Trade for life

Making trade work for poor people

Posted: 8 May 2002

Author: Mark Curtis

Author Info: Christian Aid, London, 2001, £9.99

The global trading system works well for most people in the Western world, providing a wide choice of goods and services at reasonable prices. But the same system is seriously and brutally failing the poor. This excellent well-researched book from Christian Aid explains why. And it has positive ideas as to how the system can be changed.

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After looking at why trade matters for the poor, and at the role of the World Trade Organisation, the author Mark Curtis considers "seven deadly rules". These arise from agreements "already made in the WTO" which are deepening poverty and inequality.

Take the first two "deadly" WTO rules. Rule number one prevents developing countries from protecting themselves against cheap imports which undermine local food producers and food security. Since the WTO began in 1995 probably millions of smallholder farmers have lost their livelihoods because they cannot compete with the cheap imports that have flooded in.

Rule number two places limits on government regulation of services, such as health-care, water supply, energy and transport. The WTO's General Agreement on Trade in Services (GATS) encourages countries to open up their service sectors to foreign suppliers by abolishing restrictions on their entry into domestic markets. While current GATS rules allow countries to choose which sectors they open up, "the WTO's built-in process of accelerating liberalisation", is dangerous, says the author.

GATS owes its existence to pressure from companies that provide services, and from governments with large service export sectors. And that takes the book into a crucially important chapter on transnational corporations (TNCs). Mark Curtis makes a strong case for the international community "to implement legally binding regulation on TNCs".

The corporations are the major trading players, accounting for two-thirds of world trade. Many are bigger than most of the countries where they operate. TNCs are not responsible for all the problems of developing countries but they dominate markets by crowding out local small-scale companies, they threaten livelihoods and are powerful enough to undermine democratic decision making. In today's world the benefits of globalisation are going to the TNCs rather than to the poor.

Despite their power, TNCs are unaccountable, with "no binding international regulations to hold them to account for their activities". But while there is this huge gap, governments seem unwilling to act. The close ties between government and the corporations presents a problem. Public opinion could help out.

The book, written for Christian Aid's Trade for Life campaign, has a number of excellent case studies - on tobacco in Brazil, oil in Sudan and coffee in Uganda, for example. It ends with "pro-poor trade alternatives and recommendations" - such as regulating TNCs, reversing the principles on which the WTO is based, and rewriting trade rules so that they "explicitly contribute" to the reduction of poverty.

Reviewer: John Madeley

Reviewer Info: John Madeley is a writer and broadcaster with a special interest in trade and sustainable agriculture.