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Issue 6 Vol I, December 31, 2005 features Hong Kong
Round of WTO : The Modern Shylocks
The rich seeking free trade and the poor or not so poor seeking trade justice struggled hard to thrash out proposals to advance a global pact to lower trade barriers. There were proposals and there was resistance. Let us take a look at what the ministers from the developing and the underdeveloped got from this week long ostentatious conference. The materially prospered countries have divided the world as developed, developing and the very poor. Much of this world had been ruled by one or the other imperial power for centuries and rendered backward. India, also a victim of imperialism is treated as a developing nation. India along with Brazil and some other countries were the proud leaders of 110 countries pitted against America, European Union and Japan. India’s Commerce Minister Kamal Nath is more than happy and has been explaining at great length to anyone who cared. “We got the maximum and have laid the foundation for further gains.” He is confident that India stands to gain in respect of agriculture, concessions allowed on trade and services to the rich nations notwithstanding.
Sounds good but a closer reading belies all hopes. One the draft speaks in the realm of future, 2013 and special products have to be identified and agreed upon if India or other developing countries wanted to protect some farm produce from competition. “For bona fide food aid will be provided to ensure that there is no unintended impediment to dealing with emergency situations.” But things are not as simple as they appear. Suppose under the emerging trade trends and now being agreed upon, rich countries like America want to export wheat and sell it cheap in India what would stop them, once the subsidy part is notionally taken care of. This could be suicidal, critics argue. The Ministerial Declaration has not substantially addressed the concerns of the developing countries and has only paved the way for an eventual trade deal by the end of 2006.
This piquant situation had forced the WTO to call for high level help from British Prime Minister, Tony Blair, and to wrap up its contentious round of trade liberalisation talks by April next year. Clearly days of wrangling in Hong Kong ended with only minimal progress. Pascal Lamy found some gain as the meeting brought the talks launched four years ago in Doha "out of hibernation", but warned the negotiations could collapse unless there was rapid progress. If negotiations could not be described as an outright failure, these were at best "disappointing" and a betrayal of the poor by campaign groups. Now Blair plans a summit of the G8 plus five leading developing countries in the New Year to give fresh impetus. With the stalemate in Hong Kong leading to little progress in the talks, the WTO has now set an April 30 deadline for negotiations to be completed in agriculture and industrial goods. Negotiations on liberalisation of trade in services will also get under way in 2006.
The position even now broadly remains the same. Much is being made out of the Americans offer to the cotton-producing West Africa to put an end to export subsidies. It is far less than what Washington gives to southern US farmers when the world price falls. Brazil, India and some of the other bigger developing countries could not expect to gain access to the EU market unless they were prepared to concede ground on industrial goods and services. With the French and Irish determined to defend European farmers' interests, Brazil’s foreign minister, Celso Amorim felt that developing nations were being told to pay Europe for something it was supposed to do anyway. Surprisingly, there was intriguing silence on the part of China, owing probably to its growing role in the global trading system. At a glance, it might seem that there was something to cheer for the developing countries. But in India, a debate rages, largely with the UPA. Left, particularly the CPM has spelt its position repeatedly both inside and outside the Parliament. “The Ministerial Declaration has not only failed to address the concerns of the developing countries but has actually paved the way for an eventual trade deal by the end of 2006 that is going to be severely detrimental for their interests. It is clear by now that the so-called “Development Round” launched in Doha in 2001, has been manipulated by the developed countries, to push for further trade liberalisation in the developing countries while the developed countries themselves continue to protect their economies through high subsidies and non-tariff barriers.” In the vital area of agriculture, for example, which affects millions of Indian farmers, the agreement hardly provides any protection, or, gains. “The commitment by the advanced countries to ease out export subsidies by the year 2013 is no achievement considering the fact that export subsidies constitute a very small part of the total subsidies that agriculture receives in the EU where their share is not more than 3.5 per cent. India will not be gaining much as its exports are limited,” CPM stated. Analysts point out that the terms of negotiations agreed to cannot be justified by the gains made in areas like grant of more H1B visas and business process outsourcing (BPO) which are of interest only to a small section