Considered as a marketing investment global trade advocacy produces unbeatable ROI. Even small business and trade associations in some of the world’s poorest economies have recently won changes in global markets worth billions of dollars in future returns for an investment of a small fraction of one percent of that sum. If you’re still wondering whether to take any interest in the “painful progress”:http://www.inquit.com/article/446/doha-round-negotiations-trouble-or-travail of global trade talks, here’s a few pointers to the mega-buck campaigns that have been taking place behind your back The decisions of the U.S. President and EU Commission to cut subsidies to “cotton”:http://news.bbc.co.uk/2/hi/business/4652991.stm and to “sugar”:http://news.bbc.co.uk/1/hi/business/4494373.stm farmers are important milestones for the reform of world agricultural markets. But they are even more remarkable for their demonstration of the extraordinary leverage that the WTO trading system offers businesses that understand how to work the trading system. Although it has been accused by NGOs and US Presidents alike of being opaque and unresponsive to the needs of citizens, it turns out that even small businesses from the world’s poorest economies can secure commercially valuable victories in WTO. The US response to Brazil’s success in the cotton case in part responds to advocacy efforts on behalf of West African farmers from countries such as Benin, Burkina Faso and Mali. Their 2002 “Cotton Initiative”:http://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd20_cotton_e.htm, also aimed at the US policies, provided the rallying point for the developing countries who “called a halt”:http://www.inquit.com/article/165/why-it-ended-without-finishing to the 2003 Cancún Ministerial Meeting of WTO. A more detailed account of the cotton campaign is contained in “Global Trade Advocate”:http://www.petergallagher.com.au/iqebooks/ Both the African and Brazilian farmers will enjoy an astonishing return on their investments in the cotton campaign. Brazil “claimed”:http://docsonline.wto.org:80/DDFDocuments/t/G/AG/GEN54.doc that the US cotton subsidies had cost it $600 million in one year (2001) alone. The benefits to the West African economies are “estimated”:http://news.bbc.co.uk/1/hi/business/4095032.stm to be about $250 million every year. Such numbers should be treated cautiously. Brazil and Africa would not be the only beneficiaries of higher cotton price. The supply response of other producers and the fragmentation of the “world market for cotton lint”:http://r0.unctad.org/infocomm/anglais/cotton/chain.htm makes reliable estimates difficult. But even at a conservative discount rate, taking account of the risks involved, an increment to income for the four original African complainants of $800 million every year for (say) a decade represents a thousand-fold return on the cost of officials’ time, executives’ time and the fees of lawyers and economic modelers. No other marketing investment by firms can match it. Tomorrow … the Sugar story
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher