The Unfair Practices of The World Trade Organization Against Developing Countries

The documentary Black Gold, is about the world coffee market and an Ethiopian fair trade cooperative. Ethiopia being the birthplace of coffee is the largest producer of coffee in the world, producing some of the highest quality of coffee beans in the world, like Harar, Yuban and Sidamo types of coffee. The significant problems pointed out in this documentary show what is wrong in the global trading system. Mainly, while most of us continue have our lattes and specialty coffees, the amount paid to the Ethiopian coffee farmers is so low that a lot of them have been forced to chop down some of their coffee fields and rely on other crops to help them survive. The Ethiopian people are malnourished; they have no clean water, no healthcare, and no schools for their families. As quoted in the film, “They are living hand to mouth”.

In chapter seven, it was stated that the coffee shop company do not completely buy from the small-time farmers. In case regarding towards Rwanda, a developing area where Starbucks supposedly performs fair trade, it was discovered that Starbucks buy their coffee beans from bigger plantations and the middle man, who buys coffee beans from small-time farmers usually scamming them (216). This creation of image of Starbucks being a good corporate business in helping the small time farmers earn more income is contracted by Simon’s findings, and shows that the coffee company is actually taking advantage of the small time farmers, when Starbucks buys from the middle man or the big plantation owners, it pay less for the coffee beans than they do if Starbucks purchases beans from small-time farmers. The greed of Starbucks at the expense of the individual farmers is unethical, yet the coffee shop company markets the contradiction.

The strategies that are proposed in this clip for changing this situation are for coffee growers to adapt to the fair-trade market. Under the fair-trade market coffee growers will have the chance to a decent market price that will help increase their production.

This is a system aimed at encouraging farmers not to give up on coffee planting by providing a better and stable life for small scale farmers who were also initially dependent on the income from coffee plantations (Mendez et al., 241; Bacon, Mendez, Gomez, Stuart, and Flores 263). In as much as globalization is a significant and inevitable move towards development, it has caused an increase in the gap between the farmer and the consumer in relation to the consumption of coffee. The small scale farmers in Central America are now left to compete with other coffee producers from regions such as East Africa and this leads to low prices of the product (Sick 194). This has been a source of discouragement for small scale farmers. In as much as the government has taken initiatives such as the introduction of Fair Trade, it seems like the statistics of this system being successful are still at an all time

In many U.S homes, as is the custom in most western cultures, the first beverage consumed at the start of every day is coffee. From its origins in Ethiopia, the strong black liquid has evolved from its modest beginnings to become an art form, a gourmet luxury, and the addiction of millions. The documentary Black Gold directed by Nic and Marc Francis addresses issues that rarely cross the minds of its consumers: who produces the coffee, and how does the coffee we drink directly affect the livelihood of those farmers who grow it? The documentary highlights the poverty that plagues Ethiopian coffee farmers by contrasting the impoverished African cities with the wealth of the western countries that control the market in order to gain the

In 2002, the United States of America passed a policy that granted United States farmers access to subsidies, in order to protect the domestic market in agriculture. In retaliation to this policy being passed the Brazilian government sued the United States in the court under the World Trade Organization for violating free trade agreements. The Brazilian government claimed that the United States was liberalizing its trade, making it unfair in a free market. The World Trade Organization enacted punitive measures against the United States by imposing tariffs and lifting patent protection on various United States goods. The United States had to act in some way because these measures would hurt markets in other areas including agriculture. The U.S. then agreed to subsidize farmers in Brazil by giving them one hundred and fifty million dollars. Many people argue that the other countries do not face the same regulations as in America, and there for are more protected, but other countries say that subsidizing farmers takes away a free market. There are pros and cons to subsidizing farmers in any country. The good side is that it provides job security for farmers and helps them to work around regulations and still acquire profits. The bad side is that these subsidies result in inefficient farmers that just get their compensation at the end of the year without producing a standard amount of product. It is also argued that subsidizing farmers restricts economic growth. I believe that

For many countries, subsidies and the lobbying power behind them can have great effects on governmental policies and direction. By far, though, the agricultural subsidies advocates in the United States and, to a slightly lesser extent, the European Union have profound sway in government policies. Being dubbed the “breadbasket of the world” gives farmers and their lobbyists in the US immense power to ensure that the government subsidies continue to favor agriculture producers. By and large, this practice has tipped the scales in both the US and the EU when it comes to ensuring that subsidies remain non-distortionary towards world markets. With policies in place that position national farmer interests ahead of global interests, higher production is encouraged, world prices are driven lower, and the incentive for developing countries to invest in agriculture is limited. While the US employs essentially the most distortionary practices, the EU does attempt to limit these distortionary effects. Still, both country’s policies display long-term negative side effects on an international scale.

