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ON THE ISSUE: Making Trade Fair
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Prepared by the Episcopal Church Office of Government Relations
Last Updated: 02/2007
Click here to download a PDF version.
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ISSUE: A Permanent Solution to Poverty
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The Millennium Development Goals (MDGs) challenge industrialized countries to partner with poor countries in fighting deadly poverty by providing resources through development aid, debt cancellation, and fairer trade rules. While aid and the cancellation of debts provide short-term relief to the world’s poor, fairer trade rules offer a more permanent solution.
No person or community in a poor country wants to rely forever on foreign generosity for the provision of basic needs. A fair-trade system would allow the people of the developing world to use the initial investments of development aid and debt cancellation to compete fairly and independently in the world’s markets and enrich their nations. Unfortunately, international-trade rules make it difficult for developing countries to compete, denying them $700 billion every year. In 1980, Africa held a six percent share of the world’s trade market. Today, this share is just two percent. If Africa could regain just an additional one percent of the world’s trade market, it would earn $70 billion more in exports each year: several times more than what the region currently receives in development aid.
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BACKGROUND: Dimensions of an Unfair System
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The world-trade system contains many inequities and imbalances, each of which works to keep people living in poverty. Rich countries protect their own markets against exports from developing countries with import duties and quotas. Rich countries also subsidize their own farmers and agricultural producers at a rate of one billion dollars a day, making it all but impossible for farmers from the developing world to compete in world markets.
Developing countries seeking to strengthen their economies know they need to diversify their exports away from unprofitable basic crops such as coffee and cocoa and into products which earn more money, such as clothes, textiles and manufactured goods. Trade rules that encourage this diversification are desperately needed. Even the export of basic crops, however, would be far more profitable for poor countries if international-trade rules did not punish them for processing them for export. (As an example, African countries that export raw cocoa to Europe can do so with no tariff, but if the African country chooses to process that cocoa – tinning, roasting, or labeling it – it would face a 25 percent tariff for export.)
Trade rules generally are written by rich countries. The World Trade Organization (WTO) is the primary rule-making body, but of the 38 African nations which are members of the WTO, 15 nations have no representative at all at the headquarters in Geneva, and four nations have an office of only one person. Most rich nations have dozens of staff to protect their trading interests.
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U.S. AND INTERNATIONAL POLICY: What has to happen to make trade fair?
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A fair-trade system that empowers poor people around the world requires several commitments from rich countries. First, rich countries must open their markets to developing-country exports without quotas and duties. Additionally, developing countries must be allowed to negotiate country-specific trade schemes designed to alleviate poverty and spur economic growth. International-trade agreements also must protect labor and human rights for all. Perhaps most fundamentally, rich countries should move toward making their own agricultural sectors sustainable without commodity subsidies. While many Americans believe subsidies for agricultural commodities protect the economy of rural areas in the U.S., most subsidies do not go to small-family farms. Studies have shown repeatedly that subsidies neither create jobs nor keep food prices low. Reform (ie, movement toward alternative forms of economic support for rural America) would be good for people living in rural America as well as those living in rural Africa.
In the United States, Congress and the Bush Administration should work together to send a strong message to the international community to resume the “Doha Round” of negotiations to make international-trade rules fair immediately. (See box). Additionally, congressional reauthorization in 2007 of the U.S. Farm Bill – which dictates the scheme of agricultural subsidies for U.S. farmers – provides an important opportunity to reform a system that severely harms the livelihoods of poor people around the world. The Bush Administration in January 2007 put forward a proposal that moves in the right direction. Congress should use this proposal as a starting point in providing for a better system of support for rural America.
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WHAT YOU CAN DO
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Join the ONE Episcopalian campaign at www.episcopalchurch.org/ONE. Throughout 2007, you will receive messages urging you to e-mail your lawmakers in support of key initiatives related to fair trade, particularly with respect to the U.S. farm bill. Your voice, along with the voices of the 2.4 million other Americans who have joined the ONE Campaign, is the way through which the United States will help the make trade fair for all God’s people. If you’re interested in deeper engagement in the ONE Episcopalian campaign in your local community, send an email to Alex Baumgarten at abaumgarten@episcopalchurch.org.
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GENERAL CONVENTION RESOLUTIONS RELATED TO FAIR TRADE
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The Episcopal Church supports fair-trade rules as a result of its resolutions in support of the Millennium Development Goals (MDGs) in 2003 (D006) and 2006 (D022). (The MDGs call for fair-trade rules, alongside development aid and debt cancellation, as a way for rich-country resources to fuel poverty-reduction efforts).
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OTHER RESOURCES
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