Inter Press Service | 6 July 2007

TRADE: EU Policies ’Predatory’

By David Cronin

THE HAGUE, Jul 6 (IPS) — The European Union’s trade policy has been condemned as "predatory" by a leading anti-poverty campaigner from India.

Smitu Kothari, director of the organisation Intercultural Resources, voiced concern about how there has been little public debate in India over a planned free trade agreement between the New Delhi government and the EU.

Talks between G.K. Pillai, India’s commerce secretary, and David O’Sullivan, director-general for trade at the European Commission began Jun. 29.

The talks are aimed at scrapping duties currently applying to 90 percent of goods traded between the two sides. The Commission has predicted that a successful outcome to the negotiations would boost EU exports to India by 57 percent and Indian exports to the Union by 19 percent. The EU executive is also hoping that an agreement will make it easier for western firms to operate in South Asia.

But Kothari argued that assurances from the EU should not be taken at face value.

"If I look at the nature of European investment in the last 15 years, I find that it is reinforcing inequality and reinforcing environmental harm," he told IPS. "A significant proportion of it is essentially predatory. It is about how the value added from Indian labour and resources can best be used to make profit for Europe."

Kothari exhorted the EU to be transparent about the real impact of trade liberalisation. "One of the major issues on EU-India trade is that there is almost no debate on the contents of trade agreements," he added.

While the Commission has officially stated on many occasions that it wishes to use trade as an instrument for alleviating poverty, Kothari suggested it has not yet matched its rhetoric with action. "Europe needs to be far more responsible as an economic player if it wants to demonstrate that new agreements will be more inclusive and will genuinely lead to enhancement of justice and dignity."

Kothari was speaking at a session on global inequality at the 50th anniversary congress of the Society for International Development (SID) at The Hague.

Although India has had robust economic growth in recent years, it has experienced a "race to the bottom" since the early 1990s in terms of social rights, Kothari observed. Regulations on labour, the environment and access to land have been dismantled at the behest of multinational corporations.

Some 25,000 cotton farmers have committed suicide after finding themselves in serious debt. This crisis, he said, could be linked to how traditional agriculture has been undermined by the "aggressive introduction of genetically modified seeds."

He expressed dismay, too, about proposals to hand over forest land to foreign firms and create a network of ’special economic zones’, or tax havens over which the national authorities would effectively cede control to big business. "There would be no accountability over chunks of land across the country, with significant cultural and economic consequences."

And he argued that the Indian government has been willing to reduce health expenditure in order to placate those advocates of free markets, who preach fiscal restraint. "On the one hand, we have India’s celebrated economic growth of 8 percent," he said. "On the other hand, children’s malnutrition is worse than that of sub-Saharan Africa. Forty-six percent of Indian children suffer from malnutrition, compared to 36 percent in sub-Saharan Africa."

Another Indian campaigner said she was perturbed that the EU is trying to negotiate a bilateral agreement with her country outside of the multilateral system offered by the World Trade Organisation.

"The whole issue with bilateral agreements is that they are much less transparent than multilateral ones," Gita Sen, professor of public policy at the Indian Institute of Management told IPS. "In India, there is much less knowledge about them. It is very important to know from European NGOs (non-governmental organisations) and others what is going on. Perhaps a bilateral agreement won’t be too bad but there would have to be a lot of questions asked about it."

Josefa Francisco, a Philippines-based activist with Development Alternatives with Women for a New Era (DAWN), said that improvements to human wellbeing are taking place more slowly now than they did in the 1960s and 1970s.

"The female to male wage ratio is disturbingly lower than it was," she added. "However hard people’s movements push to the fore human rights, the responses from governments and multilateral institutions have been miserable, to say the least."

She said that those fighting to reduce poverty should not accept orthodox economic thinkers who contend that growth will improve the lot of the poor. "There can be no reconciliation but only contestation and resistance," she said.

But Asif Shaikh, chief executive of International Resources Group, a consulting firm on energy and the environment, said that data collated by the World Bank and other bodies indicated that growth can contribute to easing hardship. He cited one study of 60 countries, which found only a single example where a reduction of poverty had been achieved at a time of negative economic growth.

Technological advancements are helping to narrow the gap between the haves and have-nots, he contended. In sub-Saharan Africa the proportion of people with access to mobile phone coverage has risen from 10 percent to 65 percent since 1999 and is expected to climb to 85 percent by 2010.

"In the part of the world doing most poorly in terms of economic growth, farmers are using cell phones to call and find out prices in urban markets," he noted. "Access to knowledge and information will become one of the great levellers of our age."