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"I like bananas. You have the climate and the soils to grow
them in abundance. The cheaper you make them, the more I will
buy. The more you sell, the richer you will become. What could
be simpler? Let's call it free trade. Or let's call it the most
fundamental environmental issue of our time."
BY JOHN VIDAL, ENVIRONMENT EDITOR,
THE GUARDIAN, LONDON
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The trouble with trade today is that no international market accounts
for the environmental damage incurred during production and transport
of goods. In economic jargon, these costs are "externalized"
- i.e. they are passed on to society in general, or left to future
generations to pay. The dramatic dismantling of trade barriers
ac-complished in the Uruguay Round of the GATT (General Agreement
on Tariffs and Trade) will inevitably worsen already serious environmental
problems, because the prices of traded goods do not incorporate
these environmental costs. This enables consumer countries to
import underpriced goods and to export environmental degradation
to producer countries.
The Unwritten Principles of Global Free Trade:
- The cheaper your product , the more you sell.
- Even if cheap means razed
forests and acidified lakes, don't worry
- free trade will make you rich enough to fix everything.
The GATT has one objective - to increase the volume of trade by
freeing it of all barriers. Under GATT the consumption of resources
and the volume of world trade will increase massively in the next
decade. But the global economy cannot grow much more without damaging
the natural ecosystem unless GATT is reformed. These impacts will
be felt mostly by poor, developing countries.
Economists distinguish growth (an increase in the size of the
economy resulting from the use of resources) from development
(the evolution of better living standards). Growth and development
follow different laws. Global free trade may boost a country's
financial turnover (Gross Domestic Product or GDP) and thus enhance
its growth, but it currently ignores human and ecological welfare,
two vital constituents of development. This means that free
trade under GATT's terms encourages countries to exploit resources
beyond the point at which they can regenerate.
As a truly global economy is achieved, competitive pressures will
further encourage concealment of the full costs of the trade in
natural resources.
- GATT encourages the underpricing of goods. This enriches already
wealthy consumer nations at the expense of poor countries. The
environmental damage suffered by hard-up, developing nations forced
to sell products at rock-bottom prices will effectively subsidize
the consumption of traded goods in rich, developed countries.
GROWTH VERSUS DEVELOPMENT
In the 1970s, experts told the small Central American state of
Costa Rica that it could achieve economic growth by exporting
beef for the US hamburger market and timber for the world's construction
industry. Massive loans were secured, forests were cleared to
make way for cattle, and peasant farmers moved to the cities.
But as the trees came down, Costa Rica's fragile soils began to
wash away. Cattle farmers overstocked their ranches and land became
infertile and useless.
Yet the state's cash income grew and economists said that Costa
Rica had achieved a miracle. But 20 years on, when they included
resource depletion in their calculations, it transpired that the
value of the country's forests, soils, and fisheries had dropped
by US $4 billion over 20 years. The money Costa Rica received
from its exports did not reflect the cost of environmental damage
incurred. The country is now left with a legacy of resource depletion
and environmental damage which could have reduced the potential
for future development by as much as 30 per cent.
For Costa Rica read Ghana, the Cameroon, the Ivory Coast, or 50
other developing countries whose income from the sale of their
natural capital does not reflect the damage done to their lands.
Forests play a vital role in preventing floods, guaranteeing water
supplies, and protecting fisheries - services that are worth billions
of dollars but that do not show up in conventional accounting
systems.
Companies and countries compete on the world market by minimizing
production and transport costs. This sort of competition is encouraged
by GATT rules which prevent countries using trade measures to
discriminate between goods on the basis of their production methods.
The Uruguay Round may well increase the drift of the more polluting
industries to the south. As trade barriers are eroded, trade barriers
are eroded, so corporations see the economic advantage of ecological
dumping - i.e. setting up in countries with the lowest environmental
standards. Poor countries and poor communities
which cannot afford to turn work away and which cannot afford
to invest in new, clean technologies, will almost certainly become
havens of pollution.The GATT and most other free trade initiatives
have been directed by the wealthy for the wealthy. Rich countries
have set the trade agenda and stand to profit most from its implementation.
