14 April 2008
International trade has a tremendous potential to reduce poverty worldwide and drive economic growth. A 1% increase in the developing countries' share of world exports would lift 128 million people out of poverty. But present trade policies discriminate against developing countries and hinder poor country participation in the global economy.
In November 2001, a new round of world trade talks was launched in Doha, with over 140 countries participating. Developing countries only agreed to launch this new round on the promise that it would address the inequalities in international trade rules, making them fairer for developing countries. Consequently, it was dubbed the ‘Development’ Round.
Negotiations have now been carrying on for five years. Negotiators thrash out deals in Geneva all year and then roughly every other year the Trade Ministers from all countries get together in ‘Ministerial’ meetings to sign the deal. In 2003, the ministerial talks in Cancun collapsed after developing countries stuck together in a strong alliance and stood up to the EU and the US. Since then talks have hobbled on.
Caritas believes that developing countries should stay strong and refuse to sign any rushed deal merely in order to meet the July deadline. Instead, they should look to play a long game. The current deal looks like it will not only fail to address the gross unfairness of the past but will also make trade rules even more imbalanced against developing countries.
Key issues here are agricultural policies and market access.
Three-quarters of the world's poor-900 million people-live in rural areas and depend on agriculture or related activities. Rich countries the EU is among the worst offenders - grant large support to their domestic agricultural producers, totaling $300 billion annually.
These subsidies lead to worldwide overproduction that effectively depresses world prices, floods poor country markets and undermines incentives and earning opportunities for farmers in developing communities. In the meantime, agriculture policies in OECD countries cost consumers and taxpayers $300 billion every year-six times annual OECD spending on ODA.
Despite significant liberalization in recent decades, trade barriers are still high-especially on labor-intensive goods and services in which developing countries have a comparative advantage.
Poor country exports are locked out by high tariffs (concentrated on agricultural products, textiles and clothing), by tariff escalation (whereby the tariff increases the moment a commodity is processed) and by non-trade barriers. Barriers on products from developing countries are twice as high as those on developed country products. Reducing tariff peaks on products that are of export interest to poor countries will be essential for them to trade their way out of poverty.
Source: CAFOD and End Poverty 2015 Millennium Campaign
RESOURCESAnnual Report 2010Strategic framework 2011-2015How Caritas works: Economic JusticeCSO development effectivenessEconomic justice on Caritas Blog