of the people. According to Nath, “The draft, apart from putting a date to the elimination of export subsidies would also help protect Indian farmers from unfair competition in the domestic market and open new opportunities for export. Moreover, developing countries can declare an appropriate number of Special Products that would remain outside the ambit of the tariff reduction formula. They would also be allowed to raise import duties on agricultural products in the event of a surge in their imports or a fall in their prices.” But a study of the fine print of the Hong Kong Ministerial Text shows that the gains for the developing countries in general or India in particular, are by far too few. Moreover, the costs in terms of agricultural and industrial tariff cuts and service sector liberalization far outweigh the supposed benefits. Greenpeace campaigners find it, “scandalous that the rich countries have gained concessions in return for merely promising, for the third time over, to end export subsidies which imperil the livelihood of millions. These subsidies should have stopped long ago." Hong Kong's jaded result is a warning to developing countries that they must strengthen alliances if they hope to win a better deal. | ||||||||||||||||||||||
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Tsunami aid distributed
unevenly between India's fishing and farming villages
THARANGAMBADI, India - From fishermen cleaning nets to women sorting fish, the tsunami-hit shoreline of this town in south India bustles with activity. More than 300 fishing boats, brightly painted with the names of donors, blanket the beach. A mile away, the scene couldn't be more different. Only minimal aid has reached the dusty, almost abandoned village of Pudupalayam. Residents have struggled to eke out a living since salt from the tsunami spoiled the fields where they worked as laborers. Nearly a year after the tsunami raced across the Indian Ocean, bringing devastation to 13 countries and killing an estimated 225,000 people, international aid agencies have relearned a bitter lesson: Not everyone can be helped equally. What's happened here also has happened elsewhere: Those who already were relatively well off are doing better with assistance from international donors, while those who were struggling before the tsunami often still are struggling.
"The hope is that at the end of it, there's a better infrastructure, there's a more equitable social pattern," said Steve Hollingworth, the India director for CARE, a development agency that's active in the reconstruction. "But the fact of the matter is that an emergency like this is an opportunity for some over and above others, and it makes vulnerable groups much more vulnerable than they were before," he said. "There's no way around it." The plight of villages such as Pudupalayam (pronounced poo-doo-PAH-lay-uhm) is especially challenging in a country such as India, where a decade of economic growth has spawned shopping malls and a burgeoning middle class, but still hasn't overcome a social system that remains divided largely along gender and caste lines. "All the aid agencies and even the government are only looking after the fisher-folk," complained Shivalingam, a young and outspoken community leader who like many here uses only one name. "They got their boats and their nets. We don't have any work." The farm laborers of Pudupalayam come from the lowest caste in Indian society. Once derided as untouchables, today they're known as Dalits, a name that means "the oppressed." Tsunami relief efforts initially overlooked them; many aid agencies weren't even aware the Dalit villages existed, let alone needed help. Now, a growing number of groups are diverting resources to the Dalit victims in hopes of keeping them from sliding farther down the socioeconomic scale, though the efforts come late. It was only natural that the focus would fall on helping the fishing families of Tharangambadi (Tah-rahn-gahm-PAH-dee). About 300 people died here in the Dec. 26 tsunami, which claimed 16,000 victims in India. The village, about 150 miles south of Chennai, the city formerly known as Madras, suffered major property damage as the sea flooded inland, sweeping away boats, houses and shops. Rescue workers arrived here within hours to assess the damage and begin the rebuilding process, aided by a tightly knit community that organized quickly to capitalize on multiple offers of reconstruction aid. International aid agencies - flush with more contributions than ever before in response to a natural disaster - tripped over one another in the rush to build new boats for the town. The Indian government also reimbursed fishermen for lost boats. Anyone who received both a donated boat and government reimbursement was required to make a payment to the local village council, which presumably spent it on other needs. The story has been very different for the Dalits of Pudupalayam and elsewhere. It was weeks before rescue workers visited most Dalit areas, and then only because some aid workers decided to see what was down a dirt turnoff they passed every day en route to a fishing village. They stumbled on Marudhampallam, a Dalit hamlet of 371 families that had lost 138 cows and 200 goats to the tsunami. "They were people who were never reached by anyone," said Saikat Mukherjee, who's from the West Bengal Games and Welfare Organization, a