TRADE: Once Again, the Imbalances

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Hilmi Toros

ISTANBUL, Jun 12 2004 (IPS) - World trade is booming. Food, goods and services move across the globe with astonishing speed. Money is made.

World trade is booming. Food, goods and services move across the globe with astonishing speed. Money is made.

Yet tell that to the woman entrepreneur from Mauritania who can’t ship her camel cheese to the North because of stringent European Union health regulations. Or to one of 15 million cotton farmers in Africa, where the industry is reported to be losing 250 million dollars a year due to U.S. subsidies to its own cotton growers.

Not to mention any one of 2.8 billion people around the world who live on two dollars a day or 1 billion on just one dollar a day.

How to trickle down to the poor the enormous wealth generated by world trade is once again coming under global scrutiny at the 11th United Nations Conference on Trade and Development (UNCTAD XI), taking place Jun. 13-18 in Sao Paulo, Brazil’s largest city.

UNCTAD Secretary-General Rubens Ricupero called this gathering an “unprecedented opportunity” to help developing nations in overcoming trade imbalance and its consequences.

Above all, the emphasis falls on improved access to markets and reduction of trade barriers and subsidies that distort trade to the detriment of poorer nations, thus compounding poverty and gender inequality.

North-South rift

Representatives of civil society fear the Sao Paulo gathering could again wind up in an impasse between North and South, the North unwilling to yield its entrenched gains from world trade to the South.

“UNCTAD must be ready to make far-reaching proposals and resist pressure from some industrialised nations to limit its role,” says Celine Charveriat of Oxfam.

Adds Iara Pietrikovsky of the Brazilian Network of Trade: “The International Status Quo does not allow for international development compatible with the global needs to grow, to generate wealth and overcome poverty.”

Statistically, global commerce rose 4.3 percent last year and is projected to shoot up seven percent in 2004, with benefits to developing countries as well, as their share of world trade climbed from 24 percent in 1990 to 32 percent in 2000.

Still, over 80 percent of all global exports are produced by only 10 countries, and the lion’s share of every dollar of wealth produced in the world economy goes to wealthy or middle-income countries. Only three cents of every dollar, says the World Bank, goes to the low-income countries that are home to 40 percent of the world’s population.

And the share of the 50 least developed countries in trade slumped from 1.7 percent in 1970 to 0.6 percent in 2002, as East Asia produces 75 percent of the developing world’s manufactured exports.

African and other least developed countries accounted for a mere 0.62 percent of world trade last year, and their economies combined made up 0.58 percent of global GDP.

In 15 Latin American and Caribbean nations, more than 25 percent of the population lives in poverty, according to the World Bank.

Who’s more liberalised?

While it is possible to link poverty to trade imbalance, UNCTAD Secretary General Rubens Ricupero also points out that despite an impressive trade performance by Latin America, there are 20 million more poor people in that region today than in 1997.

In China’s recent trade boom, however, the percentage of the extremely poor has plunged from 64 percent to 17 percent, since 1981.

In parleys such as the one in Sao Paulo, the main undercurrents are globalisation and liberalisation: two trump cards of the North.

Through “outsourcing” or “off-shoring”, expected to increase 30 to 40 percent in the next five years, any big company can produce almost anything, anywhere, taking advantage of cheap labour and benefits extended by governments anxious to attract foreign investment.

Thus, liberalisation. But, it is now argued, the reluctant South is more liberalised than the North that advocates the freeing up of trade.

“Countries in the South have liberalised trade faster than the industrialised nations of the North, resulting in increased import bills,” says UNCTAD.

“Many of them have liberalised their trade regimes in anticipation of those gains, and the speed of that liberalisation has often outpaced that of developed countries. After two decades of opening up, however, the developing world is still waiting for the results,” the U.N. agency adds.

Alternatives

World trade analysts also see a window of opportunity for developing nations to go for “creative industries” such as music, movies, broadcasting, publishing and software production. Some East Asian economies engaged in such fields tripled their GDP and reduced their poverty level by 40 percent in the past two decades.

Potential is also seen in “service” exports, including labour in developed markets in the so-called “temporary movement of natural persons”, while at the other end of the scale is commodity production, which is highly vulnerable to price fluctuations and external shocks, according to UNCTAD.

If the cards are stacked against the South in North-South trade, unexplored potential exists in South-South trade, making up 10 percent of total world trade, growing 11 percent a year and now representing over 40 percent of all developing-country trade. Brazilian President Luiz Inácio Lula da Silva has called it the “new geography of trade and economics”.

U.N. Food and Agriculture Organisation (FAO) Director-General Jacques Diouf is urging the creation of joint ventures between agriculture-producing countries and oil-producing countries to bolster the development of their production and trading capacity.

In 2001, he noted, the former countries’ petroleum imports were worth 6.3 billion dollars, while the latter imported agricultural products totaling 11.6 billion dollars.

Women

In trade, a key factor apart from poverty, but also very much linked to it, is the “gender differential” creating job opportunities for women in expanding markets such as labour-intensive export industries like textiles and clothing, footwear, horticulture and data processing.

In the western hemisphere, women accounted for more than half of all migrants in 2000, although in many cases liberalisation has also involved the removal of agricultural subsidies paid by developing countries to small-scale farmers, most of them women, resulting in widespread job loss.

Now, women account for about 40 percent of all workers worldwide, and their participation rate has risen steadily. The largest increase has been seen in South America – from 26 to 45 percent of the workforce in 20 years. But women still earn about two-thirds of what men earn.

The manufacturing wage gap ranges from 52 percent in Botswana and 75 percent in Egypt to 81 percent in Costa Rica and 86 percent in Sri Lanka. And, says UNCTAD, 60 percent of the world’s 550 million working poor are women.

The Sao Paulo meeting comes in the wake of a stalemate in the World Trade Organisation (WTO) negotiations, reportedly largely the result of the failure of its liberalised, free trade model to improve the lives of people around the world.

And the gathering is seen as supplying an opportunity for governments, NGOs and businesses looking for alternative models for trade that promote sustainable development by examining the critical role of fair trade rules to address hunger, the global farm crisis of commodities, supply management, international markets and economic development.