“There is no need to worry about cooperation and mutual interests if we fail to avoid a nuclear holocaust.  Or if we fail to master the consequences that could result from continent wide hunger catastrophes”. Willy Brandt, Chancellor of the Federal Republic of Germany, 1969-74, and Chairperson of the Independent Commission on International Development Issues, 1979/80, in “Peace and Development”, Third World Lecture 1985.

“We have to get away from the romantic anachronism that developing countries should strive for self-sufficiency in food”.  John Block, US Agriculture Secretary, 1986.

“There is no way the rich in the North can continue to escape the consequences of this misdefinition with business as usual; we’re moving toward a breakdown in human civilisation – and nobody escapes that”. David Korten, People-Centred Development Forum, author of “When Corporations Rule the World”, 1995.

“The US and the Cairns Group (a bloc led by Australia and other developed countries, which never reflects the interests of developing countries) are lobbying for more aggressive cuts in agricultural tariffs . . .” - from manifesto “Our World Is Not For Sale : Priority To People’s Food Sovereignty – WTO (World Trade Organisation) Out Of Food and Agriculture!”, 2/9/03, La Via Campesina : International Peasant Movement ( www.viacampesina.org/main_en/index.php?option=com_content&task=view&id=416&Itemid=38).

“Many experts believe that the only way in which hunger and malnutrition can ever be really reduced is by a massive redistribution of wealth to the world’s poor, including a complete cancellation of Third World debts, huge improvements to infrastructure in the Third World, and a break up of giant agribusiness farms into small family and community-owned farms” (“101 Facts You Should Know About Food”, by John Farndon, Icon Books, 2007, p48).

“What the spike in food prices has made clear to developing countries is that their food security depends fundamentally not on cheap imports, but on enhancing their capacity to feed themselves. The Doha (current, but dormant, World Trade Organisation Round) rules would have further undermined this capacity” Robert Weissman, editor of Multinational Monitor, Focus on the Corporation, 30/7/08, http://www.corporatepredators.org.

As narrated in my article, “Global Food Crisis and Free Trade Disaster”, inWatchdog 118, August 2008 ( http://www.converge.org.nz/watchdog/18/06.htm), Third World (South) efforts for a New International Economic Order (NIEO) had been derailed by the 1980s, thanks to the capitalist industrial bloc. The context on the world scene had thus been set for the rise of neo-liberalism.  In the present article, I shall continue with a broadly chronological outline of free trade and food security, while making connections as appropriate with both current and historical issues and events. The overall idea is to draw various threads together so as to further outline the big picture of food and free trade, with some relevant detail for illustration – all against the background of the previous article, and what else has been published in Watchdog over the years. Emphasis is again on the economic and political factors shaping the nature of the agricultural negotiations in the former General Agreement on Tariffs and Trade (GATT), and then later, the World Trade Organisation (WTO).

The implications of neo-liberalism for food security/food sovereignty were immense and deeply ominous. Assailed by the debt burden and other development woes, Third World nations were especially vulnerable to further exploitative inroads. Moreover, as Soviet Communist industrialism faltered, any real countervailing power to the resurgent Western imperium was rapidly eroding. The Communist bloc had anyway failed to make effective common cause with the Third World, whose stance took the form of non-alignment.  

Baroness Barbara Ward has well described the situation on the cusp of the 1980s. “If one thing more than any other was made abundantly clear by the whole series of international negotiations in the 1970s, it is that the industrialised democracies – which, with Australia and NZ as appendages, and with the Soviet bloc, make up ‘the North’ – have no strategy and no vision when it comes to their dealings with the three quarters of the human race that lives in the developing ‘South’. For over a decade, the North has been discussing with the South the problem of their long term economic relations – the so-called NIEO . . .  whatever the place, whatever the context, whoever the parties, the outcome has been virtually the same. In short, it has been nothing” (“The Third World Challenge : Another Chance For The North?”, Foreign Affairs , Winter, 1980/1; Ward was the author of “Only One Earth : The Care And Maintenance Of A Small Planet” [with Rene Dubos, Penguin, 1972], among other significant works).  

As President of the International Institute for Environment & Development (IIED) in London from 1973 to 1980, Barbara Ward was acutely aware of the importance of ecologically sound and productive agriculture to provide for future population growth. Perhaps she was much too positive about the potential of the “Green Revolution” with its development and application from the 1960s of high yield cereal crops in poorer countries. The application of such new technologies can greatly accentuate inequalities and increase foreign control, as well as inflict serious, long term environmental damage.  But she fully realised the requirements for international cooperation in the years ahead, and the gravity and urgency of the issues confronting humankind. She heartily endorsed the Report of the Independent Commission on International Development Issues under the Chairmanship of Willy Brandt : “North-South : A Programme For Survival”, (Pan Books, 1980. See also my article in Watchdog 118, August 2008). 

