By Jeff Rudin | Daily Maverick | 06 Aug 2023
The very language of trade negotiations is the language of war. Once concluded, the trade agreements give way, with astonishing cynicism, to the language of double-speak and deception.
“The problem is not that international trade is inherently opposed to the needs and interests of the poor. but that the rules that govern it are rigged in favour of the rich”.
I wager that not many people will guess who coined this aphorism from 2005. Trevor Manuel! Our then Minister of Finance, so much beloved by the IMF, World Bank and the rich that his resignation in 2008 in solidarity with the enforced resignation of President Mbeki, caused the rand to plummet until his quick rescinding of his resignation.
One wonders what Manuel would make of international trade today. Unlike the quaint days of 2005, the rich no longer bother making rules: they now simply break them, unilaterally. More striking still is that they get away with their contempt for their own rules. Two egregious instances of this are the EU’s Carbon Border Adjustment Act (CBAM) and the US’s Inflation Reduction Act (IRA). Both have major implications for so-called developing countries, both were introduced unilaterally, both are in breach of a swathe of international trade agreements, and both have been accepted by their many victim countries with acquiescence.
To protect the competitiveness of EU producers against imports from countries, which, unlike EU producers, are not taxed on their greenhouse gas emissions to the same EU level, and without any referral of the matter to the World Trade Organisation (WTO), the EU will impose what it considers to be a fair price on the carbon emitted during the production of these imports. This will begin from 1st October 2023. With a cynicism all too familiar with greenwashing, the EU claims that CBAM is intended to ensure that its climate objectives are not undermined. The real reason is the protection of the competitiveness of its economies. In this respect, they are no different from all industrialised countries. No one wants to disadvantage their economies by being the first and only one to introduce measures they all know are urgently required to tackle climate change.
CBAM allows the EU to have best of both worlds: They claim the climate change moral high ground while retaining their economic competitiveness. Globally, protecting business comes way ahead of protecting humankind from climate change.
South Africa is no different in this respect. South Africa’s (fundamentally) fictional carbon tax is designed to keep our industries competitive in the entirely fictional global ‘free-trade’ to which we are committed. Against this imperative, the estimated $1.5 billion our exporters will pay to EU coffers and the 4% decline in SA’s overall exports to the EU, is considered cheap.
Again, with no reference to the WTO and similar trade agreements, the US has unilaterally introduced its Inflation Reduction Act (IRA). Unlike South Africa, where our response to a sick economy is austerity, the US treats its sluggish economy by committing a whopping $369 billion to stimulate its economy by a variety of public financed incentives hailed as being the most significant climate legislation in U.S. history. Its primary focus is renewable energy.
Pravin Gordhan alerts us to some of the unsavoury implications of the IRA for South Africa and other “developing countries” Drawing on Denene Erasmus’s article, we learn that
- He has “huge concern” about the US (and other developed countries) using this finance to “outsmart and outrun” everyone else.
- He is alarmed about the IRA providing the money for “green nationalism”, understood as a country developing “dominating green technologies”, which they “don’t share with the rest of the world”. The technological developments promoted by the IRA are intended to benefit the US rather than being a universally recognised public good to which the whole world has free access. (What he didn’t say is that the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) is specifically designed to rig the rules in favour of the rich.)
- ‘Green nationalism’ obstructs the universally agreed need for the fastest transition from fossil fuel-dominated energy to renewables by making developing countries pay for the privilege of using the ‘intellectual property’ embedded in renewable energy.
Although hardly heard, Gordhan did out least speak out against the IRA, as did Nkosazana Dlamini Zuma. So, too, has Rob Davies, the former Minister of Trade and Industry who confronts both CBAM and the IRA (“Navigating New Turbulences at the Nexus of Trade and Climate Change: Implications and Options For Africa”). By contrast, the standard response to both these issues by our political leaders, policy advisers and trade specialists is how best to adapt to these faits accomplis (and, and). They seem unwilling even to mention that both measures are in breach of the cardinal principle entrenched in the WTO and (virtually) all other trade agreements: the prohibition of anything market-distorting in what is supposed to be the world of free trade.
MIGHT IS RIGHT: THE DOUBLE SPEAK OF TRADE AGREEMENTS
Carl Von Clausewitz, the celebrated 19th-century military theorist, is best known for his aphorism about war being the continuation of politics by other means. Trade is the continuation of the politics of war by other means. The very language of trade negotiations is the language of war. Amongst trade negotiators – including NEDLAC, the National Economic Development and Labour Council (where I was a COSATU representative for several years) – the standard approach is to view matters in terms of what is openly referred to as offensive and defensive interest: the very language of hostilities. Once concluded, the trade agreements give way, with astonishing cynicism, to the language of double speak. This article doesn’t allow for elaborating the ugly realities masquerading behind the sweet talk of trade negotiations. Two examples must thus suffice. The first is the heavily one-sided trade agreement between South Africa and the EU of 1999, while Mandla’s South Africa was still supposedly the darling of the world. It’s called the Trade Cooperation and Development Agreement (TDCA). With an African focus, the EU’s entrenchment of its colonial privileges are called Economic Partnership Agreements. These so-called EPA’s are like a partnership between a rider and an unwilling donkey.
