Oxfam's new report on trade, globalisation, and the fight against poverty, Rigged Rules and Double Standards, has provoked a debate with groups and individuals campaigning to make globalisation work for the poor. A summary of the report and links to those who have joined the debate.
 
World trade is the key to addressing mass poverty and the widening, already gaping, inequalities between the rich and the poor, says Oxfam, the UK-based charity which has launched a campaign to mobilise opinion against the current rules that govern trade.

Well-managed international trade has the potential to lift millions of people out of poverty. Instead, governments in the rich countries, by using their trade policy to keep out exports from developing countries, have erected tariff walls that are four times higher than those faced by developed countries, and sealed an escape route from poverty for poor people.

It would be in the self-interest of the North to stimulate growth in the South, Oxfam points out in a report released in April 2002, Rigged Rules and Double Standards: trade, globalisation, and the fight against poverty. Otherwise, the growing enclaves of despair in parts of the developing world, the result of increasing marginalisation and the bottling up of frustration over lack of access to rising global wealth, could erupt and create such instability that it would threaten people all across a world where national borders have been breached by globalisation.
 
"If Africa, East Asia, South Asia, and Latin America were each to increase their share of world exports by one per cent, the resulting gains in income could lift 128 million people out of poverty," the report states.
 
Oxfam, through its campaign 'Make Trade Fair' (www.maketradefair.com), wants to work with organisations and individuals around the world who are already campaigning to ensure that trade makes a real difference in the fight against global poverty. As economist Amartya Sen who is Honorary President of Oxfam says in the Foreword: "The great rewards of globalised trade have come to some, but not to others. What is needed is to create conditions for a fuller and fairer sharing of the enormous benefits from trade."

• Oxfam prescribes eight main institutional changes and policy reforms to radically alter the prevalent levels of inequality and poverty, without wrecking the globalised economy.
  
• Improve market access for poor countries and end the cycle of subsidised agricultural over-production and export dumping by rich countries.
  
• End the IMF-World Bank's use of conditions that force governments to open their markets whatever its impact on poor people.
  
• Raise prices to levels consistent with a reasonable standard of living for producers.
  
• Establish new intellectual-property rules to ensure that poor countries are able to afford new technologies and basic medicines, and that farmers are able to save, exchange and sell seeds.
  
• Prohibit rules that force governments to liberalise or privatise basic services that are vital for poverty reduction.

Enhance the quality of private-sector investment and employment standards.
 
Democratise the WTO to give poor countries a stronger voice
Change national policies on health, education, and governance so that poor people can develop their capabilities, realise their potential, and participate in markets on more equitable terms.
 
Change is possible, the charity asserts. "We can choose to allow unfair trade rules to continue causing poverty and distress … Or we can change the rules." The way forward is neither that of the "globaphiles" nor "globaphobes" who argue for more of the same rules for trade and against participation in trade, respectively. Oxfam calls this a "false debate" not least because of the "revolutionary changes that are transforming the global trading system". The report diagnoses the ills and prescribes the changes.

Trade and globalisation in the 21st century
Part of the change is quantitative: exports have been growing faster than global GDP and developing countries have registered particularly rapid increases. While many remain dependent on primary commodities, the share of manufactured goods (from China, Mexico and India) has been growing. TNCs are linking producers in the South to consumers in the North. Globalisation is generating forces which create major opportunities, along with huge threats.

Trade as a force for poverty reduction
Export success can play a key role in poverty reduction. If developing countries increase their share of world exports by just 5 per cent, this would generate $ 350bn – seven times as much as they receive in aid. Experience from East Asia shows a rapid growth in exports has contributed to a wider process of economic growth which has lifted more than 400 million people out of poverty.

Left behind: poor countries and poor people in the global trading system
The rising tide of wealth generated by trade has widened inequalities, both within and between countries. For every $ 1 generated through exports in the global trading system, low-income countries account for only 3 cents. Even though developing countries have been increasing their exports more rapidly, large inequalities mean that the absolute gap between them is widening. Exporters of primary commodities have seen their share of world trade shrink.

Market access and agricultural trade: the double standards of rich countries
The North reserves its most restrictive trade barriers for the world's poorest. Trade restrictions in rich countries cost developing countries around $ 100 billion a year – twice as much as they receive in aid. Oxfam has devised a double standards index to measure the gap between the free-trade principles espoused by rich countries and their actual protectionist policies. The worst offenders are the EU followed closely by the United States. In agriculture, both the EU and the US are driving down prices for exports from developing countries by subsidising their own exports, and damaging the prospects of smallholder agriculture.

