It is late at night in a bar by the Zambezi river when Dipak Patel, trade minister from the impoverished southern African state of Zambia, finds the perfect way to illustrate how hard his job is. “So how many people does the Financial Times have covering trade?” he says. Well, I say, there’s me (the world trade editor), a reporter in Geneva who spends most of her time on trade, someone in Brussels, someone in Washington, and of course our bureau chiefs and reporters around the world spend a fair amount of their time writing about it. “God,” Patel says, contemplating the rows of luxury cognac bottles behind the bar, waiting for the rich tourists. “The FT has more capacity to do trade policy than we do.”
Patel is a blunt, charismatic, chain-smoking businessman turned politician with a formidable task. This month he will be organising the poorest nations on the planet at a critical meeting of ministers in Hong Kong under the aegis of the World Trade Organisation, the body that co-ordinates negotiations over restrictions on trade. The “Doha round” of trade talks, named after the Qatari capital where the negotiations started in 2001, has stumbled, and ministers will be trying to put it back on its feet.
The developing world’s loudest voices within the WTO belong to the big, middle-income countries that have much to gain from more market access: the agricultural powerhouse of Brazil; the world’s back-office and software consultant of India. But Patel will speak for the 50 least-developed countries (LDCs) - a euphemism that covers countries beset by war and famine, and even more by the simple, unspectacular reality of economic failure.
Patel’s family is from Gujarat in India, but he was born in Lusaka, Zambia’s capital. (When he fell out with his early mentor, Zambia’s former president Frederick Chiluba, this gave him a perfect retort to Chiluba’s call to “deport Dipak”: “Deport me back to where? Lusaka General Hospital?”) After working for the family business, he was a founder member of the Movement for Multiparty Democracy. This successfully challenged Kenneth Kaunda, who had ruled Zambia for a quarter-century after independence with a mix of stirring nationalism, rousing rhetoric and breathtakingly wrongheaded attempts at directing the economy.
Being a minister in a desperately poor country throws up unimaginable challenges. One of Patel’s first jobs under Chiluba was as minister of sport. On his second day in office, the entire Zambian national football team died in a plane crash in Gabon, an event that stunned the footballing world. “I had never even been to a bloody football match,” he says. But he pushed and cajoled and eventually got the Danish government to agree to train Zambia’s new team at the national football centre outside Copenhagen. “Then the next year we got to the finals of the African Cup.”
Patel clambered off the Chiluba bandwagon when it became clear that Zambia had exchanged an inept and misguided regime for a corrupt and repressive one. He later joined the administration of Levy Mwanawasa, who replaced Chiluba in 2002 and so far has proved a distinct improvement.
But Zambia remains on the fringes of the global economy, as do all the least-developed nations. Only 32 of the 50 LDCs have joined the WTO (membership depends on being willing - and able - to submit to international agreements on opening markets). Together, they constitute less than 1 per cent of global trade. Around two-thirds are in sub-Saharan Africa. A third of their people are malnourished; only half finish primary school. Many, like Zambia, are landlocked; some are riven by external or civil conflict.
The LDCs will not be asked to make cuts in goods or farm tariffs in the Doha round, and their concerns in trade talks tend to be narrow and specific. One pressing matter is cotton subsidies. Four west African countries - Benin, Mali, Burkina Faso and Chad - that grow large amounts of cotton are hurt by the dumping of heavily subsidised American cotton on the world market. But most LDCs do not compete much with the products subsidised by Europe and the US, so such distortions are not quite the cause celebre that western NGO activism might suggest.
One of the main concerns of the remaining countries is their so-called “preferences” - special access rights to western markets, some longstanding, some more recent. Partly because of their poverty and partly because of the hangover of colonial preferences in Europe, these rights already give the least-developed countries much better access to western markets than those enjoyed by better-off developing countries such as China or Brazil. They want to secure these deals irrevocably into the future and remove some of the rules that complicate them. They also want the US and Japan to match the generosity of the EU’s scheme, which allows tariff-free access for almost all products.
In theory, the least-developed countries’ leverage is enormous. Any of the WTO’s members can veto an agreement. In practice, they would come under a tremendous amount of pressure if they blocked a deal. The challenge Patel faces is to co-ordinate the LDCs into some sort of coherent negotiating force. But this is sometimes a frustrating exercise.
