International Trade Policies and Poverty Human Rights Council Social Forum September, Geneva Aileen Kwa Coordinator, Trade and Development Programme South Centre

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 This is 72.2% in 2005 (World Bank 2008) In figs, the number of poor in SSA have nearly doubled: from million in 1981 to 551 million in 2005 (World Bank 2008)

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

More Economic Growth and Trade And More Poverty. Why? (2) Agriculture FAO: of 23 ‘food groups’ in 102 developing countries from , 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.

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 country’s 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, Ghana’s growth in MVA was significantly negative, at -3.5 in the 1990s, i.e. severe deindustrialisation (Shefaeddin, 2005).

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.

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.

Solutions (1) 1. Production, not trade, is paramount. Production and the economy must serve people, rather than being dislocated from people. 2. 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. 3. This could lead to the stimulation of the industrial sector. Industrial development for the domestic and regional markets.

Solutions (2) 4. We need to rethink our trade policies and trade agreements so that they are subservient to human rights principles. 5. 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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