Increasingly, at least among environmentally aware development analysts, there was an understanding that somehow humankind had to make a cooperative transition to what came to be called “sustainable development”, and that food security would be central to this (e.g. “The Third Revolution : Population, Environment And A Sustainable World” by Paul Harrison, Penguin, 1992). But such considerations – which have long been obvious to some of us given the conditions of a small, fragile planet – were overridden by the conventional capitalist goals of growth, profits, and power.  “Sustainable development” itself, too, has come to be a strongly contested term with varying interpretations. For instance, James Lovelock objects to the concept of “development” at all, having a narrowly traditional notion of this particular term (“The Revenge Of Gaia : "Why The Earth Is Fighting Back - And How We Can Save Humanity ”, Allen Lane/Penguin, 2006, pp2/3). Instead, in his view, we need to “retrench” in a “sustainable retreat” (ibid, chapter 7), but the implications of some of his own prescriptions, especially nuclear power, are very confused and inconsistent in their implications. This does not, of course, affect the validity of his general thesis on the ecological crisis of industrial civilisation.    

Market economic theory looks to trade expansion and foreign investment for growth. By the mid-1980s, GATT was being vigorously pushed by the US and other rich developed countries as the answer to world woes. So, more “free trade” and more market forces were prescribed for the poor in line with the demands of the transnational corporations (TNCs). Capitalism in its Reaganist/Bush/Thatcherite version proved triumphantly regnant during this period, ushering in the GATT Uruguay Round in September 1986. CAFCA has monitored GATT/WTO-induced free trade in Watchdog since 1991, while the closely associated groups of GATT Watchdog and ARENA also arose to help try and counter detrimental trends, as well as develop positive alternatives. Indeed, various groups in Aotearoa/NZ have campaigned for fair trade, justice, food sovereignty, sustainable development, and a better future. 

In the 1980s then, the need for capital to grow meant keener incentives to develop new areas within the world economy. It also entailed the desire to exploit existing sectors at even higher levels of development. Agriculture was a prime target. A 1985 Trilateral Commission report entitled “Agricultural Policy And Trade : Adjusting Domestic Programmes In An International Framework” was influential in setting the agenda for “reform” according to TNC-mandated interests (Briarpatch, June 1993). The Trilateral Commission has been a top tier grouping of capitalist politicians, businesspeople, academics, etc., who have devised governmental and corporate strategy on how the US, European Union (EU), and Japan, i.e. the capitalist industrial North, or the Organisation for Economic Co-operation and Development (OECD) countries, might more efficiently rule the South; and more broadly, implement the most profitable outcomes for the ruling classes they represent. The Commission’s 1985 report on agriculture was on the theme of moving to more market-oriented policies, with particular impetus towards GATT-compatibility, and making domestic support as least trade restrictive as possible.   

One of the most vital duties of any responsible government is the provision of adequate food for its people. However, market forces saw this area of governmental responsibility as a fresh field for usurpation. Agriculture and food came to be central issues in international trade talks. Underlying the talks then was the prevailing reality of the world economic situation where predatory corporate interests were gathering to extend their global reach in asset acquisition, investment, and market generation. Resultant capital and income accumulation would be expressed in terms of growing inequality and oppression. 

To quote a publication from the stable of one of the main organs of capitalist market ideology : “The driving force of globalisation has been multinational companies, which since the 1970s have constantly, and often successfully, lobbied governments to make it easier for them to put their skills and capital to work in previously protected national markets” (“Pocket Economist” by Matthew Bishop, The Economist Books, 2000, p102). The corporate global power grab is given a positive spin here in terms of “skills” and “work”, whereas the reality can so often be brutal.

Tellingly enough, in The Economist dictionary there is no entry for “multinational company”, let alone, of course, entries for terms like “imperialism”, “accumulation”, “exploitation”, and “surplus value”.  Furthermore, the entry on “free trade”, includes the comment that : “For economists, the benefits of free trade are explained by the theory of comparative advantage, with each country doing those things in which it is comparatively more efficient” (ibid. p94). However, the dictionary also notes that : “Real-world trade patterns sometimes seem to challenge the theory of comparative advantage” even if the agricultural exports of Australia, “or Saudi Arabia’s reliance on oil, do clearly stem from their particular stock of natural resources” (ibid, p95).

Immediately following this statement, The Economist dictionary concludes its entry on “free trade” by observing that “poorer countries often have more unskilled labour, so they export simple manufactures such as clothing” (ibid.). In my previous article on the global food crisis (in Watchdog 118, August 2008), I looked at the case of Bangladesh’s sweated textile workers and their desperate agitation in 2008 about rising food prices. The Economist has such an eminently self-serving view of the world.  With the WTO’s ending of the Multi-Fibre Agreement (MFA) at the end of 2004, Bangladesh and other poor countries were hard hit. Yet, according to Philip Burdon, when he was NZ’s Minister for Trade Negotiations in 1994, “the elimination of the trade distorting MFA will greatly benefit developing countries” (letter to me, 5/9/94). The propaganda persistently peddled on free trade by the NZ Government has been truly Orwellian. Incidentally, Roger Kerr of the TNC-driven Business Roundtable avidly recommends The Economist’s view of the world, while The Press editorial staff trumpet the economic case for free trade as “irrefutable”.

