Mendacities and modalities of menacing mercantilism

The surging anguish and unattended apprehensions of developing states have caused the concern to unravel the workings of World Trade Organization, whose signatories include the entire world. The dwindling resources and incompetence in management capabilities of developing world, have brought to the fore some structural/fundamental flaws in the institution of WTO. To elaborate, the policies of WTO are ostensibly enclosed within the ambit of Liberal ideologies, but the structural endorsement of these policies are directed from the perspectives of Mercantilism. The point of concern is the inordinate indifference by WTO in prioritizing the aspirations of Developed states.
Subsequently this disproportionate structure of WTO refers towards the existential principles of Mercantilism. It is still perceived as being practiced by developed states for the retention of their hegemonic status. For instance, multiple tools are utilized to eventuate the goal of maintaining the yawning gulf between the developed and the developing states. To substantiate, agricultural charters of WTO are designed to entrap the third world nations through multiple Enclaved measures, which are designed for the apparent provision of egalitarian/liberal bilateral engagement but in essence they carry the vested ambitions of Mercantilism. Moreover, the devastating impacts of its agricultural charters and the grave implications of inter-dependence are also quite radiant through the course of action designed by WTO.
In Liberal Perspective, Agricultural Charter of WTO assists the states- developing included- to avail the astronomical opportunity of Global Markets. This certain factor of the charter endorses the liberal perspective of the free market. However, the underlying theme is contrary to expectations as this egalitarian and collective market opportunity favors the interests of developed states. To reiterate, developed states are the prime signatories of the agricultural charter with their exceptional shares. Thus, WTO’s agricultural charter bestows favors to the developed states through multiple equivocal, ambiguous, and concealed tools for the exploitation of the developing states. The utilization of these tools -to be discussed- portray a picture of Mercantilist strategies. Furthermore, following are the main tools for developed states to manipulate and exploit the developing states through the Mercantilist strategies guised in the state of Liberalist approach and materialized through the agricultural charter of WTO.
SO, critical inquisitions arrive as, What are the obstructions in the path of developing agricultural states to achieve a relatively egalitarian status? And what are the concealed factors siphoning off the resources of developing states through a liberal institution of WTO? Along with, what are the negative effects of rigid and fixed policies of WTO’s agricultural charter?
Firstly, in the context of Market Access, it is widely observed to be a framework based upon the liberalist ideology. This certain agreement of WTO’s agricultural charter creates an equal playfield for all the relevant stakeholders to proliferate the market access of farmers from developing states and from those of developed states as well. This agreement increases the possibility of low prices as the availability of a cyclopean market at its disposal would allow states to reach for affordable and better-quality products. Regardless, there is a structural flaw here which allows this liberal agreement to pale into insignificance in comparison to its mercantilist ambitions. To substantiate, this agreement gives leverage to developed states over their developing counterparts, to chalk out their individual national standards for procurement of agricultural products. Thus, having a significant superiority in economic domain, developed states hinder the process of imports from developing countries- by raising their standards of procurement- without damaging their own exports to the developing nations. This fact particularly speaks volumes of the endorsement of Mercantilism, which vows to maximize the revenues of powerful states on the cost of exploitation of vulnerable/fragile/economically meager developing states. For instance, the 18 years ban on Alphonso Mangoes of India by United States of America (1989-2007)- BBC News- and the ban of same mangoes by EU (European Union) and UK on one pretext or the other, is a glaring example. This example sheds light upon the tool for discouraging the markets of developing states however continuing their own exports to these countries. Nonetheless, this is the least controversial aspect of WTO’s agricultural charter endorsing partial mercantilism in the form of Liberal Agreements.
Secondly, in the context of Export subsidies, an inordinate and indifferent approach is meted out when concerning the developed and the developing states. For instance, every state strives to proliferate its agricultural sector for the eventuation of its national/domestic requirements. Furthermore, to maximize its revenues and to collect foreign reserves for the lubricated procurement of imports, states tend to subsidize their agricultural economies. The assistance from the state is materialized through the distribution of subsidies and assistance in the forms of Tax amnesties, low-cost loans, and direct payments to farmers. This is a Neo-liberal perspective where the state- within its defined boundaries- attempts to subsidize its agricultural export sector by directing and not by dictating. The provision of this permission in WTO is a sign of its liberal outlook. However, the