By Vince Caruana, Fair Trade Cooperative
While the USA puts enormous pressure on weak countries to open their markets to American goods, threatening to reduce aid and support if they don't, it pumps in equally enormous subsidies to American industries. This policy is in part responsible for keeping many millions of Africans below the poverty line.
Cotton is a case in point - farmers in the USA now receive 70 cents per pound of cotton as direct subsidies. This amounts to a lot more than the amount paid by the US government as overseas aid to the whole of Africa.
The rich countries can also afford other types of indirect subsidies such as support for research and technical help. The subsidies increase the supply of cotton, resulting in a world price drop that directly affects African farmers.
In fact the world price for cotton has fallen by 66 per cent since 1995. Unlike the US, certain African countries are forbidden from supporting their own cotton industry as a result of conditions attached to its loans by the IMF and World Bank. The result is that the impact of the falling world prices has to be absorbed by the African farmers themselves. At times this is just nonsensical since farmers end up receiving less for the cotton than they invest in producing it. To add insult to injury West African farmers produce cotton more efficiently and more cheaply than US farmers.
There are no easy answers to 'unfair trade' however; an end to subsidies such as those paid to cotton producers in the US or to European farmers under the Common Agricultural Policy will be a first step in allowing African farmers to compete on a more level plain.
Of course in itself this is not enough to establish 'fair trade' and one has to take the real context of the African continent in consideration if trade is to make any difference in the lives of the starving poor - a context that includes widespread Aids, crippling debt and often natural disasters.
It is doubtful whether the World Trade Organisation will be successful in achieving its aim of directing the enormous flow of goods into the right channels on the basis of fair competition without adopting flexible rules that take dire poverty into account. Perhaps the aim ought to be to direct the enormous flow of goods into the right channels on the basis of bringing greater justice to the textile economy.