The Monitor (Kampala)
ANALYSIS
September 21, 2003
Posted to the web September 22, 2003
Andrew M. Mwenda
Kampala
The recently collapsed World Trade Organization (WTO) 5th ministerial conference in Cancun, Mexico, demonstrated the power and weakness, opportunities and threats of less developed countries in international trade.
The theme of the conference was how to use international trade to promote development in developing/poor countries.
The outcome was a collapse of the talks because both sides were not willing to give and take.
So what were the forces at play? How did each side strategise to advance its agenda?
And for the Ugandan readers, how did President Yoweri Museveni position himself in this interplay of forces?
Apparently, the European Union (EU), Japan and the United States of America (USA) were united in their resistance against removing, or significantly reducing subsidies they give to their farmers.
They were also united in restricting access to their markets in non-agricultural exports from developing/ poor countries.
Hope for poor countries
Unlike the United Nations (where you have five permanent members of the Security Council with veto powers) or the International Monetary Fund - IMF - (where the US has veto powers) or the World Bank (where voting is determined by a country's shareholding just like in the IMF), the rules of WTO are based on the principle of one country one vote. The rich and the poor all have equal voting powers.
When it comes to numbers, developing and poor countries of Africa, Latin America, Asia and the Caribbean have the largest numbers; with Africa being the largest single voting bloc in the body.
On the face of it, the WTO therefore looks the most democratic international organisation on offer, and should give hope to developing and poor countries to use it to promote their trade interests.
In reality, this structure is actually a sham as the rich countries to their advantage undermine it.
How? They use their bilateral relations with individual poor and developing countries to divide and regiment them.
Divide-and-disorganise tactics by the developed countries are important because the poor/developing countries can only have teeth if they vote as a bloc.
Divide and disorganise policy
But how can rich countries divide and disorganise the poor and developing countries if the latter know their interest?
A number of factors are at play here. Developing and poor countries have internal differences among themselves - on key trade issues.
In most cases they have highly conflicting trade agendas, especially given their different levels of development (compare South Africa and India to Chad and Bolivia), and also given the different preferential bilateral trading arrangements with the rich countries e.g. AGOA.
However, in spite of these differences, there are a few issues on which these countries share a common destiny, and that is on agricultural subsidies.
All of them, regardless of bilateral arrangements and levels of development, are united in seeing the end of subsidies to farmers in rich countries.
There is also a minimum agreement on non-agricultural market access, except issues like export quotas on textiles.
The effective way to divide these poor and developing countries therefore is to introduce issues around which their contradictory and competing interests will come into play and force them to fight on different fronts.
For the EU, US and Japan, therefore the strategy was to bring issues which divide these countries into the negotiations. It was important to highlight the differences among the poor and developing countries, demonstrate that even among them, these countries have issues to fight for.
By forcing them to fight on different fronts (among themselves and then against the US, EU and Japan), the rich countries calculated, the poor and developing countries would dissipate their energies, biting at each other like the proverbial grasshoppers once put into a bottle.
It is in this context that President Museveni's letter to Uganda's head of delegation in Cancun, Trade and Industry minister, Edward Rugumayo, plays a crucial role.
Museveni's 'treacherous' letter
Initially, it was only a rumor. But hearing that it had come via email, Internet hackers went to work. Soon the letter was on open display in Cancun.
In the letter, Museveni was asking Uganda to mobilise other African Union (AU) delegations to oppose Latin America and Asia, and take their own position.
President Museveni was equally asking Rugumayo to discuss issues outside of NAMA and agriculture, issues on which the poor and developing countries have, within themselves, serious differences.
The president did not stop there. In his now highly controversial letter, he even said he would write to other AU presidents to mobilise them to oppose "Asia and Latin American countries" who are "misleading African countries while promoting their own commercial agendas."
For the Asian and Latin American delegations, which had worked so closely and fought very hard to reach a consensus with their African brothers and sisters, this 'callous ploy' by someone considered one of Africa's leading statesmen was more than they could take.
At one time the unity of the whole poor and developing countries group was on the brink as the letter sparked off mutual suspicion and animosity. The situation was eventually calmed, and for a moment, the US-EU drive was held at bay.
