Monday, August 01, 2005

Fair globalization

Mali - a country of 12 million people, the fourth poorest in the world, a classic case of the Sub-Saharan Africa problem. Poverty incidence is a staggering 64%. Its main export is cotton; and cotton is one of the most well-subsidized industries per value-added in the US, driving cotton prices down in the world market. And there you have it - Mali is the poster child for unfair globalization.

A starker portrait of G-8 hypocrisy can hardly be painted. While an extra US$ 25 billion has been pledged for Africa aid by 2010, farm subsidies in the industrialized nations continue to hurt the world's poorest cash crop farmers.

Well good news - the WTO has ruled with finality against United States cotton subsidies, following several appeals by Washington. No the case was not brought by Mali - a country too poor to afford extensive legal representation in the WTO, based in Geneva. It was the relatively affluent Brazil which brought the suit. Elimination of cotton subsidies is expected to allow world prices of cotton to rise by an average of 4%. This translates to about US$ 20 million or so gain per year in Mali, not incorporating farmer responses (i.e. plant more cotton once prices go up). However the pathway from the ruling to the final elimination of subsidies is long and convoluted. Only recently has the Bush administration finally requested Congress to repeal the subsidies. A protracted fight remains, as it is possible for these subsidies to be transformed and hidden away, for more suits to expose them.

The battle for fair trade has been joined. For once, these G8 leaders should stop insulting the intelligence of the rest of the world.

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