In late June this year trade ministers from the LDCs meet in Livingstone, Zambia, within sight and sound of the thundering Victoria Falls and just across the border from troubled Zimbabwe.
The meeting is intended to talk about taking on the rich countries in the WTO, but the LDCs still have to rely on foreign donors to finance their defiance - the conference is funded by the British and Swedish aid budgets through the United Nations.
In the restrained luxury of the Zambezi Sun hotel, about 200 delegates gather in a room, facing two screens on which PowerPoint presentations are projected. The tiny Pacific island state of Vanuatu is represented by a man with impressive ringlets of black hair and a pirate’s earring; the Nepalese delegate wears an embroidered cap. But row after serried row in the room is occupied by ministers from Africa, the world’s failing continent.
Patel, tall, imposing and film-star handsome, is wearing an open-necked batik shirt. He smokes Rothmans outside on the terrace as he waits to chair the opening session of the meeting, which eventually starts half an hour later than scheduled. In contrast to most of the African ministers, in pristine white shirts and dark suits, he is perhaps the only man in the room not wearing a tie. His lack of the usual formalities extends to his opening address: he leavens the familiar developing-world rhetoric about the iniquities of rich countries - the farm subsidies, the protectionism - with an unusual degree of blunt self-criticism for the insularity of the LDCs. “Our reaction to trade negotiations has generally been a resounding no, or a plea for special and differential treatment, or more time to adjust,” he says. “It is time we took the fight to the developed world.”
Following protocol, Patel then retires to a small room off the terrace to carry on his ministerial duties, and hands the conference over to the officials. There then follows almost two days of argument in which his point about self-indulgence frequently gets lost. A proposed communique is projected on the screens hanging from the ceiling and the officials haggle over it line by line, word by word.
There is a short debate about including commas around the expression “inter alia”. Because of the francophone African countries present, the communique is translated into French and there is a discussion about whether the correct interpretation of “market access” is “acces sur le marche” or “acces au marche”. One of the most heated arguments is about whether to include a separate reference to cotton-producing countries: there is an evident tension between the French-speaking west Africans, whose losses from cotton subsidies give them particular victim status, and the anglophone Africans who want to stress that the least-developed countries are all suffering.
Of serious strategic or tactical discussion about what the LDCs should be demanding from the trade talks there are only intermittent signs. The first day of the conference ends early because the interpreters are only paid to work until late afternoon. Finally, towards the end of the second day, Patel takes the conference chair himself and charges through the rest of the agenda in about half an hour, cajoling and demanding, flattering the delegates by calling them “brothers and sisters”, and then bulldozing the communique into coherence.
A Cambodian delegate, evidently impressed by this unusual display of executive decisiveness, suggests leaving all the negotiations to Patel. He reads out Patel’s personal e-mail address to the conference and implores all present to send their ideas to him and let him decide. Given Patel’s limited resources, this is quite a responsibility. Later that night in the bar his frustration is evident. “We have no analysis, no data. That is why we spend our time changing commas and arguing about translations.”
When I visit Patel’s ministry offices in Lusaka a few days later, it becomes clear just how scant are his resources, a situation against which he constantly chafes. He picks me up from the hotel five minutes early, waiting impatiently in the car while I get ready. “I caught you early, huh?” He drives himself to the office, railing against the lack of a Lusaka bypass when he is held up in traffic for two minutes.
The ministry has just moved to an impressive new tower block. The building was funded by an aid package from the Chinese government, which, Patel says, offered countries in southern Africa either a new party headquarters or a football stadium. “Most countries chose the stadium.”
But it still is not finished, and a sweeping, raised concrete driveway edged with marble peters out into a car park of dust and straw. Patel, arriving shortly after 8am, is usually the first one in from his department. “To be fair, they have transport problems.” His office is huge, and mainly empty. He sits facing a large mural on the wall, a Chinese poem from the Tang dynasty poet Li Bai, reflecting the building’s provenance. Blinds tap a syncopated rhythm against the walls in front of open windows. His desk has photos of his negotiating team at the previous WTO ministerial meeting, at Cancun in 2003.
The office is so new that the landlines have not yet been installed, so Patel conducts business on his mobile phone, barking instructions at an unseen minion to come and see to his computer, which has been playing up again. Brown cardboard folders sit on the shelf behind his desk, labelled “WTO”, “IMF/World Bank”, “Reading Material: General”, “Privatisation”, “Strategic Plans”.
