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Last Updated: Tuesday, 6 January, 2004, 14:25 GMT
Does trade exploit the poor?
By Michael Blastland
Producer, The Poor Wars

Are the rich countries of the world making the plight of the most wretched on earth even worse? For their Radio 4 series 'The Poor Wars', BBC economics editor Evan Davis and producer Michael Blastland have been looking at the evidence from the front line to see whether the developed countries and international institutions hurt and exploit the Third World. In their second report they look at trade and debt.

What would disturb you more, a report of the loss of millions of lives to an earthquake in China, or the imminent loss of your own little finger?

Anti-globalisation protestors celebrate after WTO talks collapse
Protesters celebrated the collapse of trade talks in Mexico
When the 18th century economist Adam Smith asked this question, he said we'd sleep soundly over the fate of millions far away but feel turmoil at our own trivial loss.

When it comes to a perceived trade-off between what we think is good for us and what's good for them, the evidence we found suggests that we're still willing to hurt the most disadvantaged on earth for sake of some vocal interest group at home.

"It's a scandal," former UK overseas development minister Clare Short said.

She pointed out that the main agricultural products from Africa - coffee and cocoa, for example - are free of tariffs as long as they are unprocessed, but the minute anything is done to them which adds real value, they faces heavy tariffs from developed countries.

Germany turns out to be a major exporter of processed coffee, making profits from the processing denied to the countries of origin.

"The OECD countries are a bunch of hypocrites," said Ms Short, "It's disgraceful, the skewed rules of world trade. Even with fair trade chocolate, 90% of the value added is in Europe."

Meanwhile, she says, we preach the politics of trade liberalisation to the same countries whose products we're penalising to protect our own industries.

Swamping the market

In Ghana, we trundled down a dusty track to a rice farm about 40 miles from the capital, Accra.

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Protesters in Cancun, Mexico

With few tools and little technology, we watched as women winnowed the rice on large drying floors, scooping it up with what looked like two scrap pieces of plywood, the breeze lifting away the chaff as it fell back to the ground.

Back in Accra, where the farmers said they sold their rice, we went to a local market and at the first stall we found huge bags of rice piled high, some from India but most stamped with the American flag.

"People buy Texas rice," the trader told us. "It's sad we can't produce our own. Ghana should produce its own rice."

The Ghanaian government did try to impose higher tariffs on imported rice to protect its own growers, but came under pressure from the IMF to back down.

At the same market we found a similar story about tomatoes (tinned tomatoes imported from Italy) and chickens (imported from Holland).

Subsidies

Rubens Ricupero is Secretary General of UNCTAD, a United Nations body which researches and keeps track of world trade issues.

He told us: "You are putting your finger on perhaps one of the most extreme examples of unfairness. Two US rice producers, firms in Arkansas, are the first and second in the list of companies that receive the most money from the US government."

The same, he said was true of tomatoes in Europe, doubly subsidised, once when grown and again for export.

The rich world is not uniquely to blame for the injustices in world trade.

In many cases its tariffs are lower than those of developing countries, and often it is poor countries that most penalise other poor countries.

And sometimes trade would do little to help a country like Malawi, for example, which already enjoys favourable terms of trade for its main crops but lacks the infrastructure - roads, ports, distribution - to get its products to market.

Here, we were told by Sheila Page, from Britain's overseas development institute and an advisor to the Malawian government, that straightforward aid is what's needed to make trade work for Malawi.

But it remains true that in agriculture, where the developing world most needs easy access to markets, we protect our own industry sometimes at their expense.

Cheaper food

There's an argument about whether poor countries should just accept produce from us which we've subsidised.

After all, it's cheaper that way for the consumers in poor countries, even if it hurts producers.

In Mexico for example, we found that cheap, subsidised American maize was welcomed in Mexico and tariffs were lowered faster than they needed to be under pressure from big Mexican food companies making corn tortillas, but small-scale Mexican maize farmers lost out.

No one we spoke to thought free trade a bad idea in principle, though some did say poor country producers needed time to develop their own ability to compete before they were exposed to the full rigours of world trade.

But perhaps the most powerful argument against the current distortions was put by Rubens Ricupero of UNCTAD.

He said unfair trade was the single biggest cause of worsening poor country debt.

BBC Radio 4's The Poor Wars presented by Evan Davis continues on Sunday, 11 January, 2004 at 1700 GMT.


WATCH AND LISTEN
The Poor Wars: Programme 1
The IMF and the World Bank


The Poor Wars: Programme 2
Unfair trading practices



SEE ALSO:
IMF 'not always to blame'
30 Dec 03  |  Business


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