A much linked blog of late has been Marginal Revolution, a site set up by two economists, containing a range of social commentary. It was through that blog that I discovered news of a UNESCO meeting last week on the topic of ‘cultural diversity’. From Marginal Revolution:

“Several countries, most notably France, would like UNESCO to have the power to overturn the free trade commitments made through the WTO and the EU for that matter.”

The reasoning behind this desire is the sense many of us have that the key thing being lost in the wake of free trade agreements is cultural diversity. While it is amusing that Brussels has told France that it must allow books to be advertised on television, something previously forbidden the removal of trade barriers and government subsidies of local businesses has the potential to open the floodgates to foreign companies entering developing world countries and using their immense buying power, economic reserves and economies of scale to force smaller operations out of the market.

Many argue that this encourages efficiency in production methods and a reduced price to the consumer. When a company has free rein to source its materials, production, administration and other essential services from wherever in the world it wishes, and has the entire world population as a target market, streamlining follows resulting in extremely low unit costs.

Such processes have also allowed some businesses to achieve what many describe as ‘monopoly’ power, something the EU at least seems to disapprove of if its treatment of Microsoft is anything to go by. I am told Adam Smith (the father of capialism) believed governments should have the power to overrule market forces, by breaking up monopolies. I really must read some Adam Smith soon. Rulings against those with such monopoly power certainly suggest that the ideological commitment of our governments to free trade has its limits.

But what concerns many more than the formation of monopolies is the loss of cultural diversity which can follow from globalisation of production. This has long been one of the key complaints of the movements which came to be collectively known as ‘anti-globalisation’ and follows from the fact that free trade agreements prevent governments from putting conditions on markets (whether subsidies or other rules) which particularly support local companies. There is an exception to some of the agreements for particular crises (invoked when the US government needed more anti-anthrax drugs recently, but much debated when southern Africa felt it needed to produce more anti-retroviral AIDS treatments) but not for measures which seek to preserve traditional ways of life.

Any attempt to develop ‘cultural diversity’ clauses for trade agreements will need to be undertaken very carefully. The current state of play in international trade would suggest that any such measures would likely be implemented unevenly, with the countries with the most negotiating clout being allowed considerably more liberal interpretations than those with less clout. The latter group is also likely to be the countries most in need of the protection such measures would provide. Cultural diversity measures would need to be so worded that they did not serve—as many agricultural subsidies do at present—to support the richest countries’ indigenous businesses in flooding foreign markets with their subsidised produce.

The joy of international trade has long been the fact that we get to experience the products of other cultures, brought to us through the marvels of travel. Increasingly it seems to be the case that international trade is instead resulting in our receipt of cheap versions of the products of our culture, manufactured elsewhere. It would be a shame if the original joy of trade was entirely lost to us.

Having mentioned the principle of ‘comparative advantage’ recently, I’ve been looking for a good explanation of it on the web. It’s taken a little while, but this piece about David Ricardo’s theory seems to set it out relatively well.

What is missing is—as usual with explanations of this theory—any discussion of the costs of production and transport beyond the economic. For me, the failure to put economics in a social-environmental context is what lets down most such arguments.

A short while ago, I decided to email clothing supplier Land’s End to ask them about the ethical status of some of their products. Noting that their products were ‘imported’, i enquired as to where the products were sourced from and the conditions in the factories where they were produced.

Somewhat misinterpreting my question, but responding very promptly they commented:

We’ve heard similar comments from many of our customer [sic]. As much as we would like to offer USA made clothing items we are simply unable to locate many manufacturers that are in the USA. We work with many manufacturing companies that are USA owned companies but their manufacturing facilities are over seas. We inspect each manufacturing facility to be sure they are good work environments as well as that the workers are paid fair wages before we agree to use these companies to produce our products.

Thanking them for the speed of their response, my subsequent email (of March 11th) assured them that I understood that many products had to be sourced outside of the USA and asked whether they had any third-party inspection or certification of the labour standards in these factories.

When by March 24th I had yet to receive a response, I forwarded my email to them with a note asking if they’d had time to respond. The response came within twenty minutes.

In that email they detailed the requirements they have for any contractors they work with, including a sound approach to child labour (no-one under 16 unless it’s part of a school work placement scheme), freedom of association for employees and anti-discrimation policies. The details offered on wages are not quite so well worded, however:

“Workers must be paid wages and benefits which at a minimum comply with any applicable law and match the prevailing local industry practices.”

