Trade Liberalization Earns Mixed Marks As Fighter of Poverty. The newest way to sell trade pacts is to trumpet how much they help poor countries. Thus, a new round of global trade talks is dubbed "the development round." And President Bush promotes a Central American trade deal as a way to bring "good jobs and higher labor standards" to the region, reports The Wall Street Journal.
While the pitch may assuage liberal guilt and make conservatives feel compassionate, trade liberalization has a mixed record as a poverty fighter. China and some Southeast Asian nations have lifted millions out of poverty through jobs created by foreign investment and exports. But Latin America, which has followed the same free-trade model, remains impoverished. "Trying to sell trade policy as a high-powered way for helping the poor - you can't do it with intellectual honesty," says Gary Hufbauer, an economist at the free-trade Institute for International Economics. Trade aids overall growth, he argues, but the benefits aren't targeted toward lower-income people.
A different policy would help: opening the borders of wealthy nations to more temporary workers. More work visas would equal more wealth for the world's poor. If rich countries allowed in enough temporary workers to increase their overall work force by 3 percent, that would raise global income by $150 billion annually, with the bulk of the gain going to low-income workers, according to calculations by World Bank economist L. Alan Winters. "Even a relatively small change in labor mobility is worth at least as much as any reduction in quotas and tariffs," he says. Why? Decades of global trade talks have already slashed trade barriers, so there is less to gain by further liberalization. But bars on migration remain high and are frequently aimed at the poor; easing the restraints would produce big returns.
Migration helps the poor in a number of ways. Even when migrant laborers take dead-end U.S. jobs, they earn far more than they did at home. The North American Free Trade Agreement helped lift average Mexican wages by about 10%, says Gordon Hanson, an economist at the University of California at San Diego. But a Mexican who finds work in the US earns, on average, about 2.5 times as much as he did in Mexico. Migrant workers wire some of their salaries to their families, increasing spending and consumption in poor nations. Overall, migrant workers remit about $100 billion a year, the International Monetary Fund estimates, a sum that dwarfs foreign aid.
In other trade related news, Australian Financial Review reports that China has taken on the mantle of free-trade champion against a "protectionist" US, slamming Washington's latest decision to restrict imports of cotton clothing and threatening retaliation. "This is beyond a doubt an extremely bad precedent and will seriously harm the multilateral trading system," Commerce Ministry spokesman Chong Quan said at the weekend. "The Chinese government reserves the right to take further measures within the WTO framework." Chong was reacting to the US Commerce Department's decision on Friday to institute safeguard measures against three categories of products - cotton shirts and trousers and cotton and artificial fiber underwear - setting a 7.5 per cent cap on Chinese import growth.
Meanwhile, Agence France Presse writes that the political heat is rising as the US Congress nears a showdown vote over the biggest free-trade pact in a decade, with five Central American nations and the Dominican Republic. The vote, expected in the next few weeks, is seen as a critical test for President George W. Bush's free-trade agenda and a stepping stone for a broader pan-American free-trade zone. The White House is pressing hard for ratification, and lobbying has been intense from industry groups representing textiles, sugar and high technology. Labor and other activist groups have also been vocal. To highlight the importance of the deal, Bush was joined over the past week by presidents of the countries that would join the US-Dominican Republic-Central American Free Trade Agreement.
In a separate story, Agence France Presse notes that Free-trade development strategies designed by the International Monetary Fund (IMF) and the World Bank have devastated poor countries and left their farmers worse off, a British aid group said in a report released Monday. The hardline policies of liberalization and privatization, backed by Britain and other Western governments, have led to a suicide "epidemic" among Indian farmers and inflicted terrible social costs in other developing countries, Christian Aid said.
African Ministers Meet in Nigeria For Poverty Reduction. At least twenty ministers and five central bank governors from across Africa gathered on Saturday in Abuja, Nigeria's capital to discuss how to reduce poverty and achieve the Millennium Development Goals (MDGs) on the world's poorest continent, Xinhua News Agency reports.