Burdon did actually acknowledge that the least developed countries and other developing countries that were net food importers would “lose as a result of the higher world prices which are expected to be brought about by liberalisation in agriculture” (ibid.).But, then, Burdon claimed that, “these countries will gain more in the long term from the same higher food prices increasing farmers’ incomes and promoting greater food production, as well as from better trading rules and an overall increase in global wealth” (ibid.). Over 100 Third World countries, in fact, were net food importers. At the same time, planetary environmental trends - as documented for instance by the Worldwatch Institute in its annual “State Of The World” reports - clearly showed how the Earth’s capacity for sustainable and growing food production would inevitably come more and more into question. These days Burdon applies his free trade logic as chair of the Asia NZ Foundation.

Central to the whole GATT/WTO undertaking is its declared need and aim to ever grow the world economy, constantly increasing global wealth – apparently into infinity; constantly baking a bigger cake so that crumbs can continue to trickle down to the poor. Unfortunately, however, the whole cake is starting to crumble, the ingredients are running out, and the recipe is badly wrong. To return to the 1985 Trilateral Commission report on agriculture and trade cited above, this study reinforced a range of previous formulations – including a Canadian Federal Task Force on Agriculture report published back in 1970 - that pointed to trends towards the industrialisation of farming, and how governmental policy should capitalise on better serving corporate industrial demands (Briarpatch, op. cit.). These trends included : decreasing numbers of farms, farmers, farm population and labour; fewer family farms along with increasing unit size; greater technological change; less independence for individuals; growing vertical and horizontal integration; reduction in governmental subsidies and support programmes; and greater reliance on, and use of, planning and computer-centred management (ibid.). In reality, this all adds up to enhanced TNC domination and foreign control – exorbitantly feeding the relative few at the expense of the many. Hence the heavy emphasis that is put on meat, dairy, and other such consumer products for the affluent. Centralisation and concentration of capital can go hand in hand with outreach into the fastnesses of fresh fields for exploitation. Of course, as indicated above, it is all ultimately a mirage grounded in cheap oil, and apparently inexhaustible ecosystems . . . based on illusions, subterfuge, and lies.  

In Aotearoa/NZ in the 1980s, the TNC-driven phenomenon of “Rogernomics”, or NZ’s version of neo-liberalism during the fourth Labour government and beyond, transformed our agricultural system along the lines described by the Trilateral Commission and similar studies. While some of the trends noted above have yet to really bite home, rapidly increasing corporate and TNC control is manifest in various dimensions of NZ agricultural production and trade, and already very evident in the control of consumer distribution. It was most significant that a NZ Ministry of Agriculture & Fisheries (MAF) analysis in 1995, the first year of an operative WTO, promoted industrial agriculture, or rather “an agri-food industry” according to the trends identified, “with multinational companies playing a big role” (“Situation and Outlook for NZ Agriculture” [SONZA], p88; see Watchdog 80, November 1995).   

Thus it was within the parameters of capitalist growth imperatives that international agricultural trade policy took shape in the 1980s. Trade talks were directed towards a new GATT Round in the face of widespread Third World resistance. In 1987, India and Brazil in particular were giving NZ Trade Minister, Mike Moore, concerns. In contradistinction, the US and its TNCs like Cargill and Archer Daniels Midland (ADM) have constituted the main driver of the agricultural free trade programme.  During the 1980s, competition between the European Community (EC – later the EU) and the US got pretty intense with open farm trade wars impacting severely on developing country producers through the dumping of subsidised food in national markets.(e.g., see South, November 1987). Although agriculture was just one item on the GATT agenda, which covered a whole spectrum of issues – from industrial tariffs to Trade Related Intellectual Property Rights (TRIPS) - it has proved to be, time and again, a critical sticking point – and indeed, right up to the present, the most significant source of conflict in the WTO.

The decade of the 1980s saw some very significant political manoeuvring that would eventually lead to the crisis disrupting the Doha Round in July 2008. South magazine noted that : “Free trade in agriculture is advocated by the US, the World Bank, and the ‘Cairns Group’ of smaller developed countries like Australia, New Zealand, Canada and Hungary, and ten low cost developing countries, who joined forces in 1986 to press the case for reform of world trade in agriculture” (ibid., p11).  Besides the developed countries listed, the original export-oriented and then generally very US-influenced developing country members of the Cairns Group had a relatively high economic/social standing compared with many other developing countries. In 1984, out of 142 countries, both developed and developing, none of the Cairns Group were ranked lower than 94, i.e. Indonesia (“World Military and Social Expenditures 1987-88” by Ruth Leger Sivard). Moreover, many developing country Cairns Group members were well known for repressive elites working with TNCs against their own peoples. Export agriculture in Cairns Group countries like Brazil, Chile, the Philippines, Indonesia and Thailand came very much at the expense of adequate food security and nutrition. Significantly, too, there were no African countries. As so easily predicted, Africa would be the continent to suffer the worst outcome from the GATT Uruguay Round.  

