FAIR TRADE
In September 2000, 147 Heads of State committed themselves to achieving the UN''s Millennium Development Goals (MDG''s) within 15 years. These eight goals were developed as a serious and sustained attempt to improve the lives of the world''s poor by committing the international community and the Governments of developing countries to measurable targets for poverty reduction. They include pledges to achieve universal primary education, combat HIV/AIDS, malaria and other diseases, and to develop a global partnership for development. Poor countries promised to govern better and invest in their people through health care and education. Rich countries promised to support them, through aid, debt relief and fairer trade. It is now 2006 and we are at least a century away from achieving the MDGs and 800 million people are permanently hungry.
We are all in favour of making poverty history. The Prime Minister and the Chancellor of the Exchequer certainly deserve credit for the focus last year of the British presidency of the G8 on development, especifically for Africa. Significant progress was made on debt cancellation and all the promises to increase aid by 2010 should be welcomed if all countries live up to the promises that they made. But?
Aid and debt relief on their own cannot lift countries out of poverty and if managed badly, can develop an unhealthy aid dependency. Sustained development requires a system of free and fair trade but it is one of the most difficult challenges facing the international community and each nation is walking a political tightrope. On the one hand, if development objectives are to be met, markets in rich countries must be made more accessible to developing countries. On the other, national political leaders are under pressure to secure the interests of their own traders and businesses.
At present richer countries impose many restrictions and high tariff barriers on imports for commodities in which the poorer nations tend to specialise, for example certain agricultural goods and low-value manufactured goods like textiles. Those barriers prevent the poorest countries from benefiting properly from exports of the few products in which they have a comparative advantage.
Three-quarters of the world''s poor live in rural areas and agriculture accounts for more than a quarter of all their GDP and almost half their employment. In rich countries, particularly the European Union, agriculture accounts for a mere 2 per cent of GDP. It is strange that European agriculture markets are the most heavily protected. Tariff levels are 12 times the rate for industrial products and we spend $1 billion a day subsidising agriculture.
If we could abolish trade barriers and end export-dumping by rich countries, we would allow farmers and traders in the poorest countries access to first-world markets and enable them to develop their own enterprises profitably. In that way, developing countries could build up their infrastructure, improve the standard of living in their population and achieve the MDGs. Aid and debt relief, important though they are, cannot do that.
There is a clear and powerful moral case for Europe and the United States to open up their markets to developing countries, particularly in agricultural products. It must be in our enlightened self-interest to break the culture of protectionism that holds back development in Africa and slows growth in Europe. Failure would put at risk the whole structure of multilateral organisations like the World Trade Organisation and we will have the awful alternative of pursuing bilateral and regional deals which disadvantage weak countries that lack the capacity to strike a good deal.
The debate over trade liberalisation in agriculture goes to the heart of what we mean by free and fair trade. In the short-term, it may be necessary to maintain protectionist measures that allow the poorest countries to build up capacity and infrastructure. But such regimes should be time-limited and phased out based on the capacity of their economies. Their long-term aim should be to compete in the world market as open economies. The principle of non-discrimination which underpins the World Trade Organisation should be maintained. But so should the provisions for ''special and differential treatment'' be respected for the poorest countries.
What is certainly true is that an inflexible preoccupation with privatisation and a ‘one size fits all’ approach to reform in developing countries has not worked. What is necessary in one country may be detrimental in another. We should not allow ourselves to be sidetracked into a 20th Century debate about private versus public and we have to concentrate on finding the solutions which best fit a country’s needs. Private sector involvement should be judged solely on its merits; that is, whether it can contribute to poverty reduction and the development goals.
There is cross-party agreement in this country that one cannot overlook the serious questions relating to governance. One can throw aid, debt relief and favourable trade arrangements at some countries, but the poor in those countries will not necessarily see any benefit unless the poor governance and corruption is sorted out.
However, if we are going to make significant progress on making poverty history and meeting the millennium development goals, Liberal Democrats believes that the greatest opportunities will be provided by ensuring that there is an adequate trading relationship between the west and the poorer countries. Developing countries need access to international markets and foreign investment to enable their economies to develop and diversify. Yet the process of trade liberalisation so far has been deeply uneven, benefiting rich economies more than the poorest.
What poor countries need is unconditional access to developed markets reinforced by an aid for trade package. What they are getting is massive sustained pressure to open up their markets for goods and services they still need to protect.
What should be done:
* A substantial reduction in agricultural subsidies, including the
elimination of CAP production subsidies and trade barriers.
* Trade
negotiations to deliver a positive outcome for the developing world.
* A
system by which countries in genuine medical need are allowed to manufacture or
procure royalty-free drugs.
* Providing support to the poorest countries to
enable them to participate fully in WTO negotiations and conduct WTO disputes.
* Extending the structure of ‘special and differential treatment’ through
which the poorest countries can open their markets over a much longer timescale.
* Reforming the Economic Partnership Agreements established between the EU
and developing countries under the Cotonou Agreement to ensure that they are of
genuine and equal benefit to developing countries.
* Revise the General
Agreement on Trade in Services (GATS), to allow countries to reverse previous
decisions on liberalisation and/or add new derogations, to achieve a fairer
world market in services.