It is all well and good to contextualise pay agreements—you probably don’t want to entirely distort a local economy—but if a factory is in an area filled with sweatshops, this requirement really isn’t asking very much.

On top of that they haven’t actually answered my key question:

“I was wondering whether you are engaged in any agreements which ensure third-party monitoring of working conditions”

It is encouraging that I am not the only person to have contacted Land’s End about such issues. It is also encouraging that with a little prompting they are able to produce details of their policies on a range of important issues, but it would be good to see an answer to the question I have now asked several times.

Corporate Social Responsibility is all well and good, but the track record of such endeavours suggests that independent monitoring is a vital part of any social responsibility policy. While many companies have made great steps in the past few years to bring in social responsibility programmes, the idea of third-party involvement remains anathema to most. This is a key reason why international trade agreements need to lay out minimum standards for human and environmental stewardship, and ways of enforcing them.

I recently discovered the kickAAS blog which is working for the abolition of all agricultural subsidies. Trade issues aren’t all that well represented in the blogosphere and it’s good to see anyone who wants to get in on that act. But as a lengthy comment on this entry argues, a complete abolition of subsidies is not the answer.

From a free-market perspective, agricultural subsidies are entirely wrong. By supporting “inefficient” unprofitable farms, governments are allowing them to continue in their current state rather than finding ways of operating which the market will support.

That free market argument also seems to require us to put no value on rural ways of life and communities. It is often entwined with claims that the principal of Comparative Advantage (where each community or country focusses on the one thing it does best, and supplies that to the others) means that the decline of agriculture in certain countries is not a concern as we can simply import what we need.

For those of us who believe that some communities should be supported and that the environment cannot sustain an approach based entirely on Comparative Advantage, agricultural subsidies quickly become an attractive solution. The problem is that the money is ending up in the wrong places, and that we are demanding other standards of poorer countries.

Could a system of agricultural subsidies not be developed which is tiered to support those smaller farmers who can demonstrate they are doing what they can to not rely on subsidies, while at the same time supporting their local community? Perhaps we should focus on that, and ease off on what we ask of other countries and trading blocs?

The subject of agricultural subsidies is one of the key topics in discussion of international trade justice. While rich countries have, through the WTO, insisted that poor countries remove trade barriers such as tariffs on agricultural products and subsidies to their farmers, the European Union and the USA heavily subsidise their farmers. In the UK, a variety of campaign groups have worked hard to make their calls for reform of the European Common Agricultural Policy (CAP) heard. We are assured that the discussion of reform is now very much on the table.

The issues usually raised against the CAP boil down to the hypocrisy of requiring one standard of poor countries while we (who can afford to do otherwise) don’t apply it to ourselves, and to the fact that the way the subsidy payments are structured means that the majority of the money ends up going to a small number of wealthy landowners, rather than to the small farmers who most desperately need support. That’s setting aside the argument which the ‘free trade’ ideologues would put forward that such subsidies are a false economy, halting developments towards ‘efficiency’.

In that context, I was quite taken aback to find this article discussing the start of talks on plans to phase out subsidies to farmers growing tobacco. Use of taxpayer money to subsidise the production of foods has at least some justifications, but the production of a narcotic is something else.

The article quotes Pierre Haein, director of France Tabac, saying:

“The disappearance of Europe’s tobacco industry will in no way resolve the issue of smoking and health. As long as smoking is legal in Europe, it’s obvious that cigarette manufacturers will get their tobacco supply from somewhere else in the world.”

He’s likely right that an end to the subsidies won’t suddenly bring an end to the nicotine addiction of millions of people, but that would seem to be besides the point. This discussion is not about outlawing tobacco production, but ceasing to use the money of taxpayers to reduce the prices of something governments across Europe are trying to discourage the use of.

While it is disgraceful that tobacco production is being subsidised in this way, it could be that this issue is a good one with which to raise awareness of the ludicrous structure of agricultural subsidies. The issues can be made simpler than trade negotiators tend to acknowledge, but they are necessarily complex and campaigners need ‘hooks’ with which to draw people into scrutinising the way subsidy systems are implemented.