In March 1989, there was a Cairns Group meeting at Waitangi, Aotearoa/NZ, where : “The 14 Ministers called for ‘full liberalisation of agriculture and its complete integration into the general rules and disciplines of GATT’” (NZ External Relations Review, 1989/2). The NZ Ministry of Foreign Affairs & Trade (MFAT) portrayed the Group as steering “a pragmatic middle course between the two major trading giants”, the US and the EU. In reality, as noted from the start and then regularly over the years by many commentators, the Cairns Group was closely aligned with the US, especially in its targeting of European protectionism, whatever the rhetoric or differing emphasis, or even disagreement from time to time. Furthermore, it was well noted by critics that : “The US and Cairns Group proposals to phase out all farm import controls might imperil the right of developing countries to protect their domestic agriculture, and could subject the world’s most vulnerable farmers to free market competition” (“Hungry Farmers : World Food Needs and Europe’s Response” by Clive Robinson, Christian Aid, 1989, p43).  

A couple of very important points about the origins of the Cairns Group need recall and further emphasis here. Both relate to the forces behind the formation of the Cairns Group since this tallies with the theme of my 2008 Watchdog articles examining the politico-economic processes at work in shaping the current global food crisis. The August 2008 article (Watchdog 118) observed how the US was to the fore in systematically grinding down the initial momentum for a Third World or South-defined NIEO on a whole range of fronts. These fronts ranged from economic leverage to media manipulation and from political cooptation and obfuscation through to straight out covert subversion. The free trade GATT programme loomed menacingly. NZ became an eager appendage to the US in this game, allied along with Australia and Canada in the so-called CANZUS strategic grouping.  

Trade analyst Chakravarthi Raghavan of the South-North Development Monitor (SUNS) and the Third World Network www.twnside.org.sg   has remarked that : “The US effort and policy was well orchestrated, and from the beginning it was consciously aimed at breaking up any solidarity of the Third World countries. Neo-classical economists in international financial institutions and conservative outfits like the Heritage Foundation let loose a barrage about these countries being ‘free riders’ . . .the initial US efforts to break up the Third World unity did not succeed. But gradually it began making headway.  The US and the international institutions under its influence . . . began efforts to create new groupings of North and South, led by the North – e.g., the countries primarily dependent on agriculture for external trade. This last tactic finally resulted in the formation of the Cairns Group, and alienating many of its Third World members (but not its industrial country members who never gave up their basic OECD alliance) from other Third World countries who saw little of benefit to them in the new Round” (Recolonization, GATT, The Uruguay Round & The Third World”, Zed Books and Third World Network, 1990, p76).         

NZ’s role in the early years of the GATT Uruguay Round has been covered more than once in the past in varying detail, both in Watchdog and other publications, including the role of Mike Moore as NZ’s Trade Minister in helping push the US-prescribed free trade agenda onto the Third World (for Moore and free trade in general, see : http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Trade/index.html#Moore).

According to a NZ academic Establishment view, the apparently independent formation and operation of the Cairns Group rather acted to “incite the US to push the Europeans harder on farm subsidies . . . (NZ International Review, vol. XVIII, Number 1, January/February 1993, p12). So it goes. A Press editorial (10/11/92) has actually claimed that NZ was responsible for the initiation of the Cairns Group.  This story has much of the apocryphal about it and indeed seems to bear the self-aggrandising imprimatur of Mike Moore. According to the storyline, the “brilliant” idea for this sort of grouping was put forward by an agricultural economist at Lincoln University (then College), who had also earlier been an officer of Federated Farmers. Moore, as NZ Trade Minister “at the time, took up the suggestion and pushed it strongly. Australia adopted it and the Group was formed at Cairns” in 1986, leading up to the start of the GATT Uruguay Round the same year (ibid.).

Whatever grain of truth might be in the Press story, deeper forces were obviously at work. What this tale most certainly shows is how the export agriculture concerns (and any other relevant politico-economic interests) of client states could so readily fit in with American strategic objectives. The 1992 Press editorial also pertinently noted that : “The views of the group are too close to those of the Americans for it to be a useful formal intermediary” with the EU (ibid.). So much then for any supposedly independent role by the Cairns Group, and for MFAT’s propaganda line!  

The second point worth recalling here in regard to the origins of the Cairns Group is that NZ’s publicly presented case as to how poor countries would benefit from agricultural trade liberalisation was very much based on egregious hypocrisy and calculated lies. A 1987 Cabinet paper that I obtained under the Official Information Act, “Membership of International Commodity Organisations”, plainly revealed this. I have traced the Western opposition to International Commodity Agreements or Organisations (ICA/Os) in the August 2008 Watchdog. In the Cabinet paper just mentioned, Treasury stated that it was “strongly opposed to NZ’s membership” of agreements which are of the “regulatory” or “market duplicating” type. Since the coffee ICA was an agreement of this sort, Treasury wanted NZ out of it. Indeed, Treasury declared that : “In particular, in more often leading to higher coffee prices than would otherwise have been the case, the ICA is manifestly not in the interests of NZ” (ibid.). 

