WTO Talks Focus on Tackling Global Poverty
RENEE MONTAGNE, host:
In today's business news, world trade talks wrestle with the disparity between rich and poor nations. Economic leaders from around the world began six days of meetings today in Hong Kong. The World Trade Organization negotiations are supposed to offer the benefits of free trade to developing countries, but as NPR's Kathleen Schalch reports, that won't be easy.
KATHLEEN SCHALCH reporting:
US Trade representative Rob Portman says these talks offer a unique chance to turn the tide against global poverty.
Mr. ROB PORTMAN (US Trade Representative): We think that this is a once-in-a-generation opportunity to not only increase global economic growth but those benefits will be spread in a way that particularly help those in the developing world.
SCHALCH: Because these talks aim to free up trade in agriculture. That's where trade barriers are the highest and where many developing countries believe they have the best shot at competing. Kim Anderson is the lead economist at the World Bank's Development Research Group.
Mr. KIM ANDERSON (World Bank Economist): Perhaps as many as 75 percent of the world's poor get their living either directly or indirectly from agriculture.
SCHALCH: The bank recently completed a study of the potential gains to poor countries and found that if agricultural trade barriers vanished, developing countries would earn an extra $90 billion annually. But that is an extremely big `if.' The World Trade Organization is unwieldy. It's looking toward a finish line some members aren't even sure they want to reach, and there are lots of obstacles in the way. Knocking down agricultural trade barriers is politically treacherous. It wouldn't be enough for wealthy countries to end their lavish payments to their own farmers. Nine-tenths of the gains would have to come from countries getting rid of tariffs, that is, taxes on imports. And tariffs would have to be slashed in rich and poor countries alike. As Rob Portman points out, this is no small challenge.
Mr. PORTMAN: Seventy percent of the tariffs paid by developing countries are paid to other developing countries, and that's where the highest barriers are.
SCHALCH: But poor country governments depend on tariffs for revenue and to shield their domestic producers, and the WTO gives them a lot of leeway on this. Depending on how poor they are, they can opt to trim tariffs just a little or not at all. Kim Anderson of the World Bank.
Mr. ANDERSON: Our work shows that if they were to exercise that right, the gains to developing countries are diminished hugely.
SCHALCH: There are other potential snares. Rich countries can ask for exceptions, too, for certain products they consider sensitive, things like rice and sugar. The World Bank figured out what would happen if tariffs on a few sensitive products stayed high.
Mr. ANDERSON: It completely wiped out the gains that would have come to developing countries.
SCHALCH: Some critics, including Mark Weisbrot of the Center for Economic and Policy Research, argue that even the bank's assessment is too rosy. He says some developing countries, especially formidable agricultural exporters like Brazil and Argentina, do stand to gain. But other poor countries import much of their food. Getting rid of agricultural subsidies means higher prices, he says.
Mr. MARK WEISBROT (Center for Economic and Policy Research): And of course, if you raise the price of food, people who consume food are worse off. As a group, the developing countries, the poorest countries especially, would lose from the removal of agricultural subsidies.
SCHALCH: He says without decent ports, roads and modern technology, many poor countries that might want to export will have little to sell. But US Trade representative Rob Portman says the US and other WTO members will help countries overcome these problems.
Mr. PORTMAN: Aid is very important, but ultimately when you look at the economic analysis, the single largest contributor will be enhanced trade.
SCHALCH: He says he's still hopeful that WTO members will move closer to that goal at this week's talks.
Kathleen Schalch, NPR News.