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Big News: How Corporate Greed Helps The Poor

BIG NEWS with Dave Crampton

Rich country leaders maintain free trade will help the world’s poor

Hey kids, want to make the world a better place? Then grow up: Start a business or get a job. Do you want to provide new help for the world’s poor? Hire them. Corporate greed has helped far more people than big puppets ever will. Everyone knows corporate greed, along with free trade, leads to economic growth, and so poor people benefit just as much as the wealthy. Since the folding of GATT, the world economy has grown 6-fold, in part because trade has expanded 16-fold. Yet the World Trade Organisation-bashers want to slam the trade doors shut, because their warped reasoning leads them to believe that free trade will harm the poor.

Now that’s what George W., Mike Moore and those at the IMF and World Bank would have you believe, and rich countries emphasised that stand at the WTO meeting in Doha, Qatar last month.

But there’s one big problem: Trade, as preached by the WTO. The WTO considers that free trade provides economic growth for poor countries, while WTO-bashers consider free trade will benefit rich countries and multinational corporations.

So forget AIDS, terrorism and third world debt. International trade is the most important issue in global relations, with a $7.5 trillion annual price tag. Fix trade and you go a long way in fixing debt. Fix debt and grow the economy. Grow the economy and increase health services to combat AIDS. Combat AIDS and keep the traders alive. Trade may be one of the motors of globalisation, and can actually help lift people out of poverty more quickly than was ever possible in the past. To do this, trade has to be fair.

Free trade is not fair, as all countries are on the same playing field. It’s a bit like the All Blacks playing the Eketahuna U6 rugby team and the former supplying the referee and setting the rules. It’s obvious who will win.

As a result of international trade practices, developing countries are getting poorer because rich countries set the rules. Countries representing four-fifths of the world’s population market less than one fifth of the world’s exports. According to the United Nations, developing countries are losing around $200 billion a year through unfair protectionist policies, with tariff barriers in rich countries four times higher than poor countries. It’s time to promote trade that is fair to all, but the WTO as it stands won’t do that as it was set up to promote free trade, not fair trade.

Fair Trade means that the producers who make the goods you buy get a price that fairly rewards their work and skills. Getting paid a fair deal can help people take control of their lives, have enough to live without worrying about their next meal, and be able to plan for the future, such as sending their children to school or investing in their business.

Multinational corporations, who have an increasing influence on trade, don’t care about poor country economies – but are happy to work in them. Some would argue that multinational corporations are the lifeblood of the global economy, despite employing just three percent of the world’s labour force. The world’s largest 500 multinationals dominate 70 percent of the world’s trade, whereas the world’s 49 least developed countries accounted for 0.4 percent in world trade, half what it was in 1980. A majority of multinationals have offices in the developing world and offer higher wages than local companies. This results in profits going off-shore to richer countries while smaller businesses in poor countries are swept aside as they can’t compete – and that is certainly not conducive to economic growth and poverty reduction. Free trade will only make this situation worse as small companies will find it even harder to compete with multinationals.

Developing countries want to stop this inequality so they sent representatives to Doha. The meeting at Doha was supposed to be the time when rich nations started honouring their promises to make trade rules fairer for the poor and extend to poor countries the marketing opportunities that they need. But when the US and Europe, representing 10 percent of the world’s population had 553 delegates, compared with the 92 delegates from China and India, representing 40 percent of the world’s population, the “level playing field” is as bumpy and rocky as fair trade principles. At Qatar, The G7 countries had 481 delegates and the 39 least developed nations had 276 delegates, so guess who had the final say? Not the representative from the poorest nation in the Western hemisphere, namely Haiti, because Haiti had no delegate at all- but the US, who had 51 delegates. So poor countries spent their time negotiating on intellectual property rights rather than improving access to their markets.

If rich countries honoured promises to developing countries to deliver improved access to markets and fairer treatment at the WTO, globalisation would be producing real benefits for poverty reduction as trade would also be fair.

But rich countries are on the side of multinationals, as they reap the profits of work done in poor countries. The WTO disputes process is also on the side of the rich: Developing countries have three quarters of the membership of the WTO, but only one fifth of the complaints to the disputes panel. The US alone has filed nearly 30 percent of the disputes and won 90 percent of these. What does that tell you about the process? One sided, perhaps? Any negotiation on free trade at the WTO is also one sided – and it is not on the side of the poor.

- Dave Crampton is a Wellington-based freelance journalist. He can be contacted at davec@globe.net.nz

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