On this basis and related considerations, the NZ government decided to leave the Coffee and Sugar ICAs. No move could have more decisively confirmed the commitment of the NZ Labour Party to a grossly unjust world trading system – a reversal of its early 1970s position when led by Norman Kirk - even as it further facilitated the launch of the GATT Uruguay Round by deliberately using the vehicle of the Cairns Group for its narrowly self-interested purposes. Again, revealingly enough, the Government would have actually stayed in the coffee ICA if the local TNC-dominated industry had felt that there were any benefits worth the token ICA membership fees, and had been prepared to pay for them. In observing that the Government’s decision to withdraw from the ICA “should lead to lower prices” for coffee, the National Business Review (25/9/87, p7) remarked that : “The ostensible reason for the Government pulling out of the ICA is the cost of membership – a mere $24,000 a year” (ibid.).

So NZ was a keen participant in the general US-led sabotage of ICAs of benefit to Third World producers. At the same time, the Fourth Labour government was more than content to use an OECD-dominated ICA, the International Dairy Agreement (IDA), to underpin dairy prices. The 1987 Cabinet paper, cited above, declared of the IDA that for NZ : “Continued membership is desirable because the Agreement provides a price floor, in the absence of which returns to the NZ dairy industry would fall to negligible or negative levels”. Later in 1989, Mike Moore confirmed that higher GATT minimum export prices for dairy products would help underpin NZ’s buoyant export income ( Christchurch Star, 22/9/89).

Former US Ambassador to NZ, Paul Cleveland, had a year earlier warmly praised NZ’s part in helping push Third World nations to “economic reform” (Christchurch Star, 3/10/88). Cleveland said that, “NZ has a very definite role”, exerting an influence quite disproportionate to its size. To be sure, most sadly, NZ’s role has been that of a “Judas sheep”, helping lead the lambs to slaughter. In a 1992 National Radio (27/10/92) debate between Mike Moore and trade unionist Robert Reid on the effects of free trade on food security in poor countries, Moore waxed critical of what he termed “1960s thinking”, i.e. the idea that “the world [is] run by multinationals”.  Moreover, he contended that the price of food would go down “so there would be nothing to stop you feeding the poor”. Yet, a key aspect of the NZ government’s case for free trade, particularly as advocated by Moore, was that prices would go up! Today, high food prices have reportedly plunged over 100 million people into long term poverty and hunger. The real figure for those so affected is probably much higher.

Mike Lays It On The Line  

In 1988, NZ’s view as articulated by Mike Moore was blunt. “NZ is not prepared, however, to exclude developing countries from the obligation to remove trade distorting agricultural policies” (“Protectionism And The Uruguay Round : Towards A New Bold And Broad Coalition For A Successful GATT Round In Agriculture”, Speech to Commonwealth Seminar, London, 18/7/88). As a calculated tactic in his speech, Moore acknowledged that : “Many of the economic problems facing the Third World today spring from policies followed by the industrialised countries”; and, “that many in the Third World have lost faith in the international institutions dotted around Geneva and New York”, seeing them “as dominated by the rich, developed countries and serving the interests of such countries alone”. Meanwhile, he proceeded to deliberately push forward the Trojan Horse of the Cairns Group and its subversion of Third World food security/sovereignty. Trade Aid started to challenge his propaganda back in 1987 (e.g. Press, 27/7/87).  

A key argument put forward by Moore was that “liberalisation of trade in tropical products would result in net price increases to the exporters of such products” which would “rise faster than the temperate zone products which are imported by many developing countries” (Commonwealth Speech, op. cit.). So coffee, cane sugar and similar commodities would supposedly go up in price even as Moore and his Government worked behind the scenes to make sure that these products would stay low in price.  Around the time of the conclusion of the GATT Uruguay Round, an OECD-World Bank study found that while prices for temperate foodstuffs would go up, those for cocoa and coffee would go down. Mike has ever been the political conman. In addressing “the politics of world food production and distribution”, Moore appealed to the very tarnished principle of comparative advantage, claiming that “the GATT is not designed to make the world safe for multinationals”. In the end, just as Moore failed miserably as WTO Director-General, so did the Cairns Group strategy and NZ’s very duplicitous role.          

Throughout the negotiations of the Uruguay Round, the IDA continued to underpin dairy prices in NZ’s interest and that of other OECD members. Another hypocritically pragmatic OECD-manipulated commodity arrangement was the collaborative underpinning of aluminium prices in 1994, the very year the GATT Uruguay deal was clinched, benefiting both banks and big companies like Rio Tinto-owned Comalco, the largest energy parasite and wastrel in Aotearoa/NZ (see Chapter One of my 1996 book “The Cost Of Free Trade : Aotearoa/NZ At Risk” for more detail on these commodity arrangements). This 1994 Western aluminium cartel was specifically aimed at assisting the TNCs, i.e. Rio Tinto and co. On the other hand, Third World bauxite and aluminium producing countries like Ghana, Guinea and Jamaica have long been heavily exploited, and the bauxite ICA undermined in relation to these countries’ interests (“The Aluminium Industry And The Third World : Multinational Corporations and Underdevelopment” by Ronald Graham, Zed, 1984). Market intervention is fine so long as it benefits the rich!