group that's distributing tsunami relief for Ireland's Hope Foundation. His group purchased cows and goats for the community. Even today, few relief groups seem to be aware of Pudupalayam. Aside from government food handouts, virtually the only assistance has come from an Indian organization that works with Dalits. The group, NESA, or New Entity for Social Action, is desperately short of money, said Peter Fernandes, who's overseeing its efforts to help 800 families from seven Dalit hamlets. The lack of money shows. Other temporary housing shelters have thatched roofs to provide relief from the heat. At the camp built for Pudupalayam, a few palm fronds have been thrown on the tarpaper roofs, to negligible effect. NESA hasn't been able to pay the 2,500-rupee ($56) monthly rent for the land for the past six months. Now the owner, himself a Dalit, has asked NESA to vacate by January, because he wants to sell the property. Permanent homes for the 46 families aren't expected to be ready by then. Residents of Pudupalayam acknowledge that the tsunami's impact there was less dramatic than on communities closer to the coast. The water was about chest high when it surged into the village of 55 families. Only one person died. But the water did wash away livestock and possessions and damage houses. Worse, the seawater deposited salt in the rice paddies, which a year later remain a desolate brown. There are few signs of life in the village, which sits on an unmarked and unremarkable dirt road. Selvaraj, a 50-year-old man, remains in the village to care for his cow, which survived. What he needs most, he said, pointing at the desolate rice fields, is work. An aid agency has ploughed the fields; when and if rice will grow again remains to be seen. On paper, the government isn't discriminating against the Dalits, though activists say they had to prod officials to include Dalits in government-compensation schemes. Those who lost a family member in the tsunami received 100,000 rupees (about $2,250), just as fishing families did. Those who lost houses will get new homes. But asset-based reconstruction isn't enough for the Dalits, aid officials said. Give a fisherman a boat and a net, and he's back in business. Helping the Dalits is a more complicated undertaking, requiring job training, temporary work and the rehabilitation of the rice fields. So far, job training appears modest in Dalit areas. In one temporary housing camp for Dalits, two brand-new foot-pedal sewing machines have been set up to teach tailoring skills. But for residents of Pudupalayam no such progress has been made. Meanwhile, the fishermen of Tharangambadi are back at sea. So much money was donated for tsunami relief that Tharangambadi, like many Indian fishing villages, is awash in boats. The community has 360 today, up from 155 before the tsunami, according to the South Indian Federation of Fishermen Societies. The fishermen couldn't be happier. Many used to venture out to sea in primitive vessels, little more than four or five logs lashed together to form a short, shallow craft. Now they're plying the waters in 28-foot-long fiberglass-reinforced shells that run $1,900 apiece. "It's more comfortable and it's safer," said Ravi, 35. "Our catch is good; the only problem is that fish prices have dropped." The irony is that, while so little aid has flowed to the Dalits, the proliferation of boats may turn out to be a waste. Officials from the South Indian fishing federation think that more boats were distributed than the coast can absorb. With so many boats chasing the same resource, they predict that the catch per boat will fall, and some fishermen won't be able to cover their costs. "More assets were distributed with good intentions," said Ephrem Soosai, who's overseeing the fishing federation's relief work in Tharangambadi. "Giving the poor an asset is a good thing. But it will not be sustainable over a long period." For Dalits, the good fortune of their neighbors seems unfair. "We need something too," said Anjalai, a 45-year-old woman from a Dalit community near the fishing village of Nagore, about 15 miles down the coast from Tharangambadi. Her neighbor, Kaliyama, a woman in her early 50s, added, "There's nothing wrong with helping the fishing communities. But if the total is 100 percent, at least 20 to 25 percent should be for us." | ||||||||||||||||||||||
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A Rush to Rebuild Leads to
Wasted Effort
At the time, the flurry of construction seemed like the right thing to do. People desperately needed shelter, and, with donations pouring in, money was not an issue. The Tamil Nadu government set a goal of moving the homeless into temporary housing by Pongal, a mid-January harvest festival. Eager aid agencies sprang into action. But in the rush to build, some key considerations got overlooked. Shelters built in low-lying areas ended up flooding during the rainy season. Tarpaper roofs turned the windowless barracks into ovens. Aid agencies returned later and built thatched roofs over the shelters; the difference in temperature was palpable. “It’s a shame we are all living with,” said Annie George, head of the council coordinating tsunami relief in Nagapattinam, the hardest hit district in Tamil Nadu. “The haste in building temporary shelters cost us more. Every two months, we’re going back to raise the floor, fix the roof.”