All trade agreements impinge on the sovereignty of mainly the less powerful countries. They occasionally do so to the displeasure of the most powerful country. Thus, the WTO’s Appeal Tribunal that enforces WTO rules has been paralysed since the days of President Obama and all subsequent Presidents blocking the appointment of new members to the Tribunal. While the US gets away with such display of its might, the less powerful countries have their sovereignty trampled by design. The General Agreement on Trade in Services is a prime example. South Africa’s constitution commits the government to the progressive realisation of the constitution’s Bill of Rights. GATS commits our government – all governments – to the progressive realisation of liberalisation, of the deregulation of everything in pursuit of profit maximisation. GATS is deliberately designed to make it almost impossible for most countries to change policies, regardless of the policies of new governments no matter how democratically they were elected. What Gordhan calls “Green Nationalism” is – and long has been – deeply entrenched in a host of WTO agreements. We sometimes still speak of developing a local renewable energy industry. Apart from a few NGOs – like AIDC (where I work) – nothing is said about the trade barriers to this much-needed local industry, which is also where most of the new renewable energy jobs will be created. (Jonathan Cannard, The Impediments Trade Agreements Pose to a South African Renewable Energy Industry, 2001). And who but old trade specialists have ever heard of the WTO Moratorium on Customs Duties on Electronic Transmissions of 1998(!)? Between 2017-2020 alone this Moratorium has deprived what was once call the ‘third world’ – including South Africa – of $56 billion of tariff revenues? What for workers is the global “race to the bottom” is yet another largely unknown consequence of rigged WTO agreements (also)
Yet all we hear about trade in South Africa is Agoa! Not, mark you, how some leading Congressmen, blatantly trample over South Africa’s supposed sovereignty sanctioned by international law, but rather about incalculable damage South Africa will suffer (and) if excluded by Agoa (the African Growth and Opportunity Act). Leaving aside the cynicism of the growth and opportunity allegedly being offered – when structural adjustment programmes imposed on many African countries resulted in most of such staples as rice, soybeans, wheat, cooking oil and sugar being imported – there is virtual unanimity that South African agricultural exports would be particularly vulnerable without Agoa’s duty-free access into the US. In 2015, South Africa acceded to its then-threatened exclusion from Agoa unless it acquiesced to US bluster and allow – wait for it – duty-free surplus US chicken legs!
Agricultural exports are a major beneficiary of duty-free entry to the US (even though 70% of our chicken imports are from Brazil). Why, one may ask, are we increasingly exporting food when increasing numbers of us are experiencing hunger? Amongst my answers to why we allow the rich to rig the rules in their favour is because we constantly confirm we are the fools the powerful take us to be.
AGRICULTURE: ITS FAIRY TALES AND UNWELCOME REALITIES.
The fiction we readily accept is that the nice farmers involved in commercial agriculture work such long hours in order to feed us. Feeding us has little to do with agribusiness. This isn’t a moralistic critique of agribusiness. They, like all competitive businesses, are driven primarily by the need to maximise profit. To this end, they will grow and produce anything, and in the amounts their hired experts predict will be most profitable in the global market.
The UN Food Systems Summit in Rome in July 2023 sought to tackle the global problems arising from food being no more than a commodity competing amongst others for profits suitably attractive for investors. In his opening address to the Summit, UN secretary general Antonia Guterres said the purpose of the Summit was to “fulfil the most basic of human rights: the right to food.” He continued:
“In a world of plenty, it is outrageous that people continue to suffer and die from hunger. The first summit helped shine a spotlight on a core truth: global food systems are broken, and billions of people are paying the price.”
The Summit, with 2,000 participants from more than 160 countries sought to measure meaningful changes made to food systems at global, national and local levels since the first such Summit in 2021. The innovation of this first Summit was that in addition to governments, the private sector, all other sectors, communities and all members of society need to work together to create food-systems transformation.