Indebted Russia – indeed, a special object of Western angst in 1994 on the aluminium issue - was even coerced into conformity with the cartel. This market intervention was an example of creating a contango : “A situation where futures prices are progressively higher the further the maturity date [of a commodity contract] is from spot” (“Reuters Financial Glossary”, 2 nd edition, 2003, p46); or in this particular case, an instance of a Western government/corporate cartel pulling strings to ensure the same! In Murray Horton’s comment in Watchdog 78, May 1995 (pp 22/3), “contango” is also defined per the New Zealand Herald (14/2/95) as “a percentage paid by a buyer to postpone the transfer of metal”, facilitated here by the self-serving intermediary role of Western banks. The 1994 Western orchestrated contango on aluminium can be nicely contrasted with the crushing of Third World tin producers in 1985 mentioned in my August 2008 Watchdog article.

In the free market game, the hidden sleight of hand of monopoly/oligopoly capitalism can certainly work in wondrous ways. Meantime, poor coffee, sugar, cocoa, and other commodity producers in the South could all go to hell in the free trade trap! Western futures, commodity, and currency exchange markets have continued to make a mint out of them as ever - billions of dollars in trading profits while Third World peasants and workers continue to only get a pittance for their labour. These days, Prime Minister and multi-millionaire John Key, a former executive currency trader at Merrill Lynch, appropriately serves as the smiling face of globalising capital in our own country.  

But, of course, even Merrill Lynch has now been swallowed up by the Bank of America in the ever growing and compounding credit crisis. A critical tipping point of global capitalism has obviously been reached. “While the object of accumulation is productivity increase, the mechanism of achieving it is through access to credit. Consequently, a divergence between the accumulation of capital in production and of capital in the financial system is created. This is the basis of fictitious capital and can lead to the intensification of economic crises when accumulation fails to overcome the obstacles confronting the continuing expansion of the production of surplus value” (“A Dictionary Of Marxist Thought”, 2 nd edition, Tom Bottomore, et al, Blackwell, 1991, p3). Bruce Jesson incisively analysed the dangers of the financial sector takeover and consequent warping of the NZ economy in his “Only Their Purpose Is Mad” (The Dunmore Press, 1999).

The underlying immediate cause of the current credit crisis lies in the exploitation of sub-prime or shonky mortgages, often blatantly ripping off poor families. These mortgages could not be repaid.  This, in turn, was at least in part fuelled by the deepening inequalities generated by the concentration of American capital. In other words, greedy capitalist entrepreneurs have run into constraints on screwing the poor that they themselves had already engendered. American corporate agriculture and dominance of the world market is rooted within this context, with all the consequent speculative abuse and volatility in futures, derivatives, exchange, and commodity markets. Free trade and growing wealth disparity in the US were fingered quite some time ago as key triggers of a coming major depression - see, e.g., “The Great Depression Of 1990” (1985); “The Myth of Free Trade : The Pooring Of America” (1993); and “Greenspan’s Fraud : How Two Decades Of His Policies Have Undermined The Global Economy” (2005) by Professor Ravi Batra. The Bush Administration’s huge bailout of the Wall Street’s finance sector – once more socialising the losses and privatising the gains – will only further intensify socio-economic inequity with more corporate consolidation and resultant instability.  Meantime, the NZ government pursues closer linkage through a planned Free Trade Agreement with the US (see Bill Rosenberg’s cover story in this issue for details. Ed.).

Certainly in NZ’s case, financial speculation and free trade outreach have increasingly gone hand in hand with dire consequences. Fonterra’s involvement in the 2008 melamine contaminated infant formula (or baby milk) disaster in China is symptomatic of this process. Its now badly damaged reputation was so easily predictable, and has proved an outcome of derelict ambition. Like Nestle (its partner in Latin America) and other TNCs, Fonterra has also been cynically pushing a substitute for breast-milk (see “Controlling Human Consumption : Nestle Replaces The State”, Watchdog 85, August 1997).

An intimate working relationship between the US and the Cairns Group was confirmed by Cairns Group Ministerial meeting documents dated 10-12 October, 2000, that I obtained under the Official Information Act. There was regular formal and informal liaison with the US. Many aspects of the American proposal on agriculture corresponded to those of the Cairns Group according to NZ’s assessment, and the Group was “also coordinating well with the US”. As part of the Cairns Group, NZ rejected any argument “that trade distorting support or protectionist import barriers are essential to addressing non-trade concerns” like “food security” or “environmental protection”. Trade was to be paramount.

Increasingly over the years, however, the Cairns Group ran out of steam. In the long run, big member countries like Brazil and Indonesia were to prove difficult for the Group’s effective operation. Although Hungary and Fiji dropped out, more developing countries, including South Africa, eventually swelled the Group’s total to 19. But a larger number inevitably meant more complicated and cross-cutting agendas, especially as certain agricultural issues became more fractious. Eventually, the Cairns Group came to flounder as a meaningful entity within the WTO. NZ’s Ambassador to the WTO and Chairperson of the agriculture talks, Crawford Falconer, has so far failed to cut a deal.

