Food as a weapon (1992)

From the August 1992 issue of the Socialist Standard

With the ending of the Cold War. American military power is no longer sufficient to hold its real economic rivals— Europe and Japan—in check, and the three power blocs are squaring up for the battle for world economic domination in the 21st century.

The current battlefield is a scries of talks on world trade, the General Agreement on Tariffs and Trade (GATT), which have now been stalled for nearly two years, with the European and US governments hurling abuse at each other over the emotive issue of farm subsidies.

So what is GATT, and why does an apparently minor dispute over handouts to farmers threaten to bring the world trading system to the point of all-out economic war?

The GATT process is aimed at promoting “free trade" amongst the competing states of the world, tearing down barriers to imports and allowing consumers to choose the most efficient supplier of anything from banking services to hairdryers.

In reality, of course, there is never any such thing as free trade among equal players— no ‘‘level playing field". US-based multinational corporations. with the economic battering ram of vast scales of production behind them, and the military and political power of the US state in the not too distant background, are clearly going to make easy meat of the struggling young industries throughout the “Third World”, currently protected by their own governments’ trade barriers.

Trade wars

Now all this is fine with European governments as well. They too have multinationals based on their soil, only too eager to participate in the turkey shoot. In the coming months you will doubtless hear ministers extolling the virtues of Free Trade for the health of the world economy.

But when we come to agriculture. there is a slight fly in the milk churn. European farms tend to be small and “inefficient" (unprofitable), whereas their US competitors tend to be large and “efficient"—fully industrialised and reaping the advantages of economics of scale.

This, of course, would give them a significant advantage in a genuinely free market, almost certainly devastating the European farm industry, and scoring round one of the battle for 21st century economic domination to America.

And American farmers have never been more desperate for markets for grain, which regularly gluts the American market. (Of course, this does not mean that there are no hungry people in America, simply that they can’t afford to buy what lies rotting in warehouses).

In fact this is another bizarre consequence of the ending of the Cold War. since in those good old days the Soviet empire bought all Americas surplus grain and paid on the nose with hard currency.

Europe’s governments, then, urged on by the powerful farming lobby, are determined not to give up their agricultural subsidies, while the US is desperate to prise the European market open.

A few months ago. a high- level EC delegation led by Portuguese Prime Minister Cavaco Silva and Commission head Jacques Delors, visited President Hush in Washington for crisis talks, with Cavaco Silva making it quite clear how deep the rift had become. “Sometimes there is a discrepancy between the apparent political goodwill and the technical proposals put on the table by the US”, he told the European (9 April).

And that’s just about as close as a diplomat comes to calling the other side a dirty cheating liar.

Both sides only entrenched their positions at the G7 economic summit in Munich last month, with John Major suffering a major rebuff to his attempts to break the deadlock, and vowing to continue to “bully, badger and cajole" fellow leaders into living up to the undertakings to conclude a deal by the end of the year.

In fact, although the European side has offered a 30 percent reduction in protection and support for agriculture, this would be on the basis of levels operating in 1986—a real cut of little more than 15 percent (The Grocer, 23 November 1991).

In the EC’s last review of support prices in June 1991. ministers cut a modest 1.5 percent from levels of support for oilseed, and at the EC Lisbon summit price support for cereals was cut 29 per cent. "Still not enough" said Hush.

Agri-business

The Daily Telegraph issued a dire warning following the failure of the Munich summit that the world is edging closer to a menacing era of protectionism. “There is a real danger that the Uruguay round of GATT could breakdown altogether, taking us back to the unstable trade bloc structures of the 1930s” (9 July).

The point is that food production is governed by the laws of competitive production for profit. Manufactures of food only survive by selling at a reduced price against their competitors, and with a glut of unsaleable food on the world market, pressure to subsidise unprofitable, mainly small-scale European producers against their industrialised US rivals is immense.

So the EC’s subsidies pile up yet more unsellable food, and US farming corporations are forced to watch their own surplus production rot in warehouses because it can’t be sold anywhere. The GATT negotiations are therefore a trial of political and economic strength between US and European agri-business, with their respective governments fighting their corners round the negotiating table.

What insanity! Capitalism— the competitive production of goods for sale at a profit—yet again proves itself to be completely unable to cope with a world in which we could provide an abundance of food for each citizen of this planet. It is the only system that actually manages to find adequate food production a major crisis. Surely its time to establish a system where this is an opportunity. through free access to all food production, to abolish hunger once and for all.

Andy Thomas