Peter Mandelson, EU Trade Commissioner and former Tony Blair cabinet member, has 
been using strong rhetoric and veiled threats to cajole resistant African countries into new trade agreements with Europe. Meanwhile, across the Atlantic, tens of thousands of Mexican farmers marched on Mexico City in opposition to the final stage of the liberalization of agricultural trade under the North American Free Trade Agreement (NAFTA).
These two scenarios share the common feature of highly developed industrial economies selling a new trade relationship to much weaker and less developed economies in the name of liberalization. If Mandelson gets his way, the resistance to the NAFTA agreement in Mexico may be a foretaste of things to come in Africa.
Peter Mandelson earned his political stripes as one of the leading idealogues in the Thatcher-esque “New Labour” faction of the Labour Party in Britain. While serving as a Blair cabinet member, he was known for chumming with wealthy businessmen under investigation and accepting gifts from them. He was twice publicly shamed out of the cabinet, and in 2004 he was exiled to his current position in the European Union.
Since then, a very earnest Mr. Mandelson has made it his personal mission to implement liberalized trade relationships with the less developed countries of Africa, the Caribbean and the Pacific (the “ACP” countries). Such has been Mandelson’s fervor that when European Commission President Manuel Barroso suggested that Economic Partnership Agreements (EPAs) with dissenting African countries could be delayed pending further negotiation, Mandelson denied Barroso’s statement and insisted that there was no time for delay. ( see: http://allafrica.com/stories/200801290565.html)
Existing trade arrangements gave the ACP countries, many of which are former European colonies, preferential trade status. However, these arrangements are subject to challenge under World Trade Organization (WTO) rules. The EPAs are a tool for phasing-in the elimination of trade barriers and opening the economies of the ACP countries to goods and investment from the outside.
Mandelson worried that unless the EPAs were agreed, Europe would have to “fall back on our default preference scheme for all developing countries, which is less generous than our current scheme. The EU is not threatening to raise tariffs for these countries”, he wrote, “but is doing all it can to avoid this.” (see: http://www.guardian.co.uk/comment/story/0,,2201993,00.html)
At the same time as he was not threatening the ACPs that failure to accept the terms on the table would make things worse for them, Mandelson also offered further assurances. “EPAs won’t mean ‘free trade’ between the EU and ACP countries from January 1 next year, or any time soon”, he said. In other words, this was not to be the brutal shock therapy engineered for Poland, Russia and Chile by Jeffery Sachs. It would be a gradual and sensitive process, “taking place over many years.”, as a European Commission document stated (see: http://www.egovmonitor.com/node/16669). Moreover, the EU Commission promised billions of euros in “aid for trade”.
These reassurances were extended in order to allay the legitimate fears of the ACP countries that trade liberalization could have severe economic and social repercussions for them. Promises of development aid have a checkered and disappointing history, and it is little wonder that many ACP countries have not considered such promises sufficient to warrant letting down their guard. What about the gradual imposition of liberalized trade rules: does this really insulate poorer countries from negative effects? We can turn to the Mexican example for the answer.
NAFTA was signed fifteen years ago by Canada, the United States and Mexico. It stipulated a phase-out of trade barriers over a period of a decade. Agriculture was given a longer fifteen year phase-out period, which means that the process was complete on 1 January this year.
Despite the “gradual” introduction of the NAFTA reforms there have been significant consequences for the workforces of participating countries. By the conservative calculations of the U.S Department of Labor, the U.S. has lost more than half a million mainly manufacturing jobs as a direct result of NAFTA (see: http://www.citizen.org/trade/forms/taa_search.cfm?dataset=1).
The cost in Mexico has been much higher. Mexican farmers-especially smaller producers-have been hard hit by liberalization of agriculture. The huge influx of Mexican immigrants into the U.S., which has become such an incendiary political issue, is attributed by many observers to the impoverishment of Mexican small farmers as a direct result of agricultural imports under NAFTA. (see: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/07/31/MNGIVK8BHP1.DTL). Small farmers in Mexico cannot compete with the economies of scale enjoyed by the giant agri-businesses north of the border.
The Mexican economy entered the NAFTA process at a relatively high level of economic and infrastructure development. Moreover, Mexico’s geographical proximity to the U.S facilitates further development by keeping overheads like transportation lower. The ACP states which now stand on the brink of comparable agreements with the EU would be starting at a much lower level of development than Mexico and are physically much more remote from the industrial North. If Mexican farmers and workers are experiencing hardships from NAFTA 15 years into the agreement, what can the less developed ACP countries expect down the road from phase-in of WTO-driven liberalization?
Underlying the relentless march of trade liberalization around the world are the policies and decisions of the WTO. Although the structure of the WTO is democratic in form, delegates from less developed countries complain of being left out of the important backroom meetings where the wealthy nations discuss strategies and make deals. In practice, these strategies and deals have one goal: maintaining terms of trade favourable to the most developed nations, while sweeping aside social, cultural and environmental concerns that might interfere with the money-making agenda. WTO principles are regarded as inviolable laws and are used to bludgeon less developed nations into submitting to the desires of the wealthy nations.
Peter Mandelson and his colleagues promoted the shameful downgrading and privatization of public services in Britain during the Blair administration. Not satisfied with this accomplishment, he wants to continue his work on an international scale. The principles enshrined in the WTO give him precisely the tools he needs to accomplish this mission. The ACP countries will do very well to resist Mr. Mandelson’s bluster and stick to development agendas which put the welfare of their people ahead of the profits of offshore and multinational companies.
