Get serious about using trade to fight poverty

Posted in UN | 14-Sep-03 | Author: Donald Johnston| Source: International Herald Tribune

Toward Cancún II

PARIS At the World Trade Organization meeting in Cancún over the next few days, rich countries will have an opportunity to make clear whether they really are serious about assisting developing countries to work their own way out of poverty.

If the rich countries miss this chance, they will discredit both themselves and the whole process of multilateral cooperation.

In the last few weeks, progress has been made in allowing poor countries access to supplies of essential medicines. But logjams still have to be broken elsewhere. The biggest jam is over trade in farm products.

It's in everyone's interest for the rich countries to reduce and even eliminate their tariffs and export subsidies in agriculture. By permitting developing countries to expand their agricultural exports, such action can help lift millions of people out of poverty.

Hunger is not caused by a global scarcity of food. The world can easily produce enough to feed everyone, without any government support. Where people go hungry, it is because they do not have access to food - sometimes for reasons of war or politics, most often because of poverty.

Producing more food in developed countries on the back of government support does not solve these problems. On the contrary, it creates others.

At present, the world's developed countries impose tariffs on imported farm products that are eight to 10 times higher than those levied on industrial goods.

The average domestic price of agricultural products in member countries of the Organization for Economic Cooperation and Development is more than 30 percent higher than price levels in international trade. Farm price support costs the average household in the European Union, Japan, and United States more than a thousand dollars a year.

Much of this money simply goes into the pockets of the wealthiest farmers in rich countries, making little contribution to the environmental and rural community goals that the developed countries claim to pursue. At the same time, many of these countries continue to subsidize exports of surplus home-produced food, driving down world prices.

In other sectors, these same countries long ago agreed to prohibit export subsidies because they distort markets. Why don't they do the same in agriculture? There's a plain contradiction here, and it's time it was laid bare for all to see. It makes no sense at all for rich countries to go on doling out aid money to poor countries with one hand while they take the same money back from these same countries through trade restrictions and debt servitude with the other hand. Growth in trade is essential for global economic prosperity. But it can't be achieved as long as rich countries steal the livelihood of farmers in poor countries by robbing them of markets for their products.

Of course, developing countries, too, must play their part. They have a shared responsibility to use the multilateral system to promote better integration among themselves and with the global economy. Tariff and nontariff barriers hinder the growth of commerce between developing countries, as well as between those countries and the developed world.

Developing countries must be prepared to make meaningful commitments to reduce such obstacles to trade, although at differing paces to match their differing circumstances.

Finally, it's vital that efforts to free up world trade continue to be pursued in a multilateral context. Since the fiasco of the 1999 WTO meeting in Seattle, regional trade agreements have grown in number by more than a third to 142. By 2005, such agreements may cover 55 percent of world trade. But they can only contribute positively to the multilateral trading system if it is itself strong.

We need steady, nondiscriminatory liberalization of multilateral trade, based on clear, fair and effective rules.

Some wag once wrote that politicians sometimes make the right decisions but only after exhausting all the alternatives. They are exhausted. It is time to do the right thing!

The writer is secretary general of the Organization for Economic Cooperation and Development.