To improve market access, the North needs to provide duty-free and quota-free access for all low-income countries; reduce tariff peaks to keep them under 5 per cent; phase out the Multi-fibre Arrangement; ban export subsidies; and respect the right of poor countries to protect their farm systems for food-security interests.

Trade liberalisation and the poor
Oxfam challenges evidence presented by the World Bank to prove that liberalisation is good for growth. Many of the countries that are integrating most successfully into world markets, like China, Thailand and Vietnam, are not rapid import liberalisers. Conversely, many who have taken World Bank-IMF policy advise on import liberalisation have a weak record on poverty reduction. Case studies from Peru show small farmers in the highland areas operating at a disadvantage compared with big landowners.
 
Oxfam recommends that the IMF-World Bank should not impose further loan conditions requiring trade reforms; and rich countries should reciprocate past liberalisation undertaken by poor countries by making equivalent reductions in their own import barriers.

Primary conditions: trading into decline
There is a general problem of structural over-supply, which is pulling prices down in the commodity markets. For a more inclusive globalisation, and to reduce the price volatility, governments need to create a new institution to oversee commodity markets, and a new system of commodity agreements. TNCs must adopt a socially responsible purchasing arrangement which factors in a fair price when world markets fall below levels consistent with reasonable living standards in exporting countries.

Transnational companies: investment, employment, and marketing
Not all investment is good investment. Free-trade zones appear to attract the worst FDI, for instance. There, governments have dismantled employment protection in order to attract FDI. The WTO's Trade Policy Reviews should report on trade-related labour standards. The ILO's capacity to monitor and enforce core labour standards should also be strengthened. Northern governments should establish better mechanisms to hold TNCs accountable for their actions in developing countries.

International trade rules as an obstacle to development
Many of the provisions of the WTO are bad rules. There are grave consequences for public health, agriculture, and essential utilities, which will damage the interests of the poor. Oxfam calls for an end to the universal application of the WTO intellectual-property blueprint: developing countries should retain the right to maintain more flexible systems of protection clear commitment to put public-health priorities before the claims of patent holders prohibit patent protection for genetic resources for food and agriculture; and provide stronger rights for poor countries to develop more appropriate forms of plant-variety protection, and to protect farmers' rights to save, sell and exchange seeds exclude essential public services from liberalisation negotiations, and strengthen WTO's provisions for the 'special and differential treatment' of developing countries.

Making trade work for the poor
Rich and poor nations alike will have to take action if trade is to work in favour of the poor. This requires action – also beyond trade, in health and education – at the national level, new forms of international co-operation, and representational democracy at the WTO.

Reforms in trade governance should include the following:

• Changes in public-spending priorities, infrastructural development and land redistribution linked to national poverty-reduction strategies.
  
• Action to root out problems of corruption – stronger auditing – and strict enforcement of anti-bribery rules and guidelines.
  
• Increased financial assistance to build up negotiating capacity among developing country members of the WTO.
  
• Greater transparency and public sharing of information by governments of all their activities at the WTO
  
• The development of a Global Anti-Trust Mechanism which extends the principles of anti-monopoly legislation beyond national borders to the international economy.
  
• The Oxfam report concludes that managed well, the international trading system can lift millions out of poverty. Managed badly, it will leave whole economies even more marginalised.

Other links:
Walden Bello of Focus on the Global South has criticised Oxfam for providing the wrong focus and wrong direction for the movement against corporate-driven globalisation by concentrating on the theme of Southern access to Northern markets while circumventing the cardinal issue – the WTO free trade paradigm. A debate between Walden Bello and Oxfam about the trade report (3 parts) www.focusweb.org
 
The European Commission issued a 32-page response. It said in general Oxfam presents an analysis which is remarkably similar to the EU's own. What it has problems with is the "so-called" double standards index, where Oxfam has used a "combination of sloppy figures, double counting, and obscure methodology to come to a conclusion which is completely contradictory to recent serious studies." The European Commission's comments on the Oxfam report, with Oxfam's response www.maketradefair.com
 
Vandana Shiva critiques the report for creating a "schizophrenic" analysis by putting together two "incommensurate" paradigms – one, which gives precedence to people's democracy, another which gives precedence to tradition, commerce and markets. www.maketradefair.org

June 12, 2002.