The fish market
The Guardian’s George Monbiot has a shocking tale of when free trade deals go wrong.
The two players in the story are firstly Senegal, one of the poorest countries on the planet, where the people mostly eat fish. They get 70 percent of their protein from fish:
Traditionally cheaper than other animal products, it sustains a population that ranks close to the bottom of the human development index. One in six of the working population is employed in the fishing industry; about two-thirds of these workers are women.
and the European Union, whose people’s also like to eat fish:
The EU has two big fish problems. One is that, partly as a result of its failure to manage them properly, its own fisheries can no longer meet European demand. The other is that its governments won’t confront their fishing lobbies and decommission all the surplus boats. The EU has tried to solve both problems by sending its fishermen to west Africa.
As a result, Senegal’s marine ecosystem has started to go the same way as ours. Between 1994 and 2005, the weight of fish taken from the country’s waters fell from 95,000 tonnes to 45,000 tonnes. Muscled out by European trawlers, the indigenous fishery is crumpling: the number of boats run by local people has fallen by 48% since 1997.
That’s a lot of unnecessary hunger. So Senegal has responded by trying to refuse to allow European fishers to fish its waters. It isn’t getting a sympathetic hearing.
[European Trade Commissioner] Mandelson’s office is trying to negotiate economic partnership agreements with African countries. They were supposed to have been concluded by the end of last year, but many countries, including Senegal, have refused to sign. The agreements insist that European companies have the right both to establish themselves freely on African soil, and to receive national treatment. This means that the host country is not allowed to discriminate between its own businesses and European companies. Senegal would be forbidden to ensure that its fish are used to sustain its own industry and to feed its own people.
These sorts of ‘national treatment’ clauses are the bedrock foundations of most all ‘free’ trade agreements, and probably the reason why local communities never seem to have much of a say in whether treaties should be signed or not.
Monbiot concludes:
None of this is to suggest that the poor nations should not sell food to the rich. To escape from famine, countries must enhance their purchasing power. This often means selling farm products, and increasing their value by processing them locally. But there is nothing fair about the deals I have described. Where once they used gunboats and sepoys, the rich nations now use chequebooks and lawyers to seize food from the hungry. The scramble for resources has begun, but - in the short term, at any rate - we will hardly notice. The rich world’s governments will protect themselves from the political cost of shortages, even if it means that other people must starve.
Europe, like New Zealand, has plenty of waters in which it can grow and catch fish. Both need either to change the amount and way we consume fish, and to invest in rebuilding fish stocks so that they can be sustainably caught. Despite our massive territorial waters New Zealand still buys a lot of ‘foreign’ fish. It’s absolutely wrong that countries that misuse their own food baskets should be able to use their comparative wealth to shelter themselves from their unsustainable mistakes at the expense of other, poorer peoples.
August 26th, 2008 at 1:32 pm
The problem is not that there is free trade, but that trade with Europe is never truly free.
Europe’s agricultural subsidies drive up food prices in Europe - fish prices as well, because it is another source of protein and you can charge more for it while still being able to compete with expensive agricultural produce. This makes fish worth more in Europe than in Africa.
So you will end up with companies fishing in Africa and selling in Europe to gain a profit - and this profit is because the trade is NOT truly free or fair.
True free trade would involve Europe ditching agricultural subsidies, import tariffs and all such policies. Food prices in Europe would plummet. The subsidy-driven incentive to eat fish from Senegal would disappear overnight. Agricultural produce from efficient countries such as New Zealand would increase in value. European farms would use fewer inputs such as fertiliser and become more environmentally friendly simply in order to survive. Trees would be planted on marginal land that is unable to be farmed without subsidies.
The problem is not with the lack of free trade, but with the fact that trade with Europe is not in fact free nor fair. We need to pursue trade policies that are both free and fair, not one-sided as often occurs at present.
August 26th, 2008 at 4:06 pm
The problem with New ZEalanders is that we like a much wider selection of things to buy (including fish,) than our humble country and resources can supply. So, we import vastly and sing, loudly, ” I o, I o, so off to work I go, they can’t afford to pay me well ’cause just like me they owe”!
