This commentary appeared in Wall Street Journal on June 18, 2002.
Reprinted with permission of The Wall Street Journal, © 2002 Dow Jones &
The last few months have seen important progress in the debate on trade and
poverty. The U.N. conference in Monterrey on financing of development produced
a new consensus on the need for both reforms in the developing countries and
increased aid to them. And there is no doubt that the swing through Africa by
both U.S. Treasury Secretary Paul O'Neil and rock-star Bono has had an impact
on the debate.
But there is still a tendency to avoid some of the hard issues -- and go for
Developing countries need free trade even more than increased aid. The lesson
both of the history of the present industrialized countries and of the developing
world during the past decades is crystal clear. It is those that endorse globalization,
and take part in the global trading economy, that prosper over time.
But this is a message that should work both ways. We can't preach the virtues
of free trade to others, and then do differently ourselves, and deny them access
to our markets. Hypocrisy will be recognized.
According to the World Trade Organization, rich countries now spend $1 billion
per day to subsidize their agricultural sectors. This policy succeeds in creating
both more expensive food in the developed countries and poorer farmers in the
developing one. It's not only foolish -- it's doubly foolish.
Developing countries would earn eight times all the debt relief granted to
them if the First World ended these agricultural subsidies and tariffs. Nearly
50 developing countries depend on agriculture for over a third of their export
earnings -- nearly 40 of them depend on agriculture for over half of those earnings.
For many, the manufacturing of textiles represents the first step on the long
road to industrialization. And yet we often block our markets to their food
and textile products. Europe is sinning more with the former, and the United
States more with the later. The effect of each is equally bad.
Too often, the United States and European Union have raised smokescreens to
obscure their own responsibility for policies that discriminate against developing
economies and render much of our foreign assistance less effective. Last November,
for example, by championing the "Declaration on the Trips Agreement and
Public Health" at Doha, the European Union managed to divert attention
away from its own distortive agricultural policies.
Thus, African nations missed a key opportunity to place greater emphasis on
the need for the European Union and other developed countries to significantly
reform their agricultural policies in a way that contributes to development
policies. Instead of using their limited political capital to fight against
EU and U.S. agriculture subsidies, they went along with a dubious bargain.
At Doha, the European Union promoted a statement that reaffirmed the right
of countries to manufacture and use patented drugs without the agreement of
the patent holder during times of public emergency. Though widely perceived
as a political victory, the declaration will do little to improve access to
life saving drugs for AIDS, malaria, or tuberculosis. Indeed, it offered nothing
new as it spelled out rights already enshrined in the Trips agreement. Worse,
it diverted attention away from the need for Europe and others to reform their
Contrary to popular belief, weakening intellectual property laws will not improve
access to life-saving drugs for millions of Africans and countless others who
need them. Poverty, and not patents, is the prime cause of the horrible devastation
caused by HIV/AIDS and other health epidemics.
We have every reason to take action to help the nations of Africa counter the
new waves of HIV/AIDS, malaria and tuberculosis now affecting the continent.
As recent studies have shown, this is not only imperative from a humanitarian
point of view, but also imperative in order to get their economies growing in
the years ahead. And for those that need further arguments, it should be evident
that a pandemic in one part of the world sooner or later will affect every part
of the world.
Thus, substantial contributions to the Global Health Fund set up at the initiative
of U.N. Secretary-General Kofi Annan should form part of any credible Africa
initiative by the G8 countries. It's been estimated that $7-$10 billion is needed
annually, but contributions so far are well below this sum.
If wealthy nations take the goal of eradicating poverty seriously, they must
work during the new Doha round to reform their policies that limit trade from
Hope for the Future
In the more immediate perspective, increased contributions to the Global Health
Fund will be of great importance. Over the longer term, sustainable economic
growth will free up the resources needed to strengthen educational and health
infrastructures and create hope for the future.
Oxfam has estimated that Africa would generate $70 billion in income if it
increased its share of world exports by one percentage point -- approximately
five times what the continent receives in aid. Many African nations also recognize
that increased trade will help lift them out of poverty. President Yoweri Museveni
of Uganda said recently, "The biggest request we are making of Western
countries is to open their markets . . . Debt relief has saved us some money,
but the real money will come from trade. Give us the opportunities, and we will
With Africa slowly getting the attention it deserves, the G8 nations must sit
down and agree on a package of policies that will give real help. This will
by necessity involve decisions that might be seen as painful with different
political constituencies in either the United States or the countries of the
But we can't ask the countries of Africa to reform their policies if we are
not ready to reform ours. And in the world without walls that we have been seeking,
we should recognize that their future development is our future security.
Explore All Topics »