Such examples point to a need to weigh the benefits of providing quick relief against the potential costs. Would survivors in Tamil Nadu have been better off waiting a few weeks for temporary housing on higher ground? Today, aid agencies face similar dilemmas as they move into long-term reconstruction for the tsunami-hit areas. Aid officials caution against acting too quickly, even as survivors grow impatient for assistance. “Those who have had their homes and incomes destroyed by the tsunami deserve to have their lives rebuilt quickly,” said Cherie Hart, a spokeswoman in Bangkok for the United Nations Development Program. “Yet the push for rapid results must be balanced against the need for equitable and sustainable long-term solutions.” One lesson from the tsunami is that building permanent housing on such a large scale takes time. Land needed to be found and purchased, and property rights had to be established for those survivors who never had deeds or lost them during the tsunami. Proposals to ban housing in coastal zones ran into stiff opposition from fishermen, further delaying reconstruction. The end result: Temporary housing turned out to be not so temporary. Weeks stretched into months before the first permanent units were ready for occupancy in Tamil Nadu in September. The modest but brightly whitewashed homes, funded by Mata Amritanandamayi Math, an Indian organization, appear worth the wait. Complete with new streets and power lines, the rows of identical homes resemble a miniature Levittown, the Long Island suburb built for returning soldiers from World War II. The recipients of the 87 homes, whose village of Pudukuppam was devastated by the tsunami, are among the lucky few. Neighboring Nagapattinam District alone needs 17,461 homes; the goal is to finish 6,000 to 8,000 of them by Dec. 26, the first anniversary of the tsunami. Though District Collector Jaganathan Radhakrishnan, the top local official, said all the houses would be finished by next April, the aid agencies that are actually building the homes predict it will take longer. In retrospect, some aid officials wish more thought had gone into the temporary shelters, given how long people have wound up staying in them. “The process was perhaps pushed too much,” said Coen Van Kessel, a program officer for the Dutch affiliate of Oxfam, the aid and advocacy group. “Everyone was working in a hurry. Taking a bit more time would have been better.” Instead, families must make do with the single dark room that they have been allocated in the rows of corrugated tarpaper barracks. Before this year’s monsoon, a woman named Thennadi prepared lunch for her family on a makeshift fire outside the entrance to their room. “It will be difficult to stay here, because of the rain,” the 28-year-old woman predicted. Thennadi, who has only one name, dumped fleshy chunks of fish into a pot of bubbling curry. Her husband, a fisherman, is back at sea, and the family no longer depends on government handouts of rice and lentils to eat. South India’s fishing ports are bustling again, which represents the other side of the debate over how quickly to rebuild. The rapid distribution of boats and nets to fishermen enabled them to start rebuilding their lives on their own, giving them a major psychological boost. But the rush to deliver boats came with a price. Anjuppan, a fisherman in the town of Tharangambadi, insists that a visitor come look at the boat he received from an aid agency. He lifts up a cover to a small hold and points inside. “Usually, it takes two years for water to start seeping in,” he said. “This happened in a couple months.” Poor quality also has cropped up in the tsunami-hit regions of Indonesia, where some of the new fishing boats are not seaworthy, said Michael Savins, an Australian master boat builder on the United Nations team in Banda Aceh, Indonesia. John Kurien, who studies India’s fishing communities at the Centre for Development