Oxfam report accuses west of double standards on trade
Charlotte Denny, economics correspondent Thursday April 11, 2002 The Guardian
The European Union and the United States are robbing the world's poor of billions of dollars each year in export earnings by preaching free trade while protecting their own markets, development campaigners claim today.
Analysing western approaches to trade in a report, Rigged Rules and Double Standards, Oxfam names the EU as the worst offender, followed closely by the US.
"Governments of rich countries constantly stress their commitment to poverty reduction," says Kevin Watkins, the report's author. "Yet the same governments use their trade policy to conduct what amounts to robbery against the world's poor. Rich countries are fierce advocates of liberalisation in developing countries, while retaining high trade barriers against exports from the same countries."
While the anti-globalisation movement has identified trade as a leading cause of the widening global inequality, Oxfam says that trading rules are the problem, not trade itself.
"In itself trade is not inherently opposed to the interests of poor people," the report says. "Well-managed trade has the potential to lift millions of people out of poverty."
Empty promises
A rapid growth of exports has helped to lift millions out of poverty in east Asia in the past 20 years, but the benefits are not automatic. "If countries are able to engage in higher value added trade, as in east Asia, export growth can contribute to rapid increases in living standards."
For free trade to work for the poor, rich countries must start backing up their rhetoric with real concessions to the developing world in the new round of global trade talks which begin in Doha in November.
"If Africa, east Asia, south Asia and Latin America were each to increase their share of world exports by 1%, the resulting gains in income could lift 128 million people out of poverty," the report says.
Oxfam ranks Europe first according to an index which measures protectionism by the world's biggest trading powers, followed by the US, Canada and Japan. They impose the highest trade barriers against the industries of most importance to poor countries: agriculture and textiles. Oxfam estimates that high tariffs and subsidies cost poor countries $100bn (£70bn) a year - twice as much as they receive in aid.
The EU and the US spend billions of dollars each year subsidising their farmers and protecting them from more efficient producers in the developing world. The surplus cheap produce is then exported to developing countries, wiping out local farmers' livelihoods.
Oxfam estimates that they export their farm crops at prices more than a third lower than the cost of production.
"These subsidised exports from rich countries are driving down prices for exports from developing countries, and devastating the prospects for smallholder agriculture," the report says. "Some of the world's poorest countries are competing against its richest treasuries."
By posing as free traders while protecting their own industries, rich countries are forcing poor countries to open their markets to western goods, using their control over the World Bank and the International Monetary Fund. Poor countries which borrow from the IMF and the bank are forced to cut subsidies and tariff barriers as a condition of receiving aid.
"Poor countries have been opening up their economies much more rapidly than rich countries," Oxfam says. "Average import tariffs have been halved in sub-Saharan Africa and south Asia, and cut by two thirds in Latin America and east Asia."
In many cases, it says, rapid liberalisation has harmed poor countries by exposing their industries to competition before they are ready to take on more efficient producers.
Oxfam is calling on the World Bank and the IMF to stop imposing trade conditions on their loans, for poor countries to be given better access of markets, and for a new international body to support the prices of the primary commodities many developing countries depend on.
A spokeswoman for the British Department for International Development said the World Bank and IMF were analysing the impact of their trade liberalisation programmes and funding a pilot study in six countries. "They have agreed to delay the introduction of measures which are found to be negative