Everyone Must Do More for Doha to Succeed

by
Paul Wolfowitz
President
The World Bank Group
Special to The Financial Times
October 24, 2006

 

(c) 2005 The Financial Times Limited. All rights reserved

 

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If the answer is yes, the round will succeed in enabling tens of millions of people to lift themselves out of abject poverty over the next decade and give them and their children a chance to lead a better life - in some cases, it will be the difference between a healthy life or an early death from a preventable disease.

 

If the answer is no, and the talks end without giving developing countries - especially the very poor, particularly in Africa - more opportunity and help to export, then the talks will have failed.

 

We are approaching a decisive phase in the negotiations, with the World Trade Organisation ministerial meeting in Hong Kong just eight weeks away. The outcome hangs in the balance. So, too, does the future of global poverty reduction, despite recent successes in cutting poor countries' debt burdens and commitments to provide substantially more aid. Strong leadership and co-operation is needed to ensure the December meeting becomes a new milestone in the fight against poverty, a moment when concern for the poorest people outweighs parochial issues.

 

It is trade, not aid, that holds the key to creating jobs and raising incomes. It is trade that will allow poor countries to generate growth; forgiving debt alone will not do that. It is trade that has helped 400m Chinese escape poverty in the past 20 years and the same can happen elsewhere. In Brazil, for example, the 20 per cent of the population that lives on less than Dollars 2 a day is looking to more open agricultural markets in developed countries as a means to lift themselves out of poverty.

 

But success will not happen if the rich countries see opening their markets only in terms of pleasing their domestic interest groups. And it will not happen if developing countries do not reform themselves. Africans and the poor of Asia, Latin America and elsewhere may not vote in rich countries but their poverty has a direct impact in other, equally powerful, ways.

 

Increasingly, we see that people in poor countries flee the hazards of insecurity and travel in search of work. This is logical human behaviour. Of course the best opportunities for safety, stability and work are in rich countries.

 

The estimated 30,000 Africans waiting in Morocco and Algeria for a chance to enter Spain are just the latest, but certainly not the last, people to want a better life in a safer country. The best solution is to help poor countries create hope and opportunity for their people.

 

Opening markets creates new opportunities: not just for India and China to sell to the US, the European Union and Japan, but for Rwanda to sell to India and China. But some of the poorest countries need help to take advantage of trade opportunities, they need greater assistance in building roads and ports to connect their goods to markets. Increased support for trade is an essential complement to the Doha round and the World Bank is working with others to deliver it.

 

Above all, there is a moral argument. How can we justify spending $280 billion (Pounds 158bn) on support to agricultural producers in developed countries - nearly the total gross domestic product of Africa and four times the total amount of overseas aid? How can we justify imposing barriers on the poorest 2bn people that are twice as high as on everyone else? How can we accept a system in which Afrca's share of world exports has fallen from 3.5 per cent to less than 2 per cent in the past 30 years? A central part of the Doha development round is the need to reduce protection on agriculture. Unless serious concessions are made by all sides - developing countries as well as developed countries, Europe, the US, Japan, everyone - the Doha round of trade talks will fail and the people who will suffer the most are the world's poor.

 

Everyone has work to do. The US needs to do more to cut its subsidies substantially. The EU needs to do more on market access to provide significant new trade opportunities for developing countries. In turn, developing countries need to open their markets in services and manufacturing, and lower their own agricultural protection.

 

We must also consider not only what is being offered but what is being kept off the table.

 

Only five products account for almost half the $280 billion in annual support to agricultural producers, so even a small number of exceptions to free trade could have a big impact.

 

Often, a single product commands billions of dollars in support - milk producers alone receive Dollars 39bn in support, according to the Organisation for Economic Co-operation and Development, while the rice industry receives Dollars 27bn a year. But poor countries often depend on a single product, one that might represent just a tiny fraction of a rich country's overall trade. Cotton subsidies in rich countries may be less than Dollars 5bn per year but their impact is enormous on individual African producers.

 

These are difficult issues and it may be uncomfortable for political leaders in the industrialised nations to step forward and give up subsidies and other barriers to free trade. But that temporary discomfort is nothing compared with the daily discomfort and deprivation faced by the world's poorest people. They are counting on us; we must deliver results for them.  

 

The Doha development round must succeed and success means that developing countries have greater access to global markets. The lives and futures of millions of poor people depend on it.

 

The writer is president of the World Bank.