Roughly one-fifth of the world’s population currently lives — or tries to — on less than $1 a day. That is a crude measure, but it translates into a daily grind of hunger, misery and disease that no human being should have to endure.
Last September, at the U.N. Millennium Summit, world leaders resolved to “spare no effort” to free their fellow human beings “from the abject and dehumanizing conditions of extreme poverty.” Specifically, they pledged to halve the proportion of the world’s people living in those conditions by 2015.
Probably no single change would make a greater contribution to fulfilling that pledge than fully opening the markets of prosperous countries to the goods produced by poor ones.
At present, farmers in poor countries not only have to compete against subsidized food exports. They also face high import barriers. The tariffs imposed by industrialized counties on staples such as meat, sugar and dairy products are almost five times those on manufactures. The European Union’s tariffs on meat products peak at 826 percent.
Also, the more value developing countries add to their products, by processing them, the higher the tariffs they face. In Japan and the EU, for instance, fully processed food products face tariffs twice as high as those on products in the first stage of processing.
In other words, the already industrialized countries, while preaching the virtues of free and fair trade, are practicing protectionist policies that actively discourage poor countries from developing their own industries.
Such barriers are huge obstacles for developing countries to overcome. Yet even in these conditions their export earnings are over $1.5 trillion.
Obviously, they could earn much more if the barriers were lifted. The minimum net gain would be over $100 billion — more than twice the amount of annual aid flows. Over time, as producers adjust to the new export opportunities, the gain could be much greater. And, besides the direct value of export earnings, these opportunities would attract an increased flow of foreign direct investment. At present, this represents less than $200 billion a year and goes mainly to a few of the most successful developing countries.
The least developed countries (LDCs), which are home to more than 10 percent of the world’s population, are at present missing out almost entirely on global trade and investment. Between them they receive only $12 billion in annual aid flows, only $25 billion in export earnings and a paltry $5 billion in foreign direct investment.
In two months’ time, the United Nations will hold a conference in Brussels, devoted specifically to the problems of these 49 countries. Market access will be at the top of the agenda.
Its importance in the struggle against poverty was clearly recognized by last year’s summit. World leaders called on the industrialized countries to adopt, preferably by the time of the Brussels conference, a policy of duty- and quota-free access for “essentially all” exports from the LDCs.
I am delighted to see that the EU, which is hosting the Brussels conference, has taken the lead in responding to that call. On Monday, by adopting the “everything but arms” initiative, it agreed to give full duty- and quota-free access to its markets for all products from the LDCs, other than weapons.
To reach this decision, Europe’s leaders had to overcome resistance from powerful producer lobbies within the EU. They also had to reassure African, Caribbean and Pacific countries, which at present enjoy preferential access to the EU market, that they will not suffer unduly from the concession made to other LDCs.
But they got their priorities right, and by so doing sent a vital political signal. Their decision shows that Europe really does want a fair international trade system, in which poor countries have a real chance to export their way out of poverty.
This should give all of us new confidence in the ability of the multilateral trade system, and the World Trade Organization, to respond to the needs of all countries, not only the richest and most powerful.
As such, it augurs well for a new round of trade negotiations, which this time must really be a “development round.”
Of course, the EU’s decision by itself will not abolish world poverty. Its direct economic impact will be quite small, since most LDCs already have relatively favorable access to the EU’s market.
Also, at present, the LDCs have neither the surplus of exportable goods, nor the production capacity, to take immediate advantage of new trade opportunities. They will need substantial investment and technical assistance in order to expand their production.
But giving them access to the market is a crucial first step. I appeal to the other industrialized countries — starting with the United States, Japan and Canada — to follow Europe’s lead, without restrictive provisions or reservations. In the battle to rid the world of abject and dehumanizing poverty, the Brussels conference must mark a turning point.
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