More on the Human Development Report 2005

There are a lot of jewels in this year's UNDP Human Development Report - not that they are strikingly new ideas, in fact already repeated too many times by too many activists - but being admitted and denounced by the United Nations (albeit its own crisis), is a step forward. Afterall we are living in an institutional world and the words of somebody weight more than the very same words pronounced by the month of someone else.

So one of these jewels with a UN-stamp is about the irrationality and immorality of the trade policies of the EU and the United States. Among other things, I am highlighting the agricultural policies because its immediate effects touch probably the largest portion of the population in the developing countries.

Rich countries spend just over $1 billion a year on aid to developing country agriculture and just under $1 billion a day supporting their own agricultural systems. And the benficiary of these subsidies are large-scale farmers, corporate agribusiness interests and landowners. Look at the following examples:

European Union’s Common Agricultural Policy (CAP) worthing $51 billion (€43 billion) in support on producers of a sector that accounts for less than 2% of employment but absorbs more than 40% of the total EU budget. Farmers and processors are paid four times the world market price for sugar, generating a 4 million tonne surplus. That surplus is then dumped on world markets with the help of more than $1 billion in export subsidies paid to a small group of sugar processors. This dumping lowers world prices by about one-third. As a result, far more efficient sugar exporters in developing countries suffer foreign exchange losses.

The US Department of Agriculture estimates that the country’s 20,000 cotton farmers will receive government payments of $4.7 billion in 2005 - an amount equivalent to the market value of the crop. These subsidies lower world prices by 9% - 13% and enable US producers to dominate world markets, accounting for about one-third of total world exports. Price distortions caused by US subsidies allow US cotton to drive out smallholder producers in developing countries relying on the production of cotton for survival, namely in West Africa.

Then in a WTO press conference yesterday, guess what Pascal Lamy's response was when asked about this report:

I had a look at this [Human Development] report that you mentioned, which I find variously balanced in various parts. And I do not think I would agree with each and every paragraph I read, nor was anyone asked to agree with what is written in this report. It is a report. But to my knowledge, it has not been sort of voted as such by any political, mandated and structured body.

It is amazing to hear the Director General of the WTO emphasizing the virtue of democracy as a basis of legitimacy. Imagine only if the WTO under his leadership would be transformed into something in which every country has a vote of equal weight (that sounds almost like a fairy tale!)

We do not question the sincerity of Mr. Lamy about democracy here. The problem in his comment is that analysis does not gain its legitimate by counting how many votes it gets. For analysis to be valid and legitimate, what is needed is solid arguments and evidence, not votes. Was any report ever "voted"? Who's entitled to vote anyway?

Mr. Lamy was probably feeling in his old shoes as the EU ambassador to the WTO again, which explains his attempt to trivialise the HDR 2005, in which a whole chapter was dedicated to unfair trade rules largely in favour, and becoming more and more so, of the EU and the US trading interests because of their clout on the negotiating table.

Categories: Development, Economy, Empire, Europe, Inequity, USA