The US, EU angry, talks collapse
However, former US assistant secretary of state for trade with Africa, Rosa Whitaker, working closely with US trade secretary, Robert Zoellick, was not going to be outdone.
She needed more ammunition to buttress President Museveni's work. She called a meeting of African heads of delegation i.e. trade ministers.
In the meeting that lasted one and a half hours, Whitaker told the ministers that the US government had placed a bill before Congress to extend the period of AGOA from 2008 to 2015.
Her calculation was apparent: an excited Africa group over a generous bilateral deal would tow the US line. If failed!
Now the Americans sought a new ploy. They called African delegations and told them that the US was willing to "significantly" reduce agriculture subsidies but that it was the EU holding back.
The British also called different delegations and claimed it was mainly the EU, especially France and Germany, who were unwilling to reduce farm subsidies.
The British even 'complained bitterly' that they put lots of money into the EU's Common Agricultural Fund from which they do not get any rewards. So what was the ploy in this strategy?
The US and EU had calculated that poor and developing countries were united (a very rare phenomenon) because they felt that the EU and US are solidly together. By faking non-existent differences among themselves, they could spark off a division among the poor and developing countries on their real differences. This also failed!
Mr Zoellick was angry. Mr Pascal Lamy, the EU chief negotiator was bitter.
How could countries they have for years played and preyed upon with ease now act with unprecedented solidarity?
They cajoled, and then they threatened. And getting no surrender, finally they insulted. Zoellick was furious and said poor and developing countries were not interested in "serious work," but "rhetoric."
Lamy sulked, Whitaker cursed, and the talks collapsed.
Tough being poor
The reality at Cancun is that the rich countries approach the poor and developing countries with which they have favorable bilateral trade arrangements and bribe them, or worse, still literally blackmail them.
The US would for example, approach a country and say: "we will put you under the Africa Growth Opportunities Act (AGOA) if you support us" on this or that.
They can even threaten to suspend a standing bilateral arrangement if the country does not yield. And this is done at a high level.
The top US trade officials call presidents and reach a deal with them. The presidents then call their ministers and give them "negotiating guidelines," often time written by US experts and only sent to these presidents to sign, as the case seems to have been with President Museveni's controversial letter to minister Rugumayo.
However, governments of these developing/poor countries have experts in the form of staff working at their missions in Geneva, Switzerland, who having been part of negotiations for long, know what is good or bad for their countries.
Irumba lives to fight another day
Developing and poor country experts on WTO, ambassadors or otherwise based in Geneva, unaware of the international forces at play, tend to push for the interests of their countries.
The US, Japan and EU find these experts too recalcitrant, and begin to push their governments to withdraw them.
This was the case with Uganda's ambassador in Geneva, Nathan Irumba, when President Museveni recalled him from Doha in November 2001.
He was only saved by the Africa group who insisted that as chair of their group in the Doha negotiations, he could not just leave.
In fact they threatened to retain him as an expatriate, forcing Museveni and the Americans to realise how futile their effort would be. Irumba stayed.
However, as momentum for Cancun grew, the pressure from the US on Uganda to withdraw Irumba increased.
Excuses were found, especially that Irumba was nearing retirement age (although he could have been retained on contract terms) and that he had been in Geneva for "very long" i.e. seven years (his US equivalent has been there for 19 years).
He was withdrawn and replaced by failed parliamentary candidate, Kweronda Ruhemba. However, because of time constraints it was not possible to get accreditation for Mr Kweronda.
So Irumba therefore went, and remained a pain in the US backside. By all accounts, Irumba is not only just one of the most knowledgeable experts on trade issues in Uganda, but on the African continent. His time in Geneva has given him invaluable insights into not only the issues, but also the mechanics of international trade negotiations.
Representation in Geneva therefore calls for not just technical competence of the issues, but actual experience in the negotiation process itself.
That President Museveni now placed Uganda's mission in Geneva into the hands of a politician, who possibly does not even know what the words WTO stand for is testimony to lack of serious focus on international trade issues on the part of Uganda.