Studies in south India, predicted that many of the new boats won’t last. “For every 100 boats distributed by . . . [the aid agencies], my bet is at least a quarter of them will be of bad quality,” he said. “In the next couple of months, their lifetime will be completed.” Ken Moritsugu is a special correspondent for Knight Ridder. Until August of 2004, he was the national economics correspondent of the Washington Bureau. Before joining Knight Ridder, he was a staff reporter at Newsday, the St. Petersburg Times and The Japan Times in Tokyo. At Newsday, he was part of a reporting team that won the Pulitzer Prize in 1996 for coverage of the crash of TWA Flight 800. He studied Asian affairs as a Jefferson Fellow at the East-West Center in Hawaii in 1999 and European affairs as a Journalists in Europe fellow in Paris in 1992-93.(Photo credit: Khampha Bouaphanh/Fort Worth-Star Telegram/KRT) | ||||||||||||||||||||||
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The Vicious Circle of Rent
Seeking ONE of the emerging realities of Economics is the inclusion of the role of the State in its conventional framework, which brings us to the domains of what is termed as the New Political Economy. It clearly defines the role of the State in terms of rent-seeking and unproductive profit seeking activities. These activities, in fact, survive on their own and work against the smooth and economically efficient functioning of the economy. Beyond that they lead to many adverse effects creating strong barriers in the way of the trickle down process, thereby setting in motion a highly complicated vicious circle of rent-seeking. These activities amount to leakages in the national income that corrodes the growth process and adversely affects the trickle down of benefits. Even as growth takes place, its benefits do not reach the masses essentially because of the rent-seeking and other vested activities of the State and its components. The rent-seeking activities, therefore, provide the initial impulse to the failure of the trickle down effect, which, in turn, accentuates the already existing poverty levels including, unemployment, and income gaps. The more acute is the poverty, more is their marginalization of the poor, and greater is, thus, the propensity to conceal poverty through various means like, borrowing and crime-related activities, both beget easy money to the stake holders. Such impetus to crime strengthens the mafia links and also encourages organized crime, and even extends to the higher strata of society that includes, amongst others, the basic role players in the guise of political entrepreneurs (both ruling and non-ruling) and their supporters (both administrators and voters) in the whole game. Such nexus and linkages give a further boost to rent- seeking and other related activities. The circle, thus, gets completed, and rent seeking leads to further rent seeking, and this chain reaction goes on unabated, viciously trapping the economy in a deadlock situation. We can depict the operation of such a vicious circle through a diagram. This complicated vicious circle, apart from being interlocking in itself and leading to further rent-seeking, through a variety of factors, is also anti-growth, anti-equity, and anti-saving. It goes on unabated and generates, at increasing rates, rent-seeking leakages (essentially, horizontally and diagonally), crime in all its manifestations, and private debt trap and mafia nexus/linkages to the advantage of the major role players in the whole game. This scenario is observed to exist in different countries, though in varying degrees. It is emerging in certain other countries, where the trickle down process has failed , and, as a result nothing positive ,in terms of economic and social provisions, ever gets percolated to the masses in general, and the equity considerations, if any, have their focus more at the macro level, and nothing much is done at the grass root level.