In his welcoming address, K. Y. Amoako, executive secretary of the UN Economic Commission for Africa (ECA), the host of the two- day meeting, asked ministers to "put all the pieces together" and agree on the urgent actions needed to erode poverty in Africa. "This meeting can make a crucial contribution to the formulation of a consensus on what Africa needs to do to achieve the MDGs and also highlight the ways in which the international community can assist us," Amoako said.
The ECA chief also called for more actions from the richest countries towards meeting their aid commitments on Africa and said it's the downward trend in aid by them had been halted. "The Millennium Project estimates that in order for sub-Saharan Africa to reach the MDGs, aid will have to increase, in real terms, from 2004's level of just under 25 billion US dollars, to 37 billion this year and then climb steadily to 73 billion by 2015," he said.
"Similarly, the Commission for Africa has calculated that an extra 75 billion dollars a year is needed for 7 percent growth in Africa and acceleration towards the Millennium Development Goals by 2015," he added.
Associated Press further notes that in an opening address, Nigerian Finance Minister Ngozi Okonjo-Iweala said recent reports showed "the Millennium Development Goals will largely not be met by 2015 in our region." She added: "This is depressing." Delegates called on developed nations to sharply increase financial aid to the impoverished continent and forgive billions of dollars (euros) in debt, echoing a British government-backed report earlier this year.
Chaired by British Prime Minister Tony Blair, the Commission for Africa report calls on the international community to immediately double foreign aid to Africa to US$50 billion (euro39 billion) a year and sets a goal of complete debt cancellation. A doubling of foreign aid "would be the minimum required" to meet the U.N. targets, said Nkonjo-Iweala. "Much more needs to be done, and it needs to be done more quickly," she said.
This weekend's meeting is being held in the run-up to a July summit of the G-8 group of wealthy nations in Gleneagles, Scotland, where Blair hopes his report's recommendations will be adopted. Britain has won the backing of France, Germany and Italy for establishing an International Finance Facility, which would leverage billions of dollars (euros) a year for aid to Africa by issuing bonds on the world's capital markets. However, the United States and Japan have rejected the proposal. Critics of increased aid and debt relief say many African nations first need to do more to fight against corruption.
Nordic countries best at narrowing 'gender gap': World Economic Forum. Europe's Nordic countries have been the most successful in the world in reducing inequality between men and women, the World Economic Forum (WEF) found in a study of the gender gap in 58 countries released Monday, AFP reports.
The study, the first overarching attempt to quantify the gender gap by assessing the level of economic and political participation of women as well as their levels of education and health, listed the world's top five as Sweden, Norway, Iceland, Denmark and Finland. European Union states occupied 10 of the top 15 spots on the list, along with non-EU members Norway and Iceland, and were joined by New Zealand at number six, Canada at seven and Australia at 10.
Britain ranked eighth, and the United States was 17th on the list, which ranked the 30 member states of the Organization for Economic Cooperation and Development plus 28 "emerging markets.” Egypt led nations where women fared the worst, followed by Turkey, Pakistan, Jordan and South Korea.
WEF economist Augusto Lopez-Claros said the Nordic countries, with their comprehensive welfare systems and transparent governance, served as a "useful benchmark" for gauging the economic importance of equality between the sexes.
"It is not surprising that the Nordic countries also occupy privileged positions in the World Economic Forum's global competitiveness rankings," he said in a statement, referring to the WEF's flagship annual economic study. "These societies seem to have understood the economic incentive behind empowering women: countries that do not fully capitalize on one-half of their human resources are clearly undermining their competitive potential." The report used UN, World Bank and WEF data to assess the gender gap in five areas: economic participation, economic opportunity, political empowerment, educational attainment and health and well-being.
Further, the BBC reports that Egypt scored badly on equality in all respects, the WEF said. Women in Egypt are the furthest behind men in terms of economic equality, while no country has closed the "gender gap" entirely, the survey has found. The report singled out the US for particular criticism, saying it "lags behind many Western European nations.”
