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Free trade is not fair trade for the poor

By Jack De Groot
December 14, 2005

THE world's trade ministers meeting in Hong Kong this week carry with them much more than just the aspirations of their own vocal farm lobbies and exporters. The silent hopes of millions of the world's poorest and most vulnerable people will also rest on their shoulders.

Trade, when combined with more and better aid and debt relief, has an enormous role to play in making poverty history. A 1 per cent increase in developing countries' share of world exports could lift 128 million people out of poverty.

But without ministers taking concrete steps towards a substantial overhaul of the global trading system at the World Trade Organisation meeting in Hong Kong, developing countries will continue to get a raw deal — particularly on agriculture.

We all rely on agriculture to feed us. In the world's poorest countries, seven out of every 10 people also depend on agriculture for their livelihoods. Yet nearly 900 million people in these countries do not have enough food to eat and despite being home to 98 per cent of the world's farming population, developing countries capture just a third of agricultural trade.

For too long rich countries have been manipulating international trade rules to protect their own interests.

The United States, the European Union, Japan and other rich countries insist that poor countries open their markets to all their exports while they spend around $300 billion each year subsidising and protecting their own farm industries — more than the combined income of the world's poorest 1.2 billion people.

These subsidies lead to massive overproduction of most farm products, which rich countries then dump on world markets at prices well below the cost of production, making it impossible for agricultural exporters from poor countries to compete.

This must stop and the Make Poverty History coalition in Australia supports efforts at the WTO meeting — including the strong push by the Australian Government, for rich countries to end all forms of dumping and instigate meaningful cuts to trade-distorting farm subsidies.

Taking a purely "free trade" approach is not the best way to eliminate poverty.

Even if these farm subsidies and dumping were scrapped tomorrow, many of the poorest people in developing countries would not be able to benefit from the change without further support.

Rich countries, including Australia, would also have to stop trying to force developing countries to open up their agricultural markets, without consideration for the impact this will have on the most marginalised members of their societies.

Forcing developing countries to open their markets too quickly and too deeply can have devastating effects, including putting millions out of work, increasing poverty, stymieing development, undermining food security and even creating political instability and conflict. Developing countries must be allowed to retain some control over how fast and how far they open their markets when the livelihoods of millions of their poorest are at stake.

Developed countries must also acknowledge that aid and trade are inseparable, rather than seeing them as competing solutions to poverty.

For poor countries to benefit from fairer trade they need more and better aid aimed at improving health, education, roads, ports, electricity, telecommunications, banking and legal systems. As, without a healthy and highly skilled workforce and functional infrastructure, transport, legal and commercial systems most poor countries will not be able to take up the new export opportunities offered by fairer trade.

If fairer trade rules were combined with more and better aid and debt relief, in this way the silent call to end global poverty may finally be answered.

Jack de Groot is chairman of Make Poverty History (Australia), a coalition of more than 70 organisations fighting poverty.