Peter Mandelson: Rich nations must do more to help the poor

How do we turn lofty rhetoric into a practical and realisable agenda for action?
Click to follow
The Independent Online

Can 2005 be the year when the world decides to "make poverty history"? Britain, through its G8 presidency, can make a difference on aid and debt. But on trade, Europe carries the weight of negotiation on behalf of member states. The future of the Doha Round hangs on a ministerial meeting in Hong Kong next December, where all 148 members of the World Trade Organisation, developed and less developed, have diverging interests but an equal vote. The G8 and EU will need to work in partnership.

Trade is the most vital leg of the development triad. Our hopes of making poverty history depend on the poorest countries travelling down a speedier path of sustainable growth. Aid and debt relief play a critical role in helping poor countries increase their capacities, through tackling the ravages of disease and the multiple handicaps of illiteracy; it also helps overcome supply constraints. Better infrastructure means goods can get more rapidly to our markets and satisfy our exacting (sometimes over-exacting) product safety standards. But only a growing share of world trade can ignite the poorest countries' engines of growth.

Yet, for the past 30 years, sub-Saharan Africa's share of world trade has actually been in decline: for every dollar received in aid, half has been lost as a result of deteriorating terms of trade. If sub Saharan Africa could regain just an additional 1 per cent share of global trade, it would earn $70bn (£36bn) more in exports - nearly five times what the region receives in foreign aid and debt relief.

What is to be done? How do we turn lofty rhetoric and high aspiration into a practical and realisable agenda for action? This is the most testing question I have to face in my new job.

The easy answer is better access for developing country products to richer country markets, including our own. Except it isn't an easy answer, because the sectors where the developing world often has a natural comparative advantage - particularly agriculture and textiles - have been precisely the sectors that the rich countries have fought hardest to protect. Total subsidies to agriculture in OECD countries were $312bn in 2003 - around 15 times OECD aid to Africa.

EU farm subsidies in 2002 amounted to slightly less than a third of the OECD total. But at least we are now making amends. The EU's conditional offer last August to phase out agricultural export subsidies, if others agree to do the same, was an important step forward, the significance of which is under appreciated. It is my job as trade commissioner to use the united bargaining power of the EU to ensure that America, Japan and others fully match that commitment. The unacceptable practice of off loading rich country surpluses on world markets must end in the shortest possible time.

And there are tough decisions ahead in textiles too. Under the Uruguay Round in the mid 1990s, the main concession that the rich countries made to the poor was the final removal of all textile quotas from next month. Huge pressures are building up to renege on this commitment, especially in the US. I have made clear that I would only resort to temporary safeguards if there were a massive surge of textile exports from China, which in particular threatened to cause economic and social mayhem in vulnerable developing countries losing the guaranteed access to our markets that the disappearing quotas used to give them.

More generally, the rich must now give greater priority to the needs of the poor in all areas of multilateral trade policy. Agreement on Doha at Hong Kong next December must embody the principle of special and differential treatment. Yes, rapidly developing countries such as Brazil, China and India must grant greater access to the EU in new markets that meet the needs of their growing middle classes. But we must never forget that there are still more desperately poor people in India than in the whole of sub-Saharan Africa. We must build up the fairtrade movement.

Necessary reforms to liberalise markets such as bananas and sugar must take into account the needs of some very poor and vulnerable countries which will see eroded the special quota access that gave them their basic livelihood: the EU cannot, and will not, pass by on the other side.

The policy of the EU is to allow free non-quota, non-tariff access for least developed countries to EU markets. But our "rules of origin" mean, for example, that about half of Bangladeshi exports still face a European tariff wall. I want to see how we can improve access in practice to our markets for developing countries.

The regional economic partnership agreements that we are negotiating with some of the world's poorest countries must put development first. I intend to ensure that there are no unfair demands for reciprocity in the EU's approach, and no enforced liberalisation until targeted aid programmes have built up local capacities. This is a difficult agenda, which demands real sacrifices - and I will need the vocal support of Independent readers, among others, to help deliver on it.

The writer is the European Union trade commissioner

Comments