The WEF survey covered all 30 industrialized countries in the Paris-based Organization for Economic Co-Operation and Development (OECD), plus 28 emerging market countries. Several of the most populous nations in the world languish at the lower end of the table. India, Pakistan,
Turkey and Egypt are all in the bottom 10. "Their rankings reflect large disparities between men and women of all five areas of the index," the WEF said in its report, with the only bright spot being India's high score for political empowerment of women. Latin America has its share of poor performers, with Venezuela, Brazil and Mexico all in the worst 10.
Wolfensohn Funds New Research Center.James Wolfensohn, the out-going president of the World Bank, will fund a new centre on development at the Brookings Institution, the Washington-based think-tank, report The Financial Times and The New York Times. The center will conduct research and advocacy on issues that Wolfensohn has worked on during his 10-year tenure at the World Bank, including security and development, health and education.
"As well as bringing financial support, Jim brings to this project himself, his energy, experience and reputation. He will continue to be a major voice in the national and global debate over how to reduce poverty," said Strobe Talbott, president of the Brookings Institution. Wolfensohn, who has become a leading voice on poverty reduction and development during his tenure at the bank, will hand over the presidency to Paul Wolfowitz at the end of this month. The initiative will be announced by Brookings today, when Nelson Mandela, South Africa's former president, delivers a lecture on Africa and development.
Brookings Institution has been looking at ways to beef up its presence in development research. The establishment of a fully fledged Wolfensohn Center at the think-tank will be delayed by about a year because of Wolfensohn's appointment as an envoy to oversee the non-military aspects of Israel's withdrawal from Gaza, on behalf of the US, European Union, United Nations and Russia.
Wolfensohn will make an initial Dollars 1m (Euros 791,000, Pounds 540,000) donation in the coming weeks and has pledged another Dollars 10m over five years. "Jim Wolfensohn and I hope that the centre, once it is properly launched in 2006, will have a life much longer than five years, as it builds up a track record, a reputation and a funding base," Talbott said.
Wolfensohn has told friends he intends to provide Dollars 5 million over five years personally, paid for by work as a business consultant to multinationals with operations in developing countries, and to solicit donations to cover the other Dollars 5 million. As well as drawing on existing staff at Brookings, the centre will hire scholars and will fund work at other think-tanks and at universities. It will be directed by Johannes Linn, a former senior World Bank official.
Briefly Noted… Kyodo News reports that the Senate Foreign Relations Committee Chairman Richard Lugar will introduce a bill next week authorizing the Treasury secretary to press the World Bank to set up an ''Anti-Corruption Trust,'' a senior committee staff official said Saturday. Also including other measures for the secretary to take to stop corruption and improve transparency at multilateral development banks, the provisions are part of legislation to ''provide authorization of appropriations for certain development banks.''
The Observer notes that up to 20 million Britons are expected to protest against world poverty as part of the biggest mobilization against global inequality ever seen. In addition, where key talks among world leaders could witness Tony Blair securing a historic deal to help Africa's poor. Oxfam yesterday ordered five million more white Make Poverty History wristbands. The charity has already sold three million.
Agence France-Presse notes that The Global Fund on Aids, Tuberculosis and Malaria is to donate 157 million dollars to Tanzania to help fight AIDS in the east African nation, the treasury said in a statement on Saturday. The grant brings to a total of 563 million dollars (445 million euros) the funds issued to Tanzania since the Global Fund was established in 2002, the statement said.
Agence France-Presse and The New York Times report, Nine people have died in the Congo Republic since late April from what appears to be an outbreak of the Ebola virus, the second episode of a deadly hemorrhagic fever to strike the region this year, a spokesman for the World Health Organization said Friday. The latest outbreak is taking place as the Congo Republic's southern neighbor, Angola, battles an epidemic of Marburg virus, a hemorrhagic fever closely related to Ebola. So far, 280 people have died in that epidemic, which has yet to be contained eight weeks after the virus was first identified.
