Rigged Rules and Double Standards

Rigged Rules and Double Standards:
Trade, globalisation and the fight against poverty

Introduction

Trade is one of the most powerful forces linking our lives, and a source of unprecedented wealth. Yet millions of the world's poorest people are being left behind. Increased prosperity has gone hand in hand with mass poverty. Already obscene inequalities between rich and poor are widening.

World trade could be a powerful motor to reduce poverty, and support economic growth, but that potential is being lost. The problem is not that international trade is inherently opposed to the needs and interests of the poor, but that the rules that govern it are rigged in favour of the rich.

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. In Africa alone, this would generate $70bn - approximately five times what the continent receives in aid.

In their rhetoric, governments of rich countries constantly stress their commitment to poverty reduction. Yet in practice rigged rules and double standards lock poor people out of the benefits of trade, closing the door to an escape route from poverty. For example:

Rich countries spend $1bn every day on agricultural subsidies. The resulting surpluses are dumped on world markets, undermining the livelihoods of millions of smallholder farmers in poor countries.

When developing countries export to rich-country markets, they face tariff barriers that are four times higher than those encountered by rich countries. Those barriers cost them $100bn a year - twice as much as they receive in aid.

While rich countries keep their markets closed, poor countries have been pressurised by the International Monetary Fund and the World Bank to open their markets at breakneck speed, often with damaging consequences for poor communities.

The international community has failed to address the problem of low and unstable commodity prices, which consign millions of people to poverty. Coffee prices, for example, have fallen by 70 per cent since 1997, costing exporters in developing countries $8bn in lost foreign-exchange earnings.

Powerful transnational companies (TNCs) have been left free to engage in investment and employment practices which contribute to poverty and insecurity, constrained only by weak voluntary guidelines. In many countries, export-led success is built on the exploitation of women and girls.

Many of the rules of the World Trade Organisation (WTO) on intellectual property, investment, and services protect the interests of rich countries and powerful TNCs, while imposing huge costs on developing countries. This bias raises fundamental questions about the legitimacy of the WTO.
Reform of world trade is only one of the requirements for ending the deep social injustices that pervade globalisation. Action is also needed to reduce inequalities in health, education, and the distribution of income and opportunity, including those inequalities that exist between women and men. However, world trade rules are a key part of the poverty problem; fundamental reforms are needed to make them part of the solution.

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