August 26th, 2008 at 5:30 pm
Mr Dennis,
subsidies for meat and dairy products do not push up the price of meat and dairy products to consumers, if anything they push it down. Therefore they cannot push up the price of fish unless the fish is being used for stock feed.
The price of fish is higher in Europe because people in Europe have more money with which to bid up the price of fish, and because meat and dairy products are more expensive due to higher wage rates, which in turn are due to the higher cost of living.
The problem is caused by Europeans being richer than Senegalese. In the long term this disparity may be able to be reduced by allowing Senegal to export other products to Eurpoe more freely, but in the short term it can only be prevented through trade restrictions designed to protect Senegalese access to Senegalese fish.
August 26th, 2008 at 6:12 pm
Kahikitea:
Food prices are high in Europe, as policy is designed to keep it that way. Import tariffs for example keep import prices high, allowing European agricultural produce to be sold at a high price. European farmers are paid approximately double what NZ farmers are for their produce. Then they receive subsidies on top of that. You are right that it is not the subsidies per se pushing up the prices but the entire agricultural policy, of which subsidies are a part, so I wasn’t quite right earlier.
European trawlers fishing in Senegalese waters can offload fish directly in Europe. But I understand if the Senegalese were to fish it then export to Europe they would be hit with import tariffs. This is ridiculous.
Yes, you may be correct that restrictions would help as a temporary measure. But ultimately true free trade is not causing this problem, but unbalanced trade.
August 26th, 2008 at 7:09 pm
um, dennis? you mean the subsidies lower the marginal cost to the seller and this results in lower prices to the consumer which artificially increases the compeditivity of european fisheries as compared to local fisheries which means that the non-europeans must sell their produce at a price lower than they otherwise would have to do in an attempt to stay compeditive?
August 26th, 2008 at 7:13 pm
and then the tariffs have the opposite effect on prices to the consumer but further increase the disparity between the markets.
August 27th, 2008 at 9:03 am
Sapient:
As I said, I wasn’t particularly accurate in my first post. It is the European policy taken as a whole that increases prices to the consumers, not subsidies per se. Some Europeans, the ones that realise what is happening, are quite upset that they are expected to pay high prices for agricultural produce then pay subsidies to the farmers from their tax on top of that. When you write in a hurry you sometimes say something silly!
August 27th, 2008 at 10:59 am
Mr Dennis is correct that the problem is unbalanced trade. But he is wrong to say “Free Trade” is the answer. For at least one economic and one political reason.
Economically “free trade” between developed and under developed countries is good for the developed economy and bad (in the medium to long term) for the developing economy. This is because there is no new economic activity that can develop in the developing economy that cannot be crushed by the developed economy. Developing economies need protection to develop.
Politically the sorts of trade arrangements that see these sorts of disparities are exactly what the imperialists are pushing on the world, and in the most delightfully Orwellian manner, calling “Free Trade”. So to call for “Free Trade” in the current world climate is to call for FTAs and WTO sanctioned agreements that perpetuate injustice. Because that is what is good for the powerful entities that get to draft the agreements.
Which is why the Green Party uses the term “Fair Trade”. Trade can be very good for every body. And trade that is good for every body should be encouraged.
Trade can choke the development out of a developing economy. That sort of trade should be discouraged.
peace
W
August 27th, 2008 at 12:44 pm
Free trade would make things a lot simpler - in this case large companies would simply buy the Senegalese fishing industry and use their much cheaper labour to catch fish for sale to the richer consumers in Europe.
If Senegalese workers manage to win higher wages, the companies will sack the lot of them and bring in workers from Pakistan, the Philippines or whatever country is on top of the ‘cheap labour provider of the week’ list.
Sooner or later there won’t be enough fish to make fishing profitable, the companies will sack the workers, dump the environmental problem on the government, invest the fishing profits elsewhere, sponsor a charity programme to feed the Senegalese on the condition that their logo is prominently displayed and all get knighthoods or whatever their government gives to such hard-working citizens.