The collapse of the WTO Doha Round in July 2008 over agricultural protectionism dramatically demonstrated the extent to which Western hypocrisy has now badly backfired. A number of developing countries headed by India, China and Indonesia have stood firm against the American Administration on the right to safeguard their food sovereignty and the use of import tariffs (Press, 29/7/08, 30/7/08, 31/708, 1/8/08 & 9/8/08). The US refused to countenance “a special safeguard mechanism (SSM) for developing countries”, causing the breakdown in negotiations (Press, 31/7/08). 

In typically scurrilous fashion, the former WTO Director General, Mike Moore, has criticised the stand on the SSM by India and China, and most outrageously, even attacked “Indian agricultural subsidies” for distorting trade (Press, 4/8/08). Mike surely has some real affection for that anti-WTO protest banner that so aptly proclaimed, “Michael Moore Starves the Poor”. Indeed, he actually even put it on the cover of his book about his life in the WTO! (for Jeremy Agar’s review of Moore’s “A World Without Walls”, see Watchdog 103, August 2003, http://www.converge.org.nz/watchdog/03/09.htm).

Developing India? 

India ’s rise to prominence on the world scene has gone hand in hand with the neglect and sacrifice of its agricultural population and poor people in general. Development has been skewed in the interests of the top tier of the population. Free trade and the free market have meant that “an estimated 40% of all the world’s severely malnourished children younger than five live in India” (Press, 26/8/08). Almost half of all young children in India – some 60 million of them - are malnourished, while 11 million children are abandoned (Press, ibid. & 9/9/08). Effective protection and support for food security are absolutely essential there. The largest and most dramatic protests against the GATT agenda took place in India and resistance has mounted against the WTO. Suicides have been rife among Indian farmers in recent years, and many have been killed too in episodes of official repression. So India’s strong stand on the SSM in 2008 is long overdue and most welcome. Even more than in China, “development” has been largely benefiting a small urban elite. Even the Indian government has acknowledged that most people have been left out (Press, 26/9/08). To take just one other national example, we see in Thailand’s 2008 political turmoil the crucial role of the urban/rural divide. 

In India and elsewhere, small farmers’ movements have been marching to a different drum to the WTO, World Bank, International Monetary Fund, etc., and are now having some real impact in countering the corporate free trade agenda, effectively pressuring their national governments. It is very unfortunate, however, that so much energy has had to go into building this global movement instead of implementing the desperately urgent and positive work of creating viable alternative systems of agriculture. Third World activists have had to challenge exploitative vested interests in their countries that are backed by all the power of the TNCs, rich country governments, and the international institutions they control. More than ever then today in the developed countries, non-government organisations (NGOs) need to hold their own governments accountable for free market derelictions. 

The Times of India , in welcoming World Bank statistics suggesting a slight improvement in the poverty rate over the period 2002-05, has defended the Indian Establishment’s “hi-tech”, industrialised version of progress, free market “reform”, and corporate and TNC enterprise, along with its trickle down economic beneficence (“Grow For The Poor”, 29/8/08). Limitless horizons seem to beckon ahead for the editors and the class for which they speak; and they were opining on this even as concerns were being widely voiced about India’s declining rate of growth. Yet, “a 2005-2006 Government study revealed hardly any progress in reducing child malnutrition over the past decade and a half – exactly when the Indian economy was exploding and attracting international attention” (Press, 26/8/08). Noted commentator Arundhati Roy, instead, has her feet very firmly on the ground. She is scathing in her denunciations of “development” driven by profit in her Indian homeland, of “the corporatisation and globalisation of agriculture, water supply, electricity and essential commodities”, i.e. the privatisation of the “public sector infrastructure”, and the basic means for life itself (“The Algebra Of Infinite Justice”, Flamingo, 2002, p178). “Think Big” dam schemes like the notorious World Bank sponsored Narmada project are ravaging both people and the environment (ibid. chapters 2&3). NGOs and people’s movements have been valiantly trying to counter these schemes.   

In recent times, the US has further blatantly undermined the Nuclear Non-proliferation Treaty by a new technology deal with India, fostering even more of what Roy laments as “the massed energy of blood thirsty patriotism” (ibid., p251), as well as more elite-oriented big power schemes. “And now corporate globalisation is being relentlessly and arbitrarily imposed on an essentially feudal society, tearing through its complex, tiered social fabric, ripping it apart culturally and economically” (ibid., pp256/7). 

India started to liberalise economically in 1991, tossing aside what remaining socialist principles it still retained. But already, by 1990, as Professor Anil Gupta of the Centre for Management in Agriculture, at the Indian Institute of Management in Ahmedabad, observed, the Green Revolution was creating yawning socio-economic/cultural differences “leading to demands for separate states and more autonomy. There is no denying the fact that the next round of violence could be in the backward regions if the neglect continues. The recent trend towards inviting multinational corporations to initiate contract farming operations in the high growth regions will, almost inevitably, bring the Latin American or Filipino experience of huge disparities in land ownership and income to India. It is a pity that planners cannot see that!” (Food Matters Worldwide 7, July 1990, p31). Such liberalisation was embraced by corporate and short sighted media and academic commentators in NZ (e.g., Press, 27/8/93 & 20/2/95; NZ Herald, 9/12/95).

