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Free Trade Is Key To Tackling Poverty

July 26, 2007

Free Trade Is Key To Tackling Poverty

David Cameron succeeded in keeping his head well above water this week in spite of accusations that he was abandoning his flooded constituency for the warm climes of Rwanda. Whilst he had earlier waded through the floods in West Oxfordshire, the press savoured the idea that Cameron had then prematur…

Free Trade Is Key To Tackling Poverty

David Cameron succeeded in keeping his head well above water this week in spite of accusations that he was abandoning his flooded constituency for the warm climes of Rwanda. Whilst he had earlier waded through the floods in West Oxfordshire, the press savoured the idea that Cameron had then prematurely abandoned his crisis-stricken constituents for an African photo opportunity.

For sure this proved unfortunate timing for Mr Cameron. The trip to Rwanda had been a long time in the planning, and signified the culmination of a great deal of hard thinking about the Conservatives’ stance on international development. Had he scrapped his Rwanda trip, the press would have equally delighted in his abandonment of a country which had notoriously been abandoned in the past. But aside from this, the bluster surrounding the trip was also a shame. Diminished was the hard work of colleagues attempting to establish enduring projects in the country and lost were the serious, constructive and insightful points David Cameron made about free trade as a crucial element in tackling deep poverty.

Speaking to the Rwandan parliament, Mr Cameron called for trade barriers to be scrapped by 2013 to give developing countries a chance to build their economies, and criticised richer countries for seeking concessions in return for trade deals. And he was right. Unless the world truly grasps the importance of free trade, we shall be forever saddled with the shameful knowledge that as we poured aid down Africa’s cavernous throat, we withheld from its people the real key to their advancement.

All sorts of criticism has been levelled at globalisation ? that it has worsened inequality, caused poverty to rise and prevented poor countries from developing in any true sense. But the truth is that the growth of free markets has done more to pull people out of poverty than all of the world’s aid programmes multiplied many times over. Yes, the ratio of average incomes in the richest communities to those in the poorest has risen, but in Asia, for example, in proportionate and absolute terms the numbers in extreme poverty have fallen as a result of rapid economic growth. It is only in sub-Saharan Africa that there is any evidence to the contrary, and this is chiefly because corruption and the insidious influence of aid as a barrier to economic growth have embedded the region’s poverty.

The skills and labour of the world’s poorest remain almost entirely unexploited. These people live outside the global economy and are barred from contributing to it by the near impenetrable trade barriers they face. Tariffs and farm subsidies reduce the export earnings of developing countries by an estimated $39 billion a year ? this is fifty per cent more than they receive in aid. For each dollar that Western nations give to developing countries, those countries lose two dollars through barriers to their exports. The European Union’s Common Agricultural Policy acts as a regressive tax and market distorter throughout the continent, whilst the United States bloats its agricultural industry with hefty subsidies ? in 2000 nearly $11 million was spent each day on cotton subsidies, depriving impoverished African nations of a foothold in that colossal market.

Depressingly, there seems to be increasing evidence of a renewed appetite for protectionism, particularly in Europe where nations struggle to deal with the effects of large scale job relocation away from manufacturing and lower skilled service industries.

Politicians across the party divide should now work to suppress this appetite and give people the confidence to embrace globalisation by opening up markets and deconstructing trade barriers. Free trade must lie at the heart of our work to help the developing world. The people of Africa, today and in the decades ahead, deserve no less.

Mark Field

26 July 2007