Patel summons Lillian Bwalya, his chief economist, and starts thinking and planning out loud, having picked up a paper calendar. He has to attend a meeting of ministers in China in a fortnight to discuss the Doha round. “When is the meeting? 12 July? Let’s assume I leave on July 10.” But a more pressing matter this morning is the need to boot out the human resources people who have taken up residence in offices down the corridor, offices his staff are supposed to move into. “Why do I have to sort even this out? I want human resources out of here. Get me Violet.” Violet, from the building’s management, is summoned and bawled out as well. He cuts off her objections. “You follow the plan. Full stop.”
One assumes that newly appointed US trade representative Rob Portman and EU trade commissioner Peter Mandelson do not have to spend their days assigning office space. But the Zambian foreign trade ministry operates at around the level of a small-sized student union. Apart from two secretaries, an office orderly and a driver, it has a total of eight professional staff - plus Philip Osafo-Kwaako, a 26-year-old Ghanaian MIT and Oxford graduate seconded by the Overseas Development Institute, a London-based think-tank.
Osafo-Kwaako is serious and widely read, carrying a library of documents round his neck on a USB flash-card. His rapid-fire west African intensity contrasts markedly with the slower cadences of the Zambians around him. He is supposed to be at the ministry to do research, but in fact he ends up doing pretty much everything. “I look at countries like Brazil and Argentina and see how well their proposals are presented,” he says. “That should be a lesson for all of us.”
Patel starts working on a speech for the launch of a new handbook about a special preference scheme for African, Caribbean and Pacific countries, having rejected his staff’s effort as too mealy-mouthed. His version is half the length, and pointedly criticises the EU for requesting that African countries cut their tariffs in return for getting special access to European markets. He cites a computer simulation showing that EU demands for cuts in Zambian tariffs will lose the government $15m in precious tax revenue.
But Zambia’s ability to do such research is limited. It has access to an online computer model developed by the World Bank, which allows it to do simulations. “But I don’t have the bandwidth, so I often get cut off,” Patel says. He wanted to do a simulation of the effect of possible cuts in goods tariffs on the LDCs in time for the Livingstone conference, but had to run round the donors asking them to do it for him. It arrived just a couple of days before the meeting, undermining its usefulness.
Eight years ago, a new “integrated framework” was set up by the UN, World Bank and others to help LDCs develop trade policy. So far it has disbursed just $1m per country. “A million dollars!” Patel says. “This is a nation, not a bloody corner shop.”
Often, he relies on briefing notes prepared by NGOs based in rich countries, such as Oxfam. “We get criticised for allowing NGOs to dictate our policy. But if we don’t have the capacity to do our own research, what can we do?” In May, Patel attended a small meeting of trade ministers in Paris on the Doha round. He says that Rob Portman, the US trade representative, already had an advantage over him, being equipped with a thick briefing binder with colour-coded documents for the different subjects. “I asked him if he could show it to me, and he said perhaps he had better not.” For Hong Kong, he has heard that the rich countries are setting up war-rooms in the hotels, with roaming officials working the developing country delegations and keeping in contact with each other with PDAs. “How do you combat that?”
The WTO, by the admission of its own staff, is a horrendously difficult system to lobby, not least because the institution itself has very little power. Essentially it administers a system of legal rules negotiated by its member countries in tortuous, multi-year “rounds” of trade talks. (The previous “Uruguay round” of talks was supposed to take four years to complete, but ended up taking seven and a half.)
Any country trying to advance or defend its interests needs expertise in statistics, economic modelling, negotiating tactics and, above all, the law. For example, the LDCs’ demands to have their tariff-free access permanently entrenched are mired in arcane legal bickering. The European Commission, which offers one of the most generous programmes, claims that to “bind” the deal in a WTO agreement would violate the equal-treatment principle at the heart of the WTO, as it would have to offer the same access to all other countries. It has instead offered what it says is the strongest form of promise possible, short of a legally binding agreement. For Patel, this is not good enough. But in an area of highly complex jurisprudence, where there are often few precedents, it is hard to prevail.
Nor are the west African cotton producers having much luck taking on Big Cotton, one of the richest and most well organised of the American farm lobbies. The US insists that any deal on cotton must be linked to a wider agricultural agreement, which for the moment remains elusive. And despite warm words to this effect at the Group of Eight rich countries’ meeting in Gleneagles in July, the US and Japan have not yet followed the EU’s lead of ending tariffs against all exports from LDCs.
