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27.09.2004 Business & Finance

IMF bullying of Ghana over poultry and rice tariffs criticized

By Public Agenda

Christian Aid, an international charity based in the UK has demanded an immediate halt to the Economic Partnership Agreement (EPAs) currently being negotiated between the EU and 77 former colonies, fearing the new free trade agreements threaten to open up the fragile markets of poor countries.

The charity is also lobbying British Prime Minister; Tony Blair and MPs to block EU plans to further open up markets of developing countries. As part of the mass lobby, Christian Aid is using political cartoonists and celebrities to convey the trade justice movement message to delegates at the ongoing Labour Party congress in Brighton.

Christian Aid thinks the UK government is in a powerful position to bring about change. In 2005 the UK will host the G8 Summit, and assume the presidency of the EU.

In a new report 'Taking Liberties: Poor People, Free Trade and Trade Justice' released last week to coincide with the Labour Party congress, Christian Aid decried discriminatory international trade rules that have condemned developing countries to unending poverty.

The report argues that the lives of millions of poor people worldwide have already been worsened by the one sided 'free trade' pursued by rich countries and urged rich countries to move away from the ideological pursuit of 'liberalisation at any cost' to a more pragmatic approach to trade. 'Poor countries need to be released from free trade dogma and given the flexibility to choose trade policies that will help them promote development', the report said.

Christian Aid notes that protecting the vulnerable may not appeal to free market beneficiaries like multinational corporations, but after 20 years, when free trade has failed to bring growth to developing countries, it was time to devise a trading system that protects the world's most vulnerable people.

The charity points out that while developed countries have imposed liberalisation on poor countries, many EU industries still benefit from vast subsidies and a high degree of technical expertise that give them advantage over poor countries. 'These advantages are like pushing an untrained light weight boxer into the ring with a professional heavy weight, and expecting a fair fight', said Andrew Pendleton, Christian Aid's Head of Trade Policy.

Christian Aid's view is buttressed by EU's own internal report prepared by Pricewaterhouse Coopers, which concludes that the impact of EPAs on poor countries could be devastating. Pendleton points out that the western world would never have gotten to the stage they are now without having to subsidised their own industries.

Studies have shown that Britain turned to liberal internationalism in 1846 after 150 years of protectionism and state power. A study by Winfried Ruigrock and Rob Van Tulder found that 'virtually all of the world's largest corporations have experienced a decisive support from government policies and trade barriers to make them viable.'

The study found that at least 20 companies in the 1993 Fortune top 100 companies in the west would not have survived by themselves if their respective governments had not saved them. 'Their governments intervened by either socialising losses or by simple takeovers when the companies were in trouble', the study noted.

The same study points out that government intervention, 'which has been the rule rather than the exception over the past two centuries' has played a key role in the development and diffusion of many products and services, particularly in aerospace, telecommunications, electronics, energy, transportation, textiles and steel.

'Government policies have been an overwhelming force in shaping the strategies and competitiveness of the world's largest firms', the report concludes.

Sadly, when it comes to developing countries a different set of rules are applied. For instance, when in April 2003, the Ghanaian Government announced new measures to support their farmers by raising tariffs on imported chicken and rice, the decision had to be reversed as, within days of the announcement and approval by the Ghanaian parliament, objection from the IMF cowed the government to backtrack.

It is easy to understand why the finance minister was unwilling to reject the IMF's advice on tariffs, as an earlier disagreement in 2002 led to the IMF and the World Bank labeling Ghana 'off track', and holding back money amounting to US$116million.

According to Christian Aid the IMF's action totally eclipsed the country's commitment under the WTO agreement on agriculture tariffs. Under this agreement, Ghana has the flexibility to raise its import tariffs to 99%, but the IMF's action prevented Ghana from implementing an increase that would have resulted in a final tariff of less than 50 per cent.

'Meanwhile, Ghanaian farmers struggle on, competing against cheap subsidised imports that threaten the very livelihoods they depend on', laments Christian Aid. It is cases like Ghana's and several others across the developing world that have compelled Christian Aid and its partners to launch the trade justice campaign.

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