Wolfowitz: WTO must rewrite trade rules for sake of world's poor

Agence France Presse
December 7, 2005

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World Bank chief Paul Wolfowitz appealed Wednesday to WTO members "to rewrite the rules of an unfair trading system" when they meet next week and so lift more than a billion people out of desperate poverty.

Trade rather than aid is the best way to ensure schooling and healthcare for the many whose hopes for a better life are being held back, he said in a speech to the National Press Club here.

"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," he said.

Wolfowitz, who has prioritised Africa since leaving the US Defense Department to take over the World Bank in June, highlighted crippling barriers to poor nations' exports erected in the developed world.

Bangladesh is charged the same amount of tariffs on its two billion dollars of exports to the United States as France, whose US exports are worth 30 billion.

"This is simply not fair," Wolfowitz said.

The World Bank president underscored that rich countries pay out a total of 280 billion dollars in subsidies to their farmers each year.

Of the total, the European Union accounts for nearly half at 133 billion dollars, while Japan and the United States spend 49 billion and 47 billion respectively.

According to Wolfowitz, that means that the United States and EU spend up to three dollars in support to their farmers for every dollar 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 programmes," 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."

Expectations for the World Trade Organisation meeting in Hong Kong, starting on Tuesday, have been diluted with no deal in sight on the key issue of agricultural commerce.

The plan now is to draft a "road map" highlighting what has to be done next year, and to hold another meeting in March to keep the WTO's "Doha Round", launched in the Qatari capital in 2001, on track.

"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.

"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, noting that 1.2 billion people worldwide live on less than a dollar a day.

"The Doha round represents an important opportunity to rewrite the rules of an unfair trading system that holds back the potential of the poorest people in the world."

But Wolfowitz 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.

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