Sacking the experts
Our country apart, many poor and developing countries' experts based in Geneva are withdrawn from their missions as a result of US and EU pressure.
The leading Kenyan expert in Geneva was recalled, but only stayed because his minister, Joseph Kituyi, held his ground and fought hard for him.
Sources in Cancun said five African trade experts based in Geneva were withdrawn before Cancun, under pressure, from the US and EU, on their presidents.
This way the WTO, outwardly a democratic organisation is in effect very undemocratic - as bribery, threats and blackmail from the rich hold away.
Hypocrisy of developed countries
In fact, the WTO exhibits the hypocrisy of the developed countries regarding their rhetoric on 'free trade'.
If anyone undermines possibilities for free trade most, it is Japan, the US and EU.
According to classic economists and proponents of free trade like Adam Smith, David Ricardo, John Stuart Mill etc, free trade would mean free movement of factors of production - capital, labour, etc.
However, when the developed countries talk of free trade, they mean manufactured goods (hence trade facilitation), capital (investments) etc as the four Singapore issues show. These are factors in which the rich countries have a competitive advantage and want to export.
However, the poor and developing countries are competitive in agriculture and in labour. By giving huge subsidies to their farmers, the rich countries put in place barriers to agricultural trade.
By putting in place highly difficult visa requirements that are actually institutionalised racism, akin to apartheid South Africa's pass laws in Bantustans, they have blocked the free movement of labour.
In fact civil society organisations and other critics of free trade miss this point; that if all countries accepted the rules of free trade and played by them, it would create an automatic global equalisation of incomes, especially given that the free movement of labour would spread investment and equalise wages.
However, the West would not get their way if all poor and developing countries' governments were committed to international trade as a way to improve incomes of their people.
Who is to blame?
While observers, civil society activists and critics situate the obstacles to trade in the international system, especially in US-EU-Japan manipulations, the primary problem is internal to poor countries. The primary interest of many elites in Sub Sahara Africa, for example, is not the pursuit of development strategies, but just to stay in power and use the state as an instrument for predatory ostentatious consumption.
Consequently, leaders like Museveni seek to stay in power by utilising resources offered by international alliances (through in flows of foreign aid - never mind the debt burden that builds on future generations) to build domestic political alliances. This removes incentives for the regime to forge more productive arrangements with domestic asset holders.
As a result, the domestic policy regime, and the international diplomatic positioning of Uganda reflect accommodation with the interests of international forces (Museveni says the "Americans are helping us") instead of a serious and more genuine search for domestic solutions.
Precisely because regime survival and consolidation is externally funded, Museveni disregards internal economic priorities.
As a result, very little is done to build domestic private sector constituencies that have a strong stake in international trade negotiations, or even to train and position technically competent professionals to act as institutional agents in such negotiations.
It does not matter whether it is Irumba or Ruhemba in Geneva because the state in Uganda does not have a strong commitment to gaining from trade, Museveni's posturing notwithstanding.
He who pays the piper
What were the representational consequences of this dilemma in Cancun? The Uganda government did not finance the attendance of one single human soul to the trade negotiations.
The EU financed Rugumayo and his staff; the very body whose interests his group of poor and developing countries were resisting.
Parliamentarians at the conference were funded by NGOs, themselves dependant on resources from the West.
The Foreign Affairs ministry whose staff could not find a generous foreign donor did not turn up at Cancun because "government of Uganda could not afford to buy air tickets and pay for their accommodation and subsistence."
Uganda's delegation was foreign funded - by one hundred percent! Although there were people like George Walusimbi (representing Uganda Service Exporters Association), Jack Bigirwa (from Uganda Coffee Farmers Association), and Nimrod Waniala (from the Private Sector Foundation), they too were funded by 'foreign donors' not their own associations.
I did not see James Mulwana (he could possibly want to export batteries or tooth brushes to the West) or Sudhir Ruparelia (Uganda's leading exporter of flowers) in Cancun.
As I flew out of Cancun to New York, looking at the beautiful forest underneath, I reflected on these dysfunctional trends and concluded that Africa is in for a long wait to development.
