Preaching ‘‘Free Trade’’?
Western countries commonly proclaim the great benefits of free trade and the evils of protectionism.
In reality, many developed countries practise double standards, insisting on free trade in areas where they are strong, whilst using protectionist measure in sectors where they are weak.
In the worst case, within the same sector they have designed rules that impose liberalisation on developing countries but allow themselves to maintain high protectionism.
An outstanding example is in agriculture, in which the rich counties are not competitive.
If "free trade" were to be practised, a large part of global agricultural trade would be dominated by the more efficient developing countries.
But until today, agricultural trade is dominated instead by the major developed countries.
For many decades they got an exemption for agriculture from trade liberalisation rules.
This exemption ended when the World Trade Organisation (WTO) was created in 1995 and the rich countries were expected to open their agriculture to global competition.
But in reality, WTO's agriculture agreement allowed them to have both high tariffs and high subsidies.
In 2001, the WTO launched a Doha development agenda whose chief goal was to liberalise the agriculture of developed countries.
Much energy was spent over many years to devise methods and formulae to liberalise agricultural trade, and a high degree of consensus was reached.
However, the US, backed by Europe, has now made it clear they do not intend to conclude the Doha Round.
Future WTO negotiations have to be on a new basis, and not based on existing texts.
The European Parliament recently voted to refuse giving China the status of a market economy in the WTO, although WTO members are obliged to recognise China as a market economy by December 2016, 15 years after it joined the WTO in 2001.
By denying China this status, it is easier for other countries to succeed when taking anti-dumping cases against China, and thus to place extra tariffs on Chinese exports.
India in May announced it will file 16 cases against the US for violating WTO rules when providing subsidies under its renewable energy programmes. Nobody knows what happened to the cases.
China won a case against the US in the WTO for wrongly imposing countervailing duties against 15 Chinese products including solar panels, steel sinks and thermal paper.
However, the US has not complied with the panel decision to withdraw the duties, and China is now starting action at the WTO to get the US to comply.
It seems impossible to prevent or reduce the rich countries' high protection of their agriculture. And it also seems they will continue using protectionist measures against products or policies of developing countries.
Vol. 49, No.4, Jul 31 - Aug 6, 2016