Finally, global economic issues have an immense influence on the world of coffee. Throughout history there has been a pattern that coffee producing countries are economically worse off than those that are consuming the coffee. Pendergrast mentions that “in 1950 the average income in consuming countries was three times that of coffee-growing nations. By the late 1960s it was five times great” (270). With that said, many producing coffee countries were facing endemics and malnourished peoples because workers were receiving absurdly low wages thus placing them into poverty and human suffering (271). Specifically, although 90 percent of El Salvador’s exports consisted of coffee in the 1930s, they agonized from “‘low wages, incredible filth…[under] conditions in fact not far removed from slavery’” (168). Global economic issues of these producing countries lead to dictators easily gaining power such as those in Guatemala, Nicaragua, and Honduras (170). Not only was politics a matter that resulted from global economic issues, “the high interest rates from financial institutions and price [squeezes]” lead to the economic struggle of farmers like those from Colombia due to

The need for the Tadesse Meskela to inspect the entire trading process of coffee beans in order to prevent exploitation from the marchants is the other example of dependency theory. While coffee beans have been harvested less and sold in lower price, the meager profit from the sale of coffee beans is not enough to satisfy most of the coffee farmers; not to mention fostering the whole poor nation into economic independence. The miserable condition of Ethiopia makes them dependent on wealthier nations for survival, whereas they are powerless to determine the price of products. As Tadesse Meskela indicated, “Price is mainly based on the New York ‘C’ market. If New York is down by five cents today, the coffee exporters are going to buy the coffee

However, I firmly believe that governmental efforts to increase or limit international trade will prove vital in guaranteeing future development and peace throughout the world. It can clearly be argued that the United States is currently not doing enough in this respect. For example, as of August 2014, Chinese trade with Africa dwarfed American trade with Africa by over $100 billion. Similarly, the governmental gifting of subsidies and tax breaks to agricultural producers has in recent years unfairly allowed the United States to dominate certain world markets, such as those of cotton, corn and oil products. While incentivising American production may increase voter support at home, such distorting practices minimise competition from developing countries overseas, thus doing little to alter the current status

Fair Trade Coffee Fair Trade promotes socially and environmentally sustainable techniques and long-term relationships between producers, traders and consumers The world coffee industry is in crisis. A flood of cheap, lower-quality coffee beans have pushed world market prices down to a 30-year low. Many now earn less for their crop than it cost them to grow. Many coffee farmers around the world receive market payments that are lower than the costs of production, forcing them into a cycle of poverty and debtWithout urgent action, 25 million coffee growers' face ruin.

The World Trade Organization (WTO) is a global organization that helps countries and producers of goods deal fairly and smoothly with conducting their business across international borders. It mainly does this through WTO agreements, which are negotiated and signed by a large majority of the trading nations in the world. The purpose of the WTO is to ensure that global trade commences freely, smoothly and predictably while also aiming to create economic peace and stability in the world through a multilateral system. This is based and applied to member states, currently 162 countries, that have consented and ratified the rules of the WTO in their individual countries. Simply put, these documents act as contracts that provide the legal framework for conducting business among nations, integrating into a country 's domestic legal system, therefore, applying to local companies and nationals in the conduct of business internationally. For instance, if a company were to open an office or business in a foreign country, the rules of the WTO dictates how that can be done.1

The film highlights the fact that coffee is the most valued word commodity, second to oil. The beginning of the film shows the process in which coffee is made- from bean harvesting by workers in Ethiopia who make next to nothing, through several intermediated stages, and into the market. Although we spend countless amounts of money on coffee without thinking twice, the price that coffee farmers who produce this commodity are getting paid, is disgustingly low. Some of them have even been forced to walk away from their fields. There is no better place to see this

Developing countries have asserted themselves, particularly over the past 2 decades. The formulation of the G20 and the first public flexing of their muscles at the WTO conference, 2003, resulted in the breakdown of negotiations. “Most observers interpreted events at Cancun as a fiasco and a multilateral failure, but when we look a bit deeper we see developing countries forming an alliance that effectively represented their interests” (Crump, Larry & Javed, 2007, 17), this is a direct example of LDCs using international practices to their advantage and resisting DCs attempts at pushing them around. Unfortunately most developing countries have small assemblies at the WTO and therefore are often overcome by the sheer extent and the gruelling schedule while negotiating. Although LDCs are increasingly influential on the world stage, they are still often disadvantaged by the nature of international practices.

The subsidies of green box, as defined by the World Trade Organization, are those which do not disfigure trade. This is prime reason why, under the terms of Agreement on Agriculture, it is stated that the countries can provide as many green box subsidies as they like. Oxfam and others believe that countries like EU and US are making use of this provision to keep on giving support which is considered as trade distorting manifestly. This is leading to serious damage to all the farmers in the developing countries. It has been found that an amount of approximately $40 billion of the payments under the green box on an annual basis are trade distorting and hence end up breaking the rules of the World Trade Organization.