Economic Neocolonialism

Page 1

WTO - what is it?

World Trade Organisation - an international organisation which oversees a large number of agreements defining the rules of trade between its member states

A forum for governments to negotiate trade agreements

A place for governments to settle trade disputes

Principles:

The trading system should be;

without discrimination - being able to trade with anyone

free - no tariffs/taxes, no regulation by government, no subsidies

predictable

more competitive

more beneficial for less developed countries

WTO history:

Formed on 1st January 1995

The biggest reform of international trade since after the second world war

Brought to reality the failed attempt in 1938 to create and international trade organisation

The case for open trade:

Data shows a definite statistical link between freer tade and economic growth. Protectionism leads to bloated, inefficient producers supplying consuners with outdated unattractive products. In the end factories close and jobs are lost despite protection and subsidies

Page 2

Neocolonialism in Ghana:

In 1957 Ghana gained independence from the British colonial rule. The British colonial government used to dictate the price that Ghanian cocoa farmers received. Today 3 influences control the price;

Commodity traders - price of cocoa is decided in commodity trading exchanges in London and New York. Prices depend on supply and demand

Overseas tariffs - EU import tariffs are higher for processed cocoa than raw cocoa beans

WTO - farmers are no longer subsidised. Farmers now suffer from imports of heavily subsidised foreign food

Since the removal of subsidies, farmers in Ghana now suffer greatly from imports of heavily subsidised foreign food. Tomato growing farmers find it hard to sell their produce because imported EU tomatoes are cheaper

Ghanian cocoa farmers have begun to form cooperatives

Kuapa Kakoo began in 1993 and has 40,000 members in 650 villages producing 1% of global crops. With stronger bargaining power than individuals it pays farmers more per bag by selling to fair trade organisations. Profits have paid for improved drinking water in rural areas and health insurance for farmers