Pambazuka News

The road to the WTO: Fair Trade Alternatives

2005-11-16, Issue 230

http://pambazuka.org/en/category/gcap/30398


Leading up to the December 2005 World Trade Organization's (WTO) Ministerial Conference in Hong Kong, Pambazuka News will examine some of the issues regarding the WTO as it affects Africa. This week we look at the concept of alternatives to free trade in Africa. Last week’s article examined fair trade and free trade, and argued that under the existing conditions, free trade was doing little to help the people of Africa. Fair trade is usually held up as the alternative to this global economic system, but in reality, fair trade means a number of different things. Economists around the globe have yet to all agree on one perfect solution to current economic challenges, should one even exist. They work within a number of frameworks, advocating a series of options.

The road to the WTO: Fair Trade Alternatives

Leading up to the December 2005 World Trade Organization's (WTO) Ministerial Conference in Hong Kong, Pambazuka News will examine some of the issues regarding the WTO as it affects Africa. This week we look at the concept of alternatives to free trade in Africa.

Last week’s article examined fair trade and free trade, and argued that under the existing conditions, free trade was doing little to help the people of Africa. Fair trade is usually held up as the alternative to this global economic system, but in reality, fair trade means a number of different things. Economists around the globe have yet to all agree on one perfect solution to current economic challenges, should one even exist. They work within a number of frameworks, advocating a series of options. The following theories are offered as substitutions to free trade:

Tobin Tax is a suggested tax of 0.05 to 1.0% on all currency trade across international borders. The goal of the tax would be to increase international currency stability, accomplished by taxing foreign exchange transactions.

Balanced trade requires that nations attempt to not run large trade deficits, through even reciprocal trade patterns. Should a country run a deficit they must find a way to balance it out, otherwise they would risk sanctions or quotas. The goal would be to reduce irregularities and large upswings and downswings in the market. This would also be done by mandating economic changes on a generational scale; this means that changes would be implemented slowly and gradually, so that people are not forced into disastrous changes. Another goal of balanced trade it to treat economic displacement just as natural disasters are treated – currently no provisions are made to those people who fall victim to economic disasters, and balanced trade calls for this stipulation.

International barter systems prohibit monetary trade, while at the same time encouraging bartering of goods.

Regional trading blocs that advocated free trade amongst themselves, but not between themselves, could put countries with similar living standards and policies on the same playing field.

In Africa, these various alternatives are playing out in many different ways. With the pressure increasing on Africa to meet the Millennium Development Goals, and with G8 countries wanting to be seen as helping Africa, how trade is practiced in Africa is crucial to its development. Conditionalities and “aid for trade” are also detrimental to the African economy, and as such, must be remedied. Alternatives must be found, supported and implemented. With the upcoming World Trade Organization Ministerial meetings, it will be crucial for the African, Caribbean and Pacific Group of States to support one another and maintain a firm stance against the inevitable bullying from wealthier countries, and keep in mind that alternatives to the ever pervasive and hegemonic policies of the WTO exist, and are indeed possible.

Further Reading:

Previous Articles:

Fair Trade and Free Trade - http://www.pambazuka.org/index.php?id=30298

Agriculture in Africa – http://www.pambazuka.org/index.php?id=30139

Women and Trade - http://www.pambazuka.org/index.php?id=30051

On the Road to Hong Kong - http://www.pambazuka.org/index.php?id=29838

Africa and WTO - http://www.pambazuka.org/index.php?id=29857

* Researched and written by Karoline Kemp, a Commonwealth of Learning Young Professional Intern with Fahamu.