The root cause of this depressing scenario is the vested interests of the so called political entrepreneurs and their supporters, that get exhibited in the form of rent-seeking and other nefarious activities, which are subject to increasing returns because of their self-generating capability, larger involvement of the stake holders, and above all, because of the inefficient legal system. In order to break this vicious circle of rent-seeking the very best way out is to minimize or eliminate, if possible, such activities of the political entrepreneurs and their supporters. But the political experience of countries completely negates such a solution. We have, therefore, to depend on the second best solution that relates to the efficacy of the legal system. The basic rules of jurisprudence to tackle such situations are always available in almost all the countries, but the reality is that these rules are not effectively and timely used by the concerned authorities to curb the given situation, and the role players, thus, keep on playing their game of manipulation and maneuver for their own benefit in terms of enhancing their electoral support, and reaping political mileage to the detriment of the whole economy. The judiciary should, in fact, take matters in hand and ensure that the major role players of the State do not resort to clever stratagems. This perhaps is the only effective way to break the given vicious circle of rent-seeking, and bring back the economy to its socially just functioning. There is a third best solution that can perhaps reduce both the extent and intensity of marginalization of the poor by the richer sections of the society which is a crucial link in the operation of the vicious circle. This solution relates to well focused urban policies. It is seen that marginalization or urban apartheid, has become increasingly extreme in most of the countries, and challenges the fight against poverty. Urban policies, therefore, have to be tuned to ensure common social ethos of the rich and poor, so that income-based, caste-based, class-based, and even racial-based discrimination and intolerance is at least reduced, if not completely eliminated from the urban areas, thereby weakening the operation and the impact of the vicious circle of rent-seeking. | ||||||||||||||||||||||
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SOUTH ASIA POST INC. | ||||||||||||||||||||||
IT
was a grand wrangling by any standard. The rich and the famous gathered
together along with the poor and not so poor in the sprawling city of Hong Kong,
now part of communist China. The issue was trade without barriers. Barriers are
protested always. Is it not? This is why several thousands protestors struggled
over five days to break the barriers and reach the venue of the conference where
140 trade ministers from as many countries were huddled together to sort the
tangled web of political and trade relations. But all they got were brickbats,
water canons and tear gas. They had met the same treatment earlier at Seattle
and Doha.
The draft, yet to be
ratified puts 2013 as the year when the rich countries would end their
subsidies, promised earlier during the Doha round. Another concession that is
said to gladden the heart in Africa is America agreeing on cutting export
subsidy on cotton. At present as Nath explained, “The draft would protect Indian
farmers from unfair competition in the domestic market and open up new
opportunities for the export of agricultural products. Further, developing
countries can declare an appropriate number of Special Products that would
remain outside the ambit of the tariff reduction formula. They would also be
allowed to raise import duties on agricultural products in the event of a surge
in their imports or a fall in their prices.”
In fact, there are deep
fissures among the developed nations. England wanted the year 2010 as the cut
off point to end subsidies. France and Ireland would not have it. There were
frequent clashes between America and EU. It would not concede much except in
case of cotton to cut subsidies. Washington's unwillingness to offer the poorest
countries duty-free access for all goods to the world's richest market was also
a setback. The US agreed to duty-free access for only 97 per cent of products,
leaving it free to exclude textiles from Bangladesh and Cambodia. 
Take the agreement that
allows the poorest countries to export their products to the west, duty-free and
quota-free. The EU pushed this very hard, perhaps because it already has such a
programme, ‘Everything But Arms’ deal. The least-developed countries account for
a tiny fraction of world trade, America and Japan insisted that duty-and
quota-free could not apply to all products. This defeated the basic concept of a
development round which was to redress the legitimate grievances of developing
countries following the end of the last batch of negotiations between 1986 and
1993. The Uruguay Round was so biased in favour of the EU and US that poorer
countries vowed they would not sign up to a new set of liberalisation talks
unless their interests were given special attention. In particular, they
demanded real cuts in the protection granted by Brussels and Washington to their
farmers. 
Ken Moritsugu
Former President Clinton,
meeting privately with aid groups last month as the United Nations special envoy
for tsunami recovery, underscored the importance of reaching the region's
poorest. "A successful reconstruction effort should ensure the protection of
vulnerable populations," he was quoted as saying in a U.N. news release.
NAGAPATTINAM, India –
Among aid workers in the south Indian state of Tamil Nadu, the rush to build
shelters after the December 2004 tsunami came to be known as the “Pongal hurry.”
With so much suffering
after major disasters, it’s human nature to want to deliver relief as quickly as
possible. But haste can make waste. A post-tsunami rush to build boats for
fishermen produced a slew of shoddy boats in both India and Indonesia, including
some that a United Nations expert declared not seaworthy. 