provision of subsidizing the agricultural sector is constrained by the unequal limitation imposed upon its signatories. As compared to the developing states, developed countries subsidize their farmers with a significant capital on multiple pretexts. One of the arguments advanced by the developed states for the reason of their export subsidy is the distribution of Aid. It is said that for the lubricated provision of Humanitarian Aid and loans to developing states it is imperative that they should maximize their revenues. Subsequently to maximize their capital it is crucial to attain comparatively high economy. So, for that reason, developed states must subsidize their exports. This indifference is endorsed under the agricultural charted of WTO, which paves the way for developing states to remain dependent for the aid by developed states instead of maximizing their own revenues by subsidizing their national exports.
Furthermore, the rigid clause of WTO also obstructs the path for the developing states to extract benefit. So, to say, the agricultural charter of WTO is locked after its formulation on January 1st, 1995. This was a backward era for developing states to get involved in global trade, thus the margins/barriers/standards fixed at that time for export subsidies were certainly not in the favor of third world states. This entrapped them and the states which were astronomically subsidizing their agricultural sector yielded significant benefit and continue to reap notable amount of leverage over their developing counterparts. To encapsulate, these preludes are the endorsement of Mercantilist perspectives which endorses more exports and trivial imports. So, to say, on one hand by subsidizing the agricultural sector apocalyptically, developed states are significantly maximizing their export capability. On the other hand, by halting the path of developing states to subsidize their native agricultural export sector they are undermining the ability of developing states to export to the developed states. Thus, attaining the goal of minimum imports as well. This is also true in the case of self-reliance, in which the highly subsidized agricultural sector of developed states makes them self-sustaining. Consequently, when the agricultural appetite of any state is pacified through its own agricultural sector, the concept of requirement for imports would itself become non-existent. This provides amply testimony to the patronization of mercantilist perspectives by WTO.
Thirdly, in the context of Domestic Subsidy, WTO strives to limit/curb the domestic subsidy by governments to their farmers or agricultural producers. In addition, it is worth mentioning that the enormous number of subsidies given to the farmers of developing states fades in comparison to the tectonic capital spent upon subsidizing the agricultural producers of developed states. The cause of this huge asymmetry stems from the commercial farming happening in developed states. However, regardless of this disproportion, the mandate of WTO to limit the domestic subsidy in its agricultural charter paints a Liberal picture. This egalitarian approach meted out to impede the path of governments from subsidizing their local producers is applicable to all the signatories which endorses the principle of equal economic opportunities of Liberalism. However, there are some underlying structural objectives which illustrate an otherwise situation when unraveled. For instance, in the Domestic subsidy, there are three domains in which the subsidies are differentiated. Firstly, the Green Box Subsidy, which does not stimulate the production capability of any state. This subsidy can be granted through direct payments to farmers on the pretext of Infrastructural development, food security and disease control. This type of subsidy is universally encouraged thus represents the liberal perspective of WTO. The second type of subsidy under the agricultural charter is the Blue Box Subsidy. These types of subsidies are for the sake of production limitation. They refer to the ambiguous perspectives where the developed states attain benefit of significantly subsidizing under their ambush. Thirdly and the most contentious box is the Amber Box Subsidy ( These subsidies are the trade distorting subsidies which might significantly push the products of other nations into servitude in Global markets with the humongous state facilitation for its agricultural production by any state. There is the liberal objective of WTO’s agricultural charter to limit this kind of subsidies. Apart from that, the apprehension stems from the deliberate ignorance envisaged by the WTO against the developing states. To elaborate, it is a certain reality that developing states are in a dire requirement of state support. Factors like climatic changes, food security, dwindling personal capital, dearth of reserves and multiple other reasons make it imperative for the developing states to attain state subsidy for retention of their agricultural activities. Moreover, the levels for determination of subsidiary limitation have been frozen to the statistical analysis in the years of 1986-88. This underlines the irrationality and the mercantilist approach adopted by WTO to favor the developed states whose level of productions were significantly higher than the developing states when the targets were fixed. This indifference is the root cause of extreme issues faced by developing states in terms of food insecurity which can be addressed as their assisting hands remained tied to the agreements of WTO.

The writer is the President of Ewing English Society at FC College University.

ePaper - Nawaiwaqt