There are winners and losers in all trade deals, and global trade
has favoured the rich over the poor. UN Development Programme
figures show that income inequities between rich and poor countries
have increased steadily during the last 24 years of progressive
trade liberalization.
Estimates suggest that under GATT, the world economy could grow
by up to US$6 trillion within 15 years. The winners therefore
stand to make significant gains, but the losers - most countries
in Africa and some in Latin America - will simply become poorer
and, as their natural resources are plundered and their air and
water supplies are contaminated, their environments and living
conditions will deteriorate.
The Uruguay Round of the GATT will thus reinforce existing economic
and environmental trends. Next year, the GATT is to become the
World Trade Organization (WTO), an international body backed by
a powerful international court and legislation that can authorize
trade sanctions against national laws and individual countries'
policies on social, environmental, and cultural issues.
Now, however, people and some governments are beginning to wake
up to the full implications of global free trade. There is a new
appreciation that trade should not just be regarded as something
that boosts short-term cash flows, but that it should be directed
to serve long-term human needs. This means that it is essential
that countries which import traded goods pay a fair price, which
covers their full environmental cost.
- Unless trade policies and agreements are revised, many of
the environmental gains achieved in the 1980s and at the Rio Earth
Summit in 1992, will be lost.
It is therefore vital to reform trade policies, starting with
the new WTO. This needs to have a binding legal commitment to
encourage sustainable development. The WTO should also have a
strong, permanent trade and environment committee and must, unlike
the GATT, conduct its proceedings in public and respond to the
needs and environmental
concerns of local communities.
In addition, the WTO should overhaul existing GATT rules to encourage
the inclusion of environmental costs in the price of traded goods.
Fair trade measures designed to protect the global environment
should be exempt from GATT rules. And finally, GATT rules must
not conflict with existing, hard-won environmental agreements.
It is not too late. Sustainable development is now part of every
country's development plans. The environment is on the world agenda
as never before. Now is the time to reform trade agreements like
the GATT so that they reinforce - rather than break - the Rio
promises.
ACCOUNTING FOR POLLUTION
European Union (EU) proposals to apply a carbon tax to encourage
fuel efficiency and reduce wasteful and polluting energy use have
already been delayed for two years because, European industry
argues, such a tax would make it less competitive.
When the Dutch government considered adopting a carbon tax before
other EU countries, many transnational companies threatened to
move out of the Netherlands and direct new investments elsewhere.
German chemical companies are threatening to relocate outside
Europe because it costs as much to control pollution in Europe
as it does to cover all production expenses in some developing
countries.
PATENT CONCERNS
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The Trade Related Intellectual Property Rights (TRIPs) agreement
in the Uruguay Round promotes the patenting of plant varieties
and ways in which plants are used. Farmers in developing countries,
particularly in India and the Far East, fear that the world's
largest seed firms will, in time, be charging them huge royalties
on slightly modified versions of seeds the farmers themselves
have developed.
They see the wisdom and skill of generations of farmers
being patented by transnational companies eager to develop new
insecticides and crop varieties to sell at huge profit on world
markets. They say that as corporations are given the freedom to
move into every area of farming, developing countries' agriculture
will become as intensive and mechanized as that of the industrialized
north. Small fields planted with a variety of crops will be replaced
by vast areas planted with single crops, whose growth rates are
enhanced by hazardous agrochemicals. The end result: traditional
farmers will be forced off the land and into overcrowded cities.
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In 1993, half a million Indian peasant farmers demonstrated against
the TRIPs agreement in Bangalore.
In return for a partial reduction of farming subsidies in developed
countries, developing nations have agreed to drop their most effective
import controls. Because developed countries are unlikely to cut
production much, underpriced food surpluses from the north could
swamp some developing countries' agricultural markets. This would
further undermine small-scale farming in these countries, impoverishing
rural communities, destroying traditional cultures, and causing
widespread environmental degradation.
Published March 1994 by WWF--World Wide For Nature (known in the USA
and Canada as World
Wildlife Fund), CH 1196 Gland, Switzerland. Any reproduction in full or
in part of this publication must mention the title, and credit
the above-mentioned publisher as the copyright owner.
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