Agence France-Presse notes new talks to set a calendar to begin disarming fighters in Ivory Coast were postponed Friday as both sides in the protracted crisis huddled to weigh indictments in a World Bank report that judged all preparations "insufficient." The World Bank has committed to paying at least half of the 150 million dollar (119 million euro) price tag attached to the process, while the government of the world's top cocoa producer will pick up the rest. To date, however, only 15 million dollars have been spent, and the accounting, according to the Bank report, has been less than transparent. Armed forces and rebel military commanders met quietly Thursday under the auspices of the national disarmament commission, hoping to reach agreement on practicalities of the long-overdue disarmament process first envisioned under a January 2003 peace pact to end the West African state's civil war.
Xinhua News Agency notes that the World Bank through its Multi- Country Demobilization and Resettlement Program has provided Uganda with 4.2 million US dollars to help resettle and reintegrate the country's ex-rebels into communities. The money is going to be channeled through a special project, Amnesty Commission Special Project.
Africa online reports that the International Monetary Fund chief Rodrigo Rato will head to Nigeria and three other African countries next week, underlining world donors' renewed interest in the continent, the IMF said on Thursday. Rato will head to the Nigerian capital Abuja next Tuesday for talks with President Olusegun Obasanjo, before heading on to Benin, Niger and Chad over the rest of the week, an IMF statement said. The overall aim is for Rato "to exchange views with a variety of political and civil society leaders about the Fund's role in Africa at a time of intensified focus of the international community on the continent", it said.
Xinhua News Agency further reports that six volunteers received inoculation with a cocktail of China's newest experimental AIDS vaccines Saturday in Nanning, capital of south China's Guangxi Zhuang Autonomous Region, marking a new development of China's clinical research of the AIDS vaccines. After receiving medical check-ups in the Guangxi Disease Prevention and Control Center, the six volunteers were inoculated with the vaccines. The volunteers will receive another three injections in the coming three months, said Chen Jie, vice director of the center. The latest round of AIDS vaccine research was launched after a two-month observation of six groups of volunteers who received inoculation with the vaccines.
Reuters reports that migrant workers send home billions of dollars to Latin America from all over the world each year, but these flows are no substitute for foreign aid, a development official said on Friday. Donald Terry, manager of the Inter-American Development Bank's Multilateral Investment Fund, said he expected remittances to Latin America and the Caribbean to breach $50 billion for the first time in 2005. The World Bank said last month the cash ought to be better harnessed for development projects, while the International Monetary Fund issued a discussion paper saying it cannot be easily used as development capital. Terry said while remittances play a crucial role improving the welfare of many families, they cannot replace foreign aid.
Dow Jones reports that European finance ministers usually meet to discuss interest rates and financial questions. This Friday and Saturday, they are gathering in Luxembourg to ponder a quite different issue - reducing world poverty. It's a divisive issue between Europe and the U.S., and, at a time when many European governments are struggling to keep their coffers full, one that causes divisions within Europe itself. Several finance ministers say that a United Nations sponsored drive that envisaged Europe doubling development aid to EUR100 billion by 2015 isn't likely to be met. Another option for raising additional funding is a tax on arms sales, an idea supported by French and Brazilian leaders, or debt relief through the International Monetary Fund or World Bank. But an arms tax would need international agreement, while IMF debt relief faces opposition from several countries, say E.U. officials. Even if the Europeans manage to get an agreement among themselves, they face tension with Washington.
Gulf News notes that Iraq's new government believes it can attract $33 billion (Dh121 billion) in foreign direct investment, on top of the $33 billion in aid pledged by foreign donors, a top Iraqi official said. "The international community has pledged $33 billion in aid to help rebuild or country, but we can double this amount through the injection of foreign direct investment [FDI] into our economy," said Barham Saleh, Iraq's Minister of Planning and Development.
Ukrainian News reports that the World Bank offers assistance to Ukraine in holding of reforms in its judicial system, for instance in judicial reform. According to the statement, considering changes in the social and economic spheres initiated by the Cabinet of Ministers, the WB also offers assistance in fighting against corruption and provision of openness of power in Ukraine.
Daily Times and the Business Recorder report that the World Bank has linked a planned $1.5bn investment in Pakistan's power sector to financial autonomy of distribution companies and the reconstitution of their boards. "During his recent visit to Pakistan, a World Bank (WB) vice president expressed a desire to invest $1.5bn in various power projects."