communities poorer. That is why every shrimp farm, every flower unit, every slaughter house is protested against by local people.

Three areas of exports which have been heavily promoted under the new trade liberalisation regime are aquaculture, floriculture and meat. According to the received ideology of free-trade the export earnings from exports of farmed shrimp, flowers and meat would finance imports of food and hence any short fall created by diversion of productive capacity from growing food for domestic consumption to growing luxury items for consumption by rich northern consumers would be more than made up.

However, it is neither efficient nor sustainable to grow shrimp, flowers and meat for export in India. In each case more food production capacity is destroyed domestically through diversion of resources and destruction of ecosystems than the food that can be purchased on global markets through exports. In the case of flower exports, India spent Rs. 1.37 billion as foreign exchange for promoting floriculture exports, and a mere Rs. 0.32 billion were earned. India can buy only one fourth the food it could have grown with export earnings from floriculture.

Our food security has therefore declined by seventy five percent, and our foreign exchange drain increased by more than Rs.1 billion. In the case of meat exports, for every dollar earned, India is destroying fifteen dollars worth of ecological functions performed by farm animals for sustainable agriculture. Cattle in India are the sources of organic fertilisers and renewable energy. When they are killed for exports, these essential services given freely by the cattle to the farmer are destroyed and we have to import chemical fertilisers and fossil fuels, thus increasing foreign exchange outflow and leading to increased climate instability.

In the case of one export slaughter house Al Kabeer, based in Andhra Pradesh, the State could have saved foreign exchange worth Rs. 360 million per year from the first lot of animals which were be killed. Taking into account their average remaining life span to be 5 years more, they would have saved forex worth Rs. 360x5 - Rs. 182 billion. Following the same argument, if all the animals which are going to be killed during (say) 5 years of Al-Kabeer's operation live out their natural life span, then they will be able to save forex worth Rs. 182.05 x 5 = Rs. 910 billion. This means that against a projected earning of Rs. 200 million by Al-Kabeer through the killings, the state can actually save Rs. 9.1 billion in foreign exchange by non- killing.

In the case of shrimp exports, every Rupee of export earnings has generated more than five rupees of ecological destruction of water, biodiversity, agriculture and fisheries. Industrial shrimp farming destroys 200 times more area than the actual size of ponds through salinisation of ground water, pollution of coastal waters, destruction of agriculture and mangroves. For every job created, fifteen livelihoods are destroyed. More food production is destroyed through destruction of domestic agriculture and fisheries than can be purchased by the export earnings from industrially farmed shrimp. Further, export earnings go to rich industrial houses, and the price of destruction is paid by poor peasants and artisanal fisherman.

Thus, as a society, we are paying more in terms of food insecurity and ecological destruction than we are earning through exports of luxury crops such as shrimps, flowers and meat.

Farmers of Andhra Pradesh are protesting against Vision 20/20 an export led policy for which envisions no role for the small holder but sees agriculture as the export business of agribusiness.

Finally, export liberalisation is bad for exports. Not only do people and the environment loose out in an unregulated trade regime, exports too suffer. India known as the pepper queen, which tempted waves of colonisers can no longer export pepper because of dumping and downward competition in prices. Further, competitive devaluation of national currencies forces countries to export larger and larger volumes of export commodities for lower and lower incomes.

Higher exports do not therefore mechanically translate into higher incomes, falsifying the central premise of Oxfam's report that 1% increase in exports world contribute to 100b$. Even if countries have doubled their export volumes, they have had no increase in foreign exchange earnings because of declining terms of trade. Changing the terms of trade requires structural change in the global economy -- the kind the anti-globalisation movement is calling for.

With this structural change, trade is no longer the "engine of growth". West Bengal increased its agricultural productivity and growth not through exports but through land-reforms. Putting resources in people's hands, and guaranteeing small producers access to local markets is the most secure, sustainable and inclusive way to remove poverty. Small producers need market access to local markets which are being destroyed as global corporations dump falsely priced, artificially cheap, subsidised products using import liberalisation rules.

International trade built on a foundation of strong local economies and resilient ecosystems will play a positive role. Export oriented economies built by alienating peoples resources, destroying local livelihoods and destroying ecosystems and local economies creates poverty at the societal level, even though a small number of displaced people get jobs in the export sector.

By decontextualising trade, Oxfam has become blind to the context in which export led national policies shift from food first to export first policies, agriculture moves from a peasant occupation of millions to a handful of agribusiness corporations, and natural resources are no more owned and used by local communities for their livelihoods and welfare but by corporations to service the luxury consumption of the rich.

These are the issues on which Oxfam is silent -- there are no small farmers and peasants in the report, only "producers", there is no sustainable agriculture in the Oxfam vision, only market access, even though shifting from external inputs to internal inputs has been established to be the most effective means of improving farm incomes.

These are the issues at the heart of food and agriculture debates worldwide. Everywhere a call is being made to re-imbed agriculture in ecology, culture and basic needs of food and livelihoods. Movements are working for the rejuvenation of small farmers, defending small farmers and strengthening local markets. This is where trade justice will be achieved. Not in the timid echo of the World Bank, or in the "market access" chorus of the Zoellick -- Lamy -- Short choir which Oxfam has joined as the youngest choir boy. It talks of an "inclusive globalisation" but the project of economic globalisation is a project of economic and political exclusion. And it is this economic exclusion which is creating a politics of exclusion in Europe and in India.

The genocide of Gujrat and the rise of LaPen in France are features of the politics shaped by economic globalisation that has destroyed livelihoods and jobs, resources and cultures. Oxfam, and other supporters of globalisation have called the building of strong resilient local and national economies "isolationist". But these are the foundation of economic security and hence the only antidote to Xenophobia and fundamentalism and forces of hatred and isolationism. The insecuritiesm generated by globalisation are providing fertile ground for facist isolationi m to emerge. Globalisation thus feeds isolationism, exclusion and fragmentation of society. Strong local economies integrate communities by generating overall security and reinforcing inclusive cultures. The equations are clear:- Globalisation = insecurity and exclusion. Economic Democracy and localisation = security and inclusion.

Oxfam has a dream of building a movement for transforming the trade system just as powerful as the movement against apartheid in South Africa. For that Oxfam needs to walk with the movements of the people and drive its passion and power and legitimacy from them.

Oxfam now has to make a choice -- will it stand for trade regulated by principles of peace, justice and sustainability or will it become a weak, coopted, voice of the dominant free trade interests?

Will it put peace and peoples security above commerce and trade?

Will it put people first or trade first?

Will it put food first or exports first?

Will it go all the way in the struggle for structural change and transformation of trade rules and the free trade paradigm?


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