“Whoever commands the trade of the world, commands the riches of the world, and consequently the world itself .” – Sir Walter Raleigh
The breakdown of the Doha round brought a few intriguing economic trends to the fore. Mandleson’s laissez-faire clashed with Sarkozy’s protectionism. Nath forced a stalemate to a roar of applause from his Indian backers. America was found wanting as it could no longer dictate trade on its terms. Since September 11th a world shift has occurred as the West’s economic clout has slowly, steadily, surely eroded away. A mushrooming Chinese middle class, a surging (if ever poverty stricken) India and the nationalisation-lite of Russian oil have made their mark in the last half decade. Wars cost, and the War on Terror is no different.
The WTO talks revolved around perhaps the most crucial segment of our markets today: food. Agricultural commodities are the very essence of our day to day sustenance. In the West we are apt to forget how basic a requirement this is, provided, as we are, with 24 hour open-on-Christmas supermarkets, stocked with luxury confectionaries of every possible colour and hue. How can it be then that cocoa farmers in Ghana have never even tasted chocolate? The answer lies in raw crop tariffs being low while the limits on processed foods are considerably higher. The cocoa used by Mars in Slough, UK might be sourced from the third world, but the finished product is easily too expensive to be commonly affordable there.
Perhaps the laissez-faire deregulation of all these tariffs could be the miracle cure? It seems unlikely. To be sure, abolishing the tariffs means that Ghana can import and sell chocolate bars for a cheaper price. Broaden this example for more needed commodities and consider what happens. The Cedi might well purchase more, but marginally so. In any case, why would a successful producer of chocolate bars wish to expand its African market, diverting resources away from more profitable ventures? I would venture a guess that if all such tariffs were abolished, it would be the surplus and unsold excess that would find their way back. In other words, the producers would adjust an erratic supply against their First World sales rather than work towards the improvement of the indigenous market.
Now it is fairly obvious that was Ghana allowed to profit from a high export tariff it would reap dividends. Admitted, this is dependent on competing cocoa cultivating countries doing the same, otherwise no-one would simply buy from Ghana. Yet remember that out of the top five major cultivators of the cocoa plant, four are West African. A mutual tariff hike would be in the interests of all of them. For the global market chocolate consumption, a luxury good, is growing not falling, doubling every twenty five to thirty years. West Africa could see real returns which could be used to boost their economy. Industrial plants may have to relocate to the continent to remain competitive. Isn’t, then, the equitable solution to our trade problem to provide weaker countries with strong tariffs and a package of enticements for industrial producers to shift there? Yet I must admit that there is a snag. Come on, do you really think the Americans, the Europeans, the Chinese, the Indians or the Russians would ever allow that to happen?
