Ripple Effect: Free trade for whom?

Free trade certainly has its skeptics in the world’s wealthiest economies, especially in our own. Lost in the narrative of shuttered Detroit auto shops and a booming China, though, is the fact that trade liberalization doesn’t always shift production from rich countries to poor. In fact, the opposite can happen. The story of our globalizing world is far more complicated than any one narrative would have us believe.

The example of Cameroon, a largely agricultural nation of nearly 25 million, perfectly illustrates this. Pulling down trade barriers with the EU has led to rapid change in the markets for two of Cameroon’s most important agricultural products: onions and chickens.

This may seem insignificant, but even small shifts can have life-changing impacts. As cheap onions from the Netherlands have flooded the Cameroonian market, onion farmers can no longer make money selling their product in city markets. Many farmers and village cooperatives have had to shift to other crops, like cassava.

So what? Isn’t this just the kind of adaptation that a free market rewards?

Yes, perhaps, but consider that onions are one of Cameroon's most important staple crops, serving not just as a base for sauces, but also as a digestive remedy and antiseptic. No longer self-sufficient in the production of a staple, Cameroonians are now more vulnerable to price fluctuations.

Then there are the less quantifiable drawbacks: the loss of human capital in the form of onion farmers’ now useless specialized knowledge, the inability of these same farmers to cook their traditional cuisine using their own crops.

A similar debacle struck the country’s chicken farmers in the early 2000s. A loosening of poultry import restrictions allowed European chicken producers to dump unwanted frozen chicken parts into a number of West African markets.  As a result, as many as 92 percent of Cameroon’s poultry farmers went out of business within a few years. Many were left with no source of income.

On the other hand, the cheap imports allowed entrepreneurial port traders to make huge profits selling cheap chicken parts to city markets. Chicken had long been an expensive status symbol. For the first time in memory, daily meat consumption was accessible to the masses.

The cheap chicken boom had an unexpected side-effect, however — disease. It turns out that frozen chicken, when introduced into a refrigerator-less supply chain in a tropical climate, becomes an incubator for dangerous bacteria. A study by the Pasteur Center estimated that 80 percent of the frozen chicken reaching market was not suitable for consumption. Local chickens had always been sold live, meaning raw poultry did not sit in the hot sun for hours before being sold.

These are the inconvenient complexities of supposedly free trade. The knock-on effects of trade liberalization can be damaging in ways economic analysis misses. Altering existing patterns of commerce can be disruptive in unexpected, unquantifiable ways. Furthermore, despite its commitment to free trade, the EU uses subsidies and tariffs to protect its agricultural markets from the fate of Cameroon’s. Which begs the question, free trade for whom?