The complexity can baffle even the best-resourced. Earlier this year, the part of the Doha talks that concentrated on agriculture were held up for two months waiting for the EU to come up with a way to convert its flat-rate farm tariffs, such as E100 per tonne, into an equivalent percentage tax. The import prices registered in the WTO’s own database were at odds with the UN’s commodity statistics, and an arcane but fierce row developed about whether to weight an average of them together before or after they were converted to a percentage. This was not mere nit-picking. At stake, months or years of negotiations down the line, the calculation in tariffs would determine how big the cuts in protection would have to be - and, ultimately, how many European beef and dairy farmers would be put out of business, as lower protection made them vulnerable to competition from abroad.
But the WTO, along with some other institutions that offer help, such as the UN Conference on Trade and Development and the rich donor countries themselves, is making earnest efforts to bring officials from its poorest members up to speed. In October, in a drab, strip-lit room in the WTO’s unglamorous Geneva headquarters, 21 officials from a variety of countries - Yemen, Afghanistan, Uganda, the tiny Pacific nation of Kiribati - sit in rows taking instruction on the agreements that underlie the organisation. Twice a year - once in English, once in French - the WTO offers three-week training courses to officials from LDCs.
The class is taken by Claude Trolliet, an earnest shirt-sleeved WTO employee who has been with the organisation for 10 years.
“We call it a trade policy course, but in fact we don’t teach you how to do trade policy,” he tells the assembled officials. “We teach you about the WTO agreements.”
The morning course I attend consists of running through the agreement on trade in services industries such as banking or insurance, part of the 500 pages of basic texts that underlie the world trading system. The overwhelming impression is one of grinding legalistic detail: the judicial principles of the agreement, the exclusions, the obligations, the schedules of services that are, and are not, liable. “For each exception there is an exception,” Trolliet says.
At times the knowledge being acquired appears ludicrously obscure. The LDCs will not be forced to open up their services industries further as part of the Doha round. And in any case few western companies are salivating at the thought of getting into such tiny markets. But nonetheless the class is attentive, even enthusiastic. “Article 6, paragraph 4: how does it define domestic regulation?” Trolliet asks. Several in the class have a word-perfect reply. And they have not lost faith in the WTO, despite acknowledging its complexity. “It seems to me that the scope of the WTO is too large, and the agreements too complicated,” says Azizun Nahar, a Bangladeshi civil servant and economist who has just been moved on to the WTO brief in Bangladesh’s commerce ministry. “But if you follow it carefully you can understand.” Gesturing to the thick book of legal texts, she says: “This is the bible.”
Later, notwithstanding his brief to give them just the facts, Trolliet digresses slightly into the dangers of relying on outside advice when making trade policy. “The US will help you liberalise audiovisual services because it wants to score points against the EU; the EU will do the opposite,” he says. (The US has long argued that France’s desire to protect its domestic cinema is a thinly disguised form of trade protectionism.)
“The developing countries are still punching below their weight in the organisation,” Trolliet concludes. “I hope with people like you that that will change.”
To me, Trolliet says: “Providing assistance to developing countries was not one of the functions of the WTO when it was set up. We have had to change ourselves.”
Mastering the legal intricacies of WTO agreements may be a prerequisite for achieving goals in the institution. Some have done so: Brazil, for example, with a large cadre of high-quality, well-paid civil servants and negotiators, has successfully challenged American cotton subsidies and European sugar quotas in the WTO. But Brazil already had efficient cotton and sugar growers to take advantage of the victory. For the world’s poorest countries, even overcoming the institutional barriers within the WTO will not remove some of the main constraints to their successful participation in the global economy. Zambia’s real problems, along with those of most LDCs, have less to do with unfair trade rules than the fact that it has not much to sell. Lack of production, lack of transport and lack of infrastructure, more than the rules of trade, are what stop Zambia becoming a beneficiary of globalisation. Dipak Patel is pushing for more aid to help LDCs build up their export industries. But aid is not the province of the WTO, and Patel’s grand plans for a new infrastructure fund for developing countries have yet to make much headway.
