August 22, 2002
Rapid growth in exports has boosted economies, lifting 400 million people in Asia out of poverty since the mid-1970s.
The debate over whether trade is good for the poor and the planet is the issue that polarises the anti-globalisation movement and its critics, writes Charlotte Denny . On the one side sit assorted environmentalists and NGOs who blame trade for the damage human beings have inflicted on the planet. Ranged against them are economists and governments who argue that dismantling tariff barriers and opening up new markets provide the best route to lifting the 2.8 billion people in developing countries who live on less than Dollars 2 a day out of grinding poverty.
Britain's development minister, Clare Short, is convinced that trade is a vital tool in fighting poverty and that those who oppose it want poor countries to stay undeveloped. Her views are echoed among many countries in the south who worry that "green protectionists" in the north are defending their markets at the expense of billions of people in the developing world. Ms Short says that poor countries suffer from too little trade, not too much. The poorest countries, where 40% of the world lives, produce just 3% of the world's exports. Meanwhile, western countries with only 14% of the world's population account for three-quarters of the world's exports.
A growing band of aid agencies and development lobbyists agree that trade could be good for the poor. The problem is the way the trading system is currently run. If western countries practised what they preached instead of demanding liberalisation abroad while protecting their own vulnerable industries from competition from the developing world, trade could be a powerful weapon against poverty.
Instead, the west spends around Dollars 350bn a year supporting agriculture, more than six times what it spends on aid. High tariff walls protect its farmers from competition from more efficient producers in the south. The subsidies encourage over-production and the resulting artificially cheap goods are dumped in the developing world, bankrupting subsistence farmers in Asia and sub-Saharan Africa.
The west has used successive rounds of trade talks since the second world war to break down trade barriers for its companies, while protecting agriculture, textiles and other sensitive industries from competition by the south. When poor countries export to the west they face tariffs four times higher than the western countries impose on each other. Western trade barriers cost the developing world Dollars 100bn a year in lost exports - twice as much as the rich world spends on aid.
The prices of the staple commodities which poor countries depend on are falling. Coffee prices are at a 30-year low undermining the livelihoods of farmers from Brazil to Tanzania.
Under attack from the anti-globalisation movement and the growing number of developing country WTO members, the west has belatedly promised to heed their demands. When the 140 member countries of the WTO agreed to launch a new round of talks in Doha last December, poor countries were reassured that it would bring real benefits to the developing world.
But progress since Doha has been disappointing, to say the least. Hopes that the US and the EU would forge a new alliance to cut the vast subsidies paid to farmers were dashed earlier this year when President Bush promised to spend Dollars 190bn supporting American agriculture over the next 10 years. In Europe, even the moderate attempts by the European commission to reform the bloated common agricultural policy look destined to be derailed by farming lobbies in France, Spain and Ireland.
All this comes at a time when poor countries are feeling the pinch from collapsing commodity prices - pushed down in part by the dumping of subsidised western crops on their markets. Most of the benefits of the west's much-hyped debt-relief package for the world's poorest countries have been wiped out by collapsing prices for their export staples.
The WTO argues that abolishing all global trade barriers would lift 320m people out of destitution by 2015 - the deadline world leaders have set themselves for halving the share of the world's population living in extreme poverty. Even development NGOs who are sceptical about how WTO number crunchers arrive at such figures argue that trade can play an important role in reducing poverty.
If the current round of trade talks grind to a halt, the anti-globalisation movement will cheer but the real losers will be the developing world. While the current system is biased in favour of rich countries, at least at the WTO, poor countries can band together and demand a better deal.
"Rich countries and corporations have less power in a multilateral system than they do in bi-lateral trade negotiations," says Kevin Watkins, senior policy adviser at Oxfam. "Without a rules-based system you have the law of the jungle and the big animals eat the small ones."
The real challenge then, is to make the Doha talks a proper development round with an upfront promise from the west to open its markets in agriculture and textiles, and stop dumping cheap produce in the south.
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