ONE key element of Washington Consensus is free trade. This is being preached to other countries by successive American Presidents, including President George W Bush himself, take for example, President Bush's recent Coast Guard Academy commencement address. In it he charged that the refusal of European Union to certify import of new strains of genetically modified crops had a moratorium on such crops, thus discouraging African nations from adopting and benefiting from them. Earlier in March 2003 US trade representative Robert B Zollick was less delicate when he suggested in a speech that Mr. Bush's opponents of corporate-led globalisation might have intellectual connection with terrorists.

While Mr. Bush's statement may be partially correct let us try to find out what USA itself is practicing in promoting free trade which is supposed to alleviate sufferings of the people in poor countries and being good for wealthy and impoverished countries.

Example #1: In the West African countries of Niger River's northern Delta, cotton is the main cash crop, and cotton farming provides employment to more than two million people and provides sustenance to several times that number. But with world cotton price down ten per cent in 2003 from last 30 years low in 2002, people can hardly survive. Extended families of 20 to 30 are reported to be trying to live on annual earnings of less than $2,000.00. Schooling and minimum healthcare have become unaffordable luxuries for these people. Meanwhile, half a world away, in the Mississippi Delta American growers are thriving. At first glance the reason seems obvious. In Mali farmers hitch their one bladed plow to oxen and take two weeks to till 10 to 20 acres of plot and the cotton is eventually picked by hand. In contrast, the Mississippi Delta growers tend giant spreads of 10,000 acres or more in air conditioned tractors

using a global position satellite system to determine the proper amount of fertilizer to apply to sprouting seedlings. Then there are expensive fertilizer and defoliants. In all it costs 82 cents to produce a pound of cotton in Mississippi versus only 23 cents in Mali.

This raises another obvious question. Why the Americans are expanding their acreage under cotton, while Malians are trying to survive even though they have comparative advantage? The answer is subsidies -- subsidies provided by US Government to its farmers while Malian farmers have none to look after them. In 2003 US

President signed into law a piece of legislation that largely increased the previous year's $3.4 billion in subsidies to America's 25,000 cotton farmers. As a result, some of these families are expected to receive one million dollars in subsidies alone. Such actions will encourage farmers to produce more and more cotton depressing its world price and impoverishing further families in West Africa.

Example # 2: The North American Free Trade Agreement (NAFTA) was signed in an effort to stimulate Mexican economy through free trade. But export of sugar, one of Mexico's main crops, is severely restricted by US quota that limits imports to only 7,258 tons of raw sugar. This quota system was introduced since 1796 to protect American sugar producers and to reward them for large contribution to

political campaigns. Since then this practice is going on and while American sugar consumers are paying fur times more than the international price of sugar a cartel of small number of US sugar growers are enriching themselves. Forbes magazine once estimated that a single family the Fajuls of Palm Beach reaps more than 65 million dollars a year as a result of quota for sugar. Furthermore, sugar industry in Florida, which is larger than that in any other state. makes even less sense environmentally than economically to produce sugar. It depends on publicly built system canals, levees and pumping sta-

tions. Fertilizers from the sugarcane fields choke the everglades, sugar growers under a special exemption of labour law, import Caribbean labourers to do the grueling and poorly paid work.

On the other side of the picture, not only Mexico but Dominican Republic and other few countries with ideal climate for growing sugarcane are unable to grow and sell sugar to USA and are experiencing political turmoil and economic collapse. Heavily subsidised US corn exports are also threatening to drive Mexican farmers off their land and into dangerously hot trucks of smugglers who ship illegal immigrants across the border.

Example # 3: The case of Brazil provides further example, unlike Cuba, which is not allowed to export sugar at all to USA for political reasons, Brazil, the largest country

in Latin America, has democratised, liberalised, deregulated and adopted prudent economic and monetary policies in accord with Washington consensus in order to take full benefits of free trade. But even in this case, the United States has clamped down a quota on its export of citrus fruits to two thirds of the product Brazil is able to sell in the US market.

Example #4: Under NAFTA, Mexican truckers are supposed to be able to drive freely anywhere in the United States as the American truckers do in Mexico. But after ten years they are still prevented from doing so. The NAFTA dispute settle-

ment panel has found the United States in breach of obligations under the treaty and has urged US to come into compliance. But US has not complied.

Example # 5: In early 1980s Bangladesh government formulated and enforced a fairly progressive drug policy to make medicine affordable to more people. Since then Bangladesh government has withstood the pressure of multinationals, particularly the United States, restricted import of unnecessary costly brand name medicines and encouraged local producers to produce medicine at a much cheaper price and increase their market share and export abroad. In 1992, the World Bank which, together with the IMF, administers provisions of Washington Consensus, asked the government to remove restrictions on import of

drugs and allow foreign companies to import their brand name

Medicines and inputs of medicines freely. This was despite the fact that such imports encouraged smuggling of medicine to India and enabled foreign companies to transfer their funds through overpricing of imports. As against this, when some Americans, being unable to afford the inordinately high price of medicine started to get the same from Canada at much cheaper price in the recent years, US Drug Administration stated that such imports were illegal and it was planning punitive action against the "offenders."

Example #6: Before World War II the United States bought 40 per cent of vegetable oil it needed from developing countries. After the war, it protected its oil seed market, -- for example, by establishing price support for soybean. Today the USA is the world's largest exporters of oil and oil seeds.

Example #7: After World War II, American farmers, using price supports, "left over from the new deal, produced vast wheat surpluses which the US exported at concessionaire prices first to Europe and then to Third World countries. These enormous transfer of cereals to the South institutionalised during the 1959s and 1969s by US food aid continued during 1980s and 1990s as the USA and the European community vied for markets, each outdoing the other in subsidising agricultural expenses.

Grain imports from the United States created food dependence within two decades in countries which had been mostly selfsufficient in food at the end of World War II. Tropical countries soon matched the grain gluts of the North with their own surpluses of cocoa, coffee, tea, bananas, etc. This of course brought down the prices of these products bringing price benefits to the affluent consumers in the West and more miseries to the farmers in those countries and none offered price support to them for their produce.

Example # 8: The United States had long had a programme of allowing special tax treatment on profits (hidden subsidy) from certain kinds of exports. In response to European complaints the World Trade Organisation has twice found this treatment in violation of WTO rules and directed the USA to alter the practice. Yet to date, the practice has not been changed and these items of export from USA are enjoying indirect subsidies.

Example #9: According to a study of Cato Institute some years ago, corporate welfare programme cost taxpayers roughly 75 billion dollars annually. In the name of keeping American technology competitive and to promote export and market opportunity a number of companies like IBM, Intel, Huges Aircraft, Archibolds, Midlands and a number of other fortune 500 companies receive the subsidy. Even McDonald was dished out $195,000.00 a year to keep its competitive edge on sale of chicken nuggets abroad.

Clyde Prestowiz, a well known specialist on international trade and who worked in a senior position under Reagan administration, has rightly observed "it is these sorts of American inconsistencies and double standards, far more than envy of our success or hatred of our freedoms, that cause alienation from America and that make the United States appear to many abroad, as a rouge nation."

A K N Ahmed is the former Governor of Bangladesh Bank

Next Friday: How free is free mar-