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