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World Bank Chief: Poor Have Most To Lose From Doha Failure

/noticias.info/ World Bank President Paul Wolfowitz Wednesday said leaders of wealthy nations must tackle vested interests and work toward a successful trade liberalization agreement in the Doha round of trade talks to aid the world's poorest people, reports Dow Jones.

Wolfowitz's comments, in a speech at the National Press Club, were directed at trade ministers just ahead of their World Trade Organization (WTO) ministerial meeting in Hong Kong next week. "The stakes are too high - not just for the poor, but also for the global economy - to let the trade talks conclude without real progress," Wolfowitz said. He continued, "The Doha Round presents an opportunity to rewrite the rules of an unfair trading system that holds back the potential of the poorest people."

Wolfowitz said under current trade rules, wealthy countries are allowed to keep tariffs highest on the goods produced by poor countries. For example, the US charges Bangladesh the same amount of tariffs on its $2 billion worth of exports as France pays on $30 billion of exports. Meanwhile, 70 percent of the world's poor live in rural areas and depend on agriculture to earn a living and feed their families, he added. Wealthy countries also use agriculture tariffs to prevent poor countries from moving up the production chain, he said.

While 90 percent of the world's cocoa beans are grown in developing countries, these countries produce just 4 percent of the world's chocolate. Many agriculture tariffs escalate with the degree of processing. For example, the EU tariff on raw cocoa is 0.5 percent. Semi-processed cocoa is under a 10 percent tariff and chocolate is under a 30 percent tax. A successful Doha agreement with lower barriers to agriculture trade would benefit producers from poor countries and consumers from rich countries, Wolfowitz said.

Xinhua (China) notes that in his speech, Wolfowitz also said that "unless the people of Africa and other poor countries have access to markets to sell their products, they will not escape poverty or be able to give their children a better future." Trade rather than aid is the best way to ensure schooling and health care for the many whose hopes for a better life are being held back, he said. "Countries sitting at the negotiating table must look beyond their own vested interests and remember that if Doha fails, it is the world's poor ... who will suffer the most," Wolfowitz said.

Agence France Presse further reports Wolfowitz underscored that rich countries pay out a total of $280 billion in subsidies to their farmers each year. Of the total, the EU accounts for nearly half at $133 billion, while Japan and the US spend $49 billion and $47 billion respectively. According to Wolfowitz, that means that the US and EU spend up to $3 in support to their farmers for every $1 they spend on foreign aid. For Japan, the disparity is five-fold. "Ultimately, it is the taxpayers and consumers in rich countries that shoulder the costs of these support programs," the World Bank chief said. "But the real damage is done to farmers in poor countries who are denied markets to sell their goods. It is their children who go hungry -- who are deprived of clean water, medicines and the most basic necessities of life."

Wolfowitz additionally said that trade by itself will not transform poorer countries' fortunes unless they are also helped with improving their capacity to trade through better infrastructure. Pakistan, for instance, loses as much as six percent of its economic output because poor roads erode the competitiveness of its goods once they have transited the country to port at Karachi. The World Bank is working closely with the International Monetary Fund and WTO members on an "aid-for-trade package" to help poor countries improve their investment climate and invest in infrastructure, Wolfowitz said.

Dow Jones reports the US's top trade envoy said Wednesday next week's global trade summit could still be a success if negotiators agree to an aid package to encourage trade in the world's poorest countries. In a speech Wednesday, World Bank chief Paul Wolfowitz also encouraged negotiators to provide aid needed to improve institutions, services, infrastructure and policies that hinder trade in poorer countries. Wolfowitz said lowered expectations in Hong Kong shouldn't be allowed to scuttle an overall WTO deal. "The stakes are too high - not just for the poor, but also for the global economy - to let the trade talks conclude without real progress," he said at Washington's National Press Club.

In related trade news, The Associated Press writes that poorer nations will gain more by reforming their own trade policies than from cuts to farm aid by developed countries, the UN Food and Agriculture Organization (FAO) said in a report released Wednesday. If developing countries agree to cut import duties and payments they make to their own agriculture producers, it will encourage more trade between them and therefore boost revenues, the FAO said. "Between 70 and 85 percent of the potential benefits for developing countries would result from their own reform policies in agriculture," the report said. But the FAO warned that the special interests of some poorer nations -- which currently enjoy preferential access to rich country markets, or which are net food importers -- must be taken into account when WTO ministers meet in Hong Kong next week. Such countries include traditional suppliers of bananas in Africa and the Caribbean to the EU, who were favored by Brussels' previous system of tariffs and quotas. notas_de_prensa_archivo