Billion-dollar gains from advocacy on the trade rules affecting cotton was the subject of my post yesterday. A similar story emerges from the campaign by Australia, Brazil, Thailand and other sugar producers to put an end to EC export subsidies on sugar. Not all advocacy campaigns lead to suchlarge wins on a global scale … or even to success. But there is much more going on than you might realize The Commission’s “recommendations”:http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/776&format=HTML&aged=0&language=EN&guiLanguage=en, after losing an appeal in WTO, to cut the subsidies further and faster (by 39% by 2009) than planned potentially adds billions to the export earnings of businesses in those countries that have carried on the fight since the late 1970s, when Australia and Brazil first challenged the EC sugar regime. Estimates of the gains vary: Oxfam “claims”:http://www.oxfam.org.uk/what_we_do/issues/trade/bn_eusugar.htm that the export subsidies cost Brazil, India, South Africa and Thailand about $800 million in lost exports in 2002. In Australia’s case, the “industry estimates”:http://news.ninemsn.com.au/article.aspx?id=49419 that every quarter of a cent added to the world price adds $30 million to export revenues. So if the world price rose by 10% that’s $120 million gain to Australia every year. This is a modest expectation given that the World Bank “estimates”:http://siteresources.worldbank.org/INTRANETTRADE/Resources/Pubs/TradeNote14.pdf that full reform of the markets would see prices rise by 40 percent from the depressed 2004 levels. As is the case with “cotton”:http://www.inquit.com/article/447/global-trading-system-advocacy-offers-huge-commercial-returns, the returns from this decades-long advocacy campaign—that isn’t over yet—are so big that the ROI for the farmers in the “Global Sugar Alliance”:http://www.queenslandsugar.com/page.cfm?pageid=180, even considering the costs of a such a long campaign, must be stratospheric: certainly much higher than the return on planting sugar. Of course, not all trade advocacy campaigns in WTO are likely to offer equal rewards: these two victories unwind absurdly large resource misallocations. Some advocacy campaigns that make it to the table in WTO are wrestled to a standstill on behalf of opposing commercial interests with no obvious winners. The terms of the 2004 WTO “agreement”:http://www.wto.org/english/tratop_e/trips_e/pharmpatent_e.htm to open up export supply of ‘compulsorily licensed’ patented medicines are tied up in knots of conditions and codicils designed to make commercial exploitation difficult (the WTO set up a special website for notifications of such licenses: but none has been reported). The Boeing-Airbus dispute seems headed for a similar fate, offering neither side a clear return from expensive disputation. But rich rewards are plausible in many smaller, hardly-noticed campaigns of business groups in developing countries over the past decade to fund and to fight cases on prejudicial anti-dumping or safeguard actions or to access tariff preferences on an equitable basis or to cut the costs of the arbitrary application of standards. How many campaigns? Just look “here”:http://www.wto.org/english/tratop_e/dispu_e/dispu_subjects_index_e.htm at the WTO’s topic index of disputes since 1995. All—except for a handful about regulatory details— represent the defense of some commercial interest or other; either of producers or consumers. All of the rest are the culmination of a campaign by some private interest to secure government support for a challenge. That’s the catch, of course. There is no private access to decision-making in WTO. Although it’s a safe bet that there a commercial interest behind every trade measure and behind every effort in WTO negotiations or disputes to change some aspect of the system, business advocates must first find effective support from governments. The incentive to do so is that the opportunity for substantial returns to advocacy by private interests in the global trading system is far from exhausted. There is a strong prospect of even more aggressive action given the scale of the benefits now being won and the commercial interests of law firms and others who service the advocacy process. Also, contrary to its reputation, the WTO provides a prospective environment for advocacy; it is a mine of information on the trade policies and measures of Member governments and surprisingly willing to cooperate with non-government advocates through an outreach program that also runs an ‘in-reach’ service to Members’ delegations. My e-book, Global Trade Advocate, which you can sample or buy here “on my site”:http://www.petergallagher.com.au/iqebooks/, contains more details, more examples from around the world, and more in-depth advice on how you can establish and manage an advocacy campaign to get a better deal from the global trading system for your interests.
Peter Gallagher is a leading Australian consultant on trade and public policy.[bio].
"I can help you with strategies for, and analysis of, international markets, law and regulations, trade agreements, export policies, import restrictions… I also offer reports, conferences and master-classes for government officials and industry associations on international trade research."
Email: Peter Gallagher