Perspective
Free trade or fair trade?
Caribbean bananas hang in the balance
Raymond Austrie is General Manager of Dominica Banana Producers Limited
- the producer company responsible for supporting the island's 900 growers
and exporting their bananas to the UK. Like all the banana-reliant economies
of the Windward Islands of the Caribbean, Dominica faces an uncertain
future as the European Union, responding to pressure from the World Trade
Organisation, opens more of its markets to bananas produced on a large
scale in Latin America.
Bananas are still an important part of rural life and economic stability
in Dominica, providing our main source of foreign exchange in the agricultural
sector. In the immediate term for us there's no alternative to bananas.
We have 900 full time banana farmers and their businesses employ another
6000 more. The fruits of their labour - 17,000 tonnes of bananas exported
to the UK a year - bring to this island East Caribbean $20 million most
of which (90 per cent) goes into producers' pockets.
The main threat to us now is market instability. Our exports to the UK
used to be considerably higher but, as a result of European Union reforms,
our market share has been falling. We believe that any change in the current
system - where we have a guaranteed place in the market - will lead to
a price war. Small farmers everywhere are the ones to suffer when free
trade rules. If any instability occurs, such as a drop in prices, the
buyers - the supermarkets - will not make up for it. Instead, it is always
passed on to the producers resulting in lower and lower returns.
One economic theory does not fit all
Economic theories on world trade are mainly developed for developed economies.
When you apply rich-based theories to young economies such as ours it's
like saying you want a man to compete with a baby! It's nonsensical. To
take trade rules designed for an advanced economy and apply them to countries
whose economies are in their infancy is illogical and irrational. This
is why the world needs to make concessions for economies of developing
countries, under the Cotonou Agreement, to provide opportunities to generate
export revenue which can finance their development, and so that we can
participate fairly and properly in world trade. The right of small countries
to participate fairly in the world economy - that's the issue at stake.
Despite our limitations, we've been doing our best to produce high quality
bananas. Our buyers inform us that our quality is as good as the competition.
However, in terms of productivity, there's no way to keep up with the
multinationals in Latin America, even though their high yields are often
achieved at a very high social and environmental cost, which is not factored
into their costs of production.
However, we have made progress in reducing costs. By collaborating with
our sister Windward Island countries, we are lowering investment in inputs
by procuring goods, including fertilisers and packaging materials, in
bulk. But these measures will still not put us on an equal footing because
those well-endowed with technology have the power and influence.
Equal rights to markets
The challenge to the WTO and the EU is to find mechanisms in trade rules
to ensure market access for all. The big, Latin American banana companies
are arguing for total market access. Small countries have the same rights:
to participate fairly and properly in world trade.
Failure to find a way to trade fairly will have a calamitous effect on
small countries like ours. History tells us so. It's not a question of
theory, it's a question of evidence. It will result in instability. In
practical terms, instability means that youth unemployment, currently
running at 50 per cent, will increase. It means the number of people of
living in poverty - now 30 per cent - will rise. It means the ability
of government to finance development will reduce considerably.
The writing is on the wall. Do we want to proceed with this liberalised
world economy despite the impact on developing countries? In 2005 a meeting
held in Brussels with representatives of the banana industry - large and
small - called for a proper evaluation of the previous impact of changes
in the banana trading regime. That's the sensible way to proceed. It would
be a win:win situation. We would all benefit, multinationals and small
produces alike. Why then accept a situation when the only winners will
be the supermarket conglomerates in Europe - because they will pay less
for bananas - while everyone else loses.
We need managed trade. Not just free-wheeling trade that destroys everything
in its path. If you go in the sea and destroy all the small fish in the
sea, we know what will happen. If you go to the forest and destroy all
the small trees and plants, we know what will happen. Globalisation means
we are in this world together. What happens here in Dominica will affect
other economies, even in the US and Europe. For example, we import EC$40
million worth of goods a year from the USA. If we have instability, we
will not be importing and that will affect businesses and jobs in the
countries we buy from.
We live in an interdependent world where big and small should learn to
live and prosper together.
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