International Trade Policies and Poverty

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International Trade Policies and Poverty

• Human Rights Council
• Social Forum 2008
• 1 September, Geneva
• Aileen Kwa
• Coordinator, Trade and Development Programme
• South Centre

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• Are we really reducing global poverty?
• Amongst LDCs as a whole, whilst percentage of
  poor is decreasing, the number of poor is
  increasing (UNCTAD 2008)
• SSA Percentage of poor is not decreasing.
• 72 of poor in SSA live below 2 a day in 1981.
  This is 72.2 in 2005 (World Bank 2008)
• In figs, the number of poor in SSA have nearly
  doubled from 286.4 million in 1981 to 551
  million in 2005 (World Bank 2008)

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• More Economic Growth and Trade And More Poverty.
  Why? (1)
• In the last 25 years, most countries have been
  advised to become more integrated with the global
  economy through exports.
• Structural adjustment policies
• WTO
• Free Trade Agreements eg. EPAs and other
  bilateral agreements
• Bilateral investment treaties

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• More Economic Growth and Trade And More Poverty.
  Why? (2)
• Agriculture
• FAO of 23 food groups in 102 developing
  countries from 1980 -2003, import surge frequency
  between 7,131 12,167 times.
• Senegal tomato paste imports increased by 15
  times, 50 local production decline.
• Burkina Faso tomato paste imports increased 4
  times 50 local production decline.
• Jamaica vegetable oils 2 times increase, 68
  drop in production
• Haiti rice imports increased by 13 times
• Kenya dairy, dramatic increase, cuts in local
  milk sales
• Benin chicken 17 times, declined local
  production
• Kenya sugar 4 times, 79 cut in employment,
  160,000 households saw incomes contract.

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• More Economic Growth and Trade And More Poverty.
  Why? (3)
• Manufacturing Sector
• Policy of export expansion in a large number of
  developing countries has not been adopted
  together with sound policies to expand the
  domestic production base.
• Without increasing the manufactured value added
  (MVA), a countrys economic development cannot be
  sustained over the long term.
• Eg.Jamica, Ghana, Colombia, Uruguay, Paraguay
  moderate to high levels of manufactured export
  growth, but negative MVA in the 1990s.
• After 2 decades of reform, Ghanas growth in MVA
  was significantly negative, at -3.5 in the 1990s,
  i.e. severe deindustrialisation (Shefaeddin,
  2005).

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• How Exports Can Shrink Domestic Markets (1)
• Amit Bhaduri (Joblessness)
• 1. When pursuing more exports, labour costs will
  be cut i.e. decreasing purchasing power.
• The internal market shrinks.
• Exports can increase, but living standards can be
  on the decline.

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• How Exports Can Shrink Domestic Markets (2)
• 2. Nos. do not add up
• Situation positive for a country if their exports
  surpass their imports. Domestic purchasing power
  can be increasing.
• However, it cannot work for all. Other countries
  will have corresponding import surplus.

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• Solutions (1)
• Production, not trade, is paramount. Production
  and the economy must serve people, rather than
  being dislocated from people.
• For countries with large agricultural sectors,
  small farmers livelihoods are critical. Domestic
  markets for these farmers are parmount. We need
  to invest in pro-poor agriculture i.e. small
  farmer agriculture. Higher farm prices are an
  opportunity for the purchasing power of masses to
  be raised.
• This could lead to the stimulation of the
  industrial sector. Industrial development for the
  domestic and regional markets.

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• Solutions (2)
• We need to rethink our trade policies and trade
  agreements so that they are subservient to human
  rights principles.
• The multilateral trade system should be an
  institution that enforces extra-territorial
  responsibility (i.e. doing no harm to others
  outside your borders). Forced liberalisation
  according to one-size-fits-all formulas are
  formulas for national disasters.
• Policy Space is paramount. We must
  Re-agriculturalisation and Industrialisation our
  countries and regions.
• In the era of climate change, transport is a
  major culprit of green house gas emissions. This
  calls for a rethinking of our current trade
  patterns. There will always be a place for trade,
  but it should not subvert local and regional
  production.

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