There are some valiant attempts to take advantage of what opportunities are available. Near the airport in Lusaka, huge circles of bright green are scattered across the parched brown landscape. This is Zambia’s version of the highly successful horticulture industry in Kenya, and it delivers mangetout, sugar-snap peas and cut flowers to British supermarkets. The government helped by building cold-storage warehouses. But the supply chain linking Zambia to its lucrative markets is thin and vulnerable to fracture. This summer British Airways cancelled its weekly freight flight from Lusaka, citing the rising cost of airline fuel as global oil prices soared. Zambia’s growers, left with tonnes of rotting produce, had to scrabble around to find space on other flights or truck their goods out through South Africa.
And like many of the poorest countries, Zambia is finding that the traditional route out of poverty - exporting garments and cheap toys - has been closed off by competition from China. The search for alternatives, other than its traditional export of copper, is not easy.
One afternoon Ronnie Parbhoo, an old schoolfriend of Patel’s, shows me round his milk-packaging plant in Livingstone. Parbhoo is one of the few remaining members of Livingstone’s formerly thriving business community - as in much of southern and east Africa, this is largely ethnic Indian.
The archetype of the painstaking Indian family businessman, Parbhoo wears rimless spectacles and a sleeveless pullover. He once owned one of Livingstone’s 40 factories in a flourishing textile industry. But output collapsed under east Asian competition, aided by president Chiluba’s decision, egged on by the International Monetary Fund and World Bank, to slash protective tariffs rapidly in the early 1990s. So quick was the resulting implosion that most of the factory owners, disillusioned, left the country altogether. Of the 2,000 or so Indians formerly in Livingstone, about 150 are left. “The rest went to the US or Canada,” Parbhoo says. “Or they are running corner shops in London.”
The theory of comparative advantage in trade, developed nearly two centuries ago by the English economist David Ricardo, holds that countries should trade freely and concentrate on what each is relatively good at. But in Livingstone the speed with which traditional industry collapsed led to much of the country’s business class upping and leaving, taking with it the capital, experience and entrepreneurial drive that might have helped the country seize new opportunities.
The industrial zone of Livingstone - now largely abandoned and overgrown, an African version of a midwestern American steel town - used to employ 10,000 workers. It now employs about 300, a third of whom work for Parbhoo.
Having been one of the few to anticipate the shock, Parbhoo converted his factory to a Tetra Pak franchise, heat-treating and packaging milk from local farmers into longlife milk, for which there is a thirst in hot, unrefrigerated Africa. The imported pasteurising and packaging machinery fills only a few rooms in his whitewashed factory. Closed-off warehouses are still full of rusting, unsaleable textile machines.
Parbhoo sells his milk mainly to Zambians, limiting the size of his market. In theory, he could export his milk to Zimbabwe, but they don’t have the hard currency to pay for it. Exporting it to Zambia’s other southern African neighbours often runs foul of their hygiene rules - frequently used as a form of protectionism - and the country no longer has the government-backed testing facilities to make its own checks. It is, moreover, a long way across terrible roads to neighbouring countries, and the railway through Livingstone that crosses Zambia has been abandoned.
The milk factory aside, there are few signs of successful indigenous enterprise in Livingstone. Parbhoo drives me down dirt roads he says he has not visited in years, and points out the dozens of Aids orphans playing in the dust. Fundamentalist Protestantism is one of Livingstone’s few growth areas: of the unbroken buildings rising out of the rubble and tall grass, many are churches backed by money from American evangelicals.
The other signs of success owe more to turmoil over the border than to Zambia’s own resources. A former state abattoir has been taken over by white Zimbabwean cattle farmers who fled Robert Mugabe’s rapacious regime and are now hoping to export beef.
Perhaps Livingstone’s best hope is tourism. The political travails in Harare have encouraged more visitors, particularly from Britain, to see the Victoria Falls from the Zambian side, taking microlight flights over the steaming, roaring cleft in the earth and spotting riverside elephants and crocodiles from the air. Parbhoo, too, is looking to invest in the tourist industry. His serious face betrays a rare glint of mischief. “We are praying for a long life for Brother Mugabe,” he says.
Whatever gains are made at Hong Kong and the rest of the Doha round may not pay off for Parbhoo until some way into the future. But for his old schoolfriend, Dipak Patel, it is his best opportunity to make the least-developed countries’ voices heard.
In any case, Patel has no alternative. In the bar by the Zambezi, he reins himself back from a long discourse about the thousand petty privations that beset a minister representing the world’s poorest nations against the richest. “In the end, it doesn’t make any difference,” he says. “We have to be up there with them. The world is not going to wait for us.”
Alan Beattie is the FT’s world trade editor.