A particularly obscene example of this kind of “development” process was illustrated by an observation made by the then Agriculture Minister, Jim Anderton, on a visit to India in March 2008. Anderton wanted NZ to play a part in expanding India’s fledgling supermarket industry, i.e. cater for the needs of the new super-rich and middle class in a country with 800 million poor people. As an example of NZ’s potential gains, Jim pointed to a bottle of NZ wine priced at a business dinner in a five star Indian hotel which cost $NZ313 plus 200% tax. The same brand was selling in NZ from $11-$19. He even pointed to India’s population “exploding” by 22 million extra mouths a year as a key reason why India is actively seeking a free trade agreement “instead of us chasing them” ( www.ruralnews.co.nz/Default.asp?task=article&subtask=print&item=15902&pageno=1). I remember lobbying Jim more than once in those early days of the GATT Uruguay Round with information about food security concerns, etc. But apparently exploiting those short term, capitalist opportunities in life can be so overwhelmingly rewarding . . .  even if it means an ultimately exploding outcome for everyone.

Over the past couple of decades or so in India, development in tune with the demands of globalisation and the free market has been severely aggravating social tensions according to various religious, ethnic, caste, class, and regional divisions that had already become stressful during the colonial and post-colonial eras (“India : The Roots Of Crisis” by S Saberwal, Oxford University Press, 1986; “Riot After Riot : Reports On Caste And Communal Violence In India” by MJ Akbar, Penguin, 1988). In particular, Hindu and Muslim fundamentalist extremism has fed on each other. Deepening economic inequalities have engendered aggressive communalism, and widespread ethnic and political violence in a huge, diverse, multi-faceted society needing more than ever today committed adherence to Gandhi’s principle of “ahimsa” or “non-violence” (“The Algebra Of Infinite Justice”, op. cit., chapter 7; Press, 8/9/08). 

Ironies abound. NZ firms, e.g. Provenco, hunt for profits in areas like retail petrol pump automation backed by the oil industry (Press, 3/1/08). India opened the door to the oil and energy TNCs like Enron in early 1994 (Press, 26/2/94). Enron’s investment proved to be a notorious disaster (“The Algebra Of Infinite Justice”, op. cit., pp144/49). But in 2008 State intervention in the oil market meant less profit than there might have been in Provenco’s particular case. Damn! Why?! Well, you see : “Dissatisfaction is growing as the upper and middle classes get richer and the Government, being a democracy, has to keep the poor happy by making sure the necessities are affordable. This can trip up the best laid plans of foreign companies” (“Opportunities For NZ Businesses As India’s Prosperity Flowers”, Press, 3/1/08; also “Find Your Niche In India”, Press, 8/1/08 : both by Reuben Schwarz, who “travelled to India as recipient of the NZTE Qantas Media Award”). 

Mahatma Gandhi’s vision of India as a network of local self-reliant villages, his development path of self-sufficiency - of “swaraj” and “swadeshi” working upwards from the bottom - is far more valid than any globalisation fantasy. Most ironically, of course, Gandhi’s vision has been dismissed by many as outmoded romanticism. But his version of sustainable development is deeply tuned to the emerging era of scarcity and to earthly ecological requirements in general. Ironically, at the end of the 1980s, for some perceptive observers : “Development, far from lifting India into the ranks of the affluent, is now coming to be seen as the latest and most ruthless form of colonial exploitation” (“The Menace Of Development” by Walter Schwarz, Guardian, 3/7/88). Lamentably enough now, it was noted at the time how : “Ironically, ecological ideas are more respectable in India than anywhere else thanks to the Mahatma” (ibid.). These days, Vandana Shiva and others work in the Gandhian tradition, using the most appropriate knowledge and ideas in science as well, especially for agricultural self-sufficiency (e.g., see the article on trade by Shiva and Colin Hines in Pacific Ecologist 12, 2006, pp55-57 : http://pacificecologist.org/archive/14/).

In the build up to the 2008 election, the National Party’s economic vision for NZ’s future was that : “She’ll be right, Bill English reckons. We’ll sell more food to Indians and Chinese at higher prices” (Sunday Star Times, 10/8/08). Stuff the poor, hungry and oppressed!  Indeed, both main parties express the same bankrupt world vision. We must constantly challenge it. 

Christian World Service (CWS) has a number of videos and DVDs that look at the dramatic and detrimental changes to rural agriculture worldwide caused by the giant food corporations and the change from growing crops to bio-fuels, e.g. “The Global Banquet”. Contact CWS : PO Box 22652, Christchurch 8032; phone (03) 3669274; Email cws@cws.org.nz; & Website : www.cws.org.nz