South Africa’s domestic food market is important but what is grown or produced and in what quantities is – like everywhere – determined by what is expected to maximise profits, rather than the food needed by most people. The consequences are spelt out in harrowing detail in another Daily Maverick article, written this time by Mbali Ntuli. Her article – “Childhood stunting and malnutrition are critical health challenges for SA” – is most challenging because what she says has long been said of post-1994 South Africa by academics such as the late Professor David Sanders in books and numerous articles. Sanders’ main contribution has been his research on the vital role played by large food corporations in South Africa’s high rates of low birth weight, malnutrition, obesity, and disease all aggravated by supermarkets who make only junk food affordable to most South Africans. Dr Tracy Ledger’s, An Empty Plate (2016) follows Sanders’s lead in this matter.
These political economic factors have a long history. The Irish potato famine of 1844 is pertinent, not least because in our colour-coding age its victims were all white. The bare facts of this famine are well known: Ireland’s population fell from almost 8.4 million in 1844 to 6.6 million by 1851. About 1 million people died and perhaps 2 million more eventually emigrated, while malnutrition marked many who survived. What is far less known is that potatoes, the staple diet of most of the population, were exported during the famine, as were other food products. The headline to the Washington Post of 2019 tells all: “THE IRISH FAMINE: COMPLICITY IN MURDER”.
The murder should serve as no more than a reminder that feeding people is a low priority. The primary purpose of commercial farming is to maximise profits in the global market. Markets make money for a minority and many forms of misery for the many. ‘Markets’ – a euphemism for capitalism – unavoidably create and reproduce inequality everywhere during the 400 years of its dominance. Yet this over-arching reality has no recognition in the UN’s Food Summits.
INEQUALITY: THE SEEMING PERMANENCE OF POVERTY
We’ve become so accustomed to worldwide regression that we seem to have forgotten some instances of progression: like the growing worldwide recognition that inequality and poverty should not fatalistically be accepted as immutable. Thus, we do increasingly draw on science to provide the understanding of what needs doing.
Mbali Ntuli, whose article I have previously referenced, is the founder and CEO of Ground Work Collective. She concludes her article on childhood stunting and malnutrition with these science-based insights.
“We believe that childhood stunting can be effectively addressed if we invest in early childhood nutrition and healthcare, increase food production at household level, and promote sustainable agricultural practices that improve access to fortified foods. Only then can South Africa break the cycle of malnutrition, improve the well-being of its citizens, and foster a healthier and more prosperous future for the nation”.
The only exceptional aspect of what she says is that it is singularly ignored, as it has been for a very long time. This begs the question: Why?
The same can be said of the science of climate change, since at least 1988. At the end of July 2023, UN secretary general, Antonia Guterres, addressing a news briefing on scientists’ confirming that July was set to become Earth’s hottest month on record, issued yet another of his stark warnings: “The era of global warming has ended; the era of global boiling has arrived.” In January 2023, he addressed the World Economic Forum, this time on the fossil fuel industry’s attempts to keep secret or undermine the science that threatens their expected profitability. “Just like the tobacco industry,” he noted, “they rode rough-shod over their own science. Big Oil peddled the big lie. … . It feeds a culture of climate misinformation and confusion. And it leaves the door wide open to greenwashing,” In June 2023, he lambasted the fossil fuel industry for seeking to “knee cap” climate progress. He called on the fossil fuel giants to “cease and desist influence peddling,” especially at the Conference of the Parties (COP), where the ‘parties’ are the political leaders of the member countries of the UN.
We know what the fossil fuel companies do and why. We also know that blaming them is far too easy. “Economics is a political argument,” in the pithy words of Cambridge University’s world-renowned economist, Ha-Joon Chang (Economics: The User’s Guide, Penguin Books). This obliges us to ask: Why are politicians so open to “influence peddling” and “greenwashing”?
My single answer both to why science is ignored when tackling hunger and why politicians are so ready to ignore the climate change science they accept is the imperatives of our political economy: capitalism.
Returning to Trevor Manuel’s wisdom about the rules always being rigged in favour of the rich, the challenge for those of us who rage against inequality and climate change is an even bigger challenge. Whether or not we’re aware of it, we all have – because we need to have – an understanding of life, the world and our place in it. Allowing this understanding to be questioned by the privileged threatens our intellectual and psychological well-being.
This is why, I suggest, we allow the powerful, in the first instance, to ignore the science they don’t like. When this option is not open to them, we allow ourselves to be comforted by the doubts they deliberately manufacture. Science ultimately wins but only with single issues, like tobacco smoke. What is needed is for us to connect all the dots and then take the final and most difficult leap. Radical means getting to the root of things. Applied here this means imbibing that the political economy we take as natural is not immutable and, moreover, needs radical surgery, at least. What we individually do with this new understanding is open to near-infinite possibilities.
But there is one certainty: Without a critical mass embracing a different understanding of the present, and the past that got us here, the future is guaranteed to remain rigged in favour of the rich, with all the avoidable injustices, sufferings and deaths that entails. DM
*This Opinion Piece was first published by the Daily Maverick.