Fighting poverty through trade
11 September 2007 (Updated 12 November)
Related pages: Millennium
Development Goal 8: Aid, Trade, Growth & Global Partnership
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International Trade
Department |
Trade: Did you know?
 Recently, the
 World Trade Organisation
(WTO) announced a resumption of informal talks around the Doha trade
negotiations. The Doha talks present the single best opportunity to promote a
fair and freer global trading system, and progress in them is a top priority for
both the UK and the European Union.
DFID's commitment to a successful conclusion
to the Doha talks reflects its core belief that trade matters for development.
Trade is a powerful engine for growth and can be an important tool for poverty
reduction and meeting the Millennium Development Goals. Through Doha, and
through other key channels, DFID continues to fight to make trade work for the
world's poorest countries.
Doha agreement: Crucial for the world's poor
The Doha Development Agenda (DDA), which sets out what the
WTO talks hope to
achieve, could lift millions out of poverty and integrate poorer countries into
the global economy. The Agenda would create economic growth, benefiting rich and
poor alike. Research (from the
 United Nations Conference on Trade and
Development (UNCTAD), the
Organisation for Economic Co-operation and Development
(OECD) and the
World Bank) indicates that the value of this growth could be tens
of billions of dollars in the agriculture and industry sectors alone. This
suggests that the more ambitious the outcome of the talks, the greater the gains
are likely to be.
The Doha Round commenced in 2001 with a Ministerial Conference in the Qatar
capital city that gives the talks their name. DFID continues to work with other
UK Government departments to ensure that the Round delivers on its original
development objectives. The main strands of the negotiations relate to
industrial goods, agriculture and services, and DFID wants to see developing
countries’ products in these areas obtain greater access to global markets.
Significant cuts in tariffs and subsidies offer the surest way for this to be
achieved. Currently, low income countries exporting to the developed world face
tariffs that are three to four times higher than those applied to trade between
high income countries.
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DFID's Development Package: Making trade work
In recent years, progress towards realising the objectives of the Agenda has
not been as swift as originally hoped. The talks' initial deadline of January
01 2005 passed without an agreement having been reached, and in July 2006
the negotiations were suspended
because of differences of opinion between six major participating countries on
the central issues of increased access to markets for agricultural and
industrial products,
 and cuts in subsidies paid to farmers. If
the barriers to trade for the developing world are to be lifted, it is essential that a deal is
reached between all members in the talks. A study by the World Bank and the
Institute for International Economies showed that the elimination of global
trade barriers could lift 300 to 500 million of the world’s poor out of poverty.
To help ensure that developing countries really benefit from new trading
opportunities created by the Agenda, the UK has produced a Development Package.
This takes account of the specific needs of individual countries, for
example safeguarding the livelihoods of West African cotton producers by
reducing the support that developed countries give to their own cotton
producers. The huge subsidies provided to US cotton farmers have lowered world
prices by 9 to 13%, enabling the US to dominate the world market and leading to
an increase in poverty in those developing countries where cotton is a major
export. The Package also calls for a
simplification of the complex trading rules that exempt the world's
least developed countries from export duties, and a broadening of the exemptions
to cover all products being exported.
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Economic Partnership Agreements must help development
 As well as through the DDA, another important way in which DFID is pushing to
make trade address poverty is through its work on
Economic Partnership
Agreements (EPAs). EPAs are trading agreements between the European Union and
the 78 African, Pacific and Caribbean (ACP) countries; they are scheduled to
take effect from 01 January 2008. It is vital that these agreements bring new
trade and development opportunities to, and reflect the concerns of, ACP
countries.
DFID is working with the
European Commission and all countries
involved to ensure that the agreements are development-friendly. In recent
months, good progress has been made towards this, with the EU offering 100%
free market access to ACP counties, with only rice and sugar being required to
undergo a period of adjustment. DFID believes that trade agreements that include
full access to European markets and liberal export rules will benefit poor
countries and help them share in the world’s wealth; over coming months, EPAs
will be a priority of DFID's.
In September 2007, Trade and Development Minister Gareth Thomas attended an
EU Development Meeting in Madeira, where he called on
the EU and ACPs to focus on the central issue of goods to achieve agreement
on the EPAs by the end of the year.
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A good deal for producers in poor countries
 The Fairtrade movement also has a significant role to play in the fight
against world poverty. By ensuring higher prices for products from the
developing world,
greater economic certainty, increased access to global markets, and the
empowerment of producers in poor countries, the movement has already benefited some 5
million people.
Since 1997, DFID has provided nearly £2 million to the
Fairtrade Foundation, and is
discussing further potential support in the future. DFID wants the
Foundation to focus on the poorest producers, assess impact more
rigorously, expand the number of people benefiting, have an
impact on mainstream supermarkets, and be able to sustain itself financially in
the long term.
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More about how trade can beat poverty
Read about the new joint Trade Policy Unit,
bringing together staff from DFID and the Department for Business, Enterprise
and Regulatory Reform. The creation of this unit reflects the importance of
trade to development, and will bring
trade and development
agendas closer together.
Further facts and figures about trade are available here:
Trade - Did you know?
To read more about trade and how DFID is helping to make a difference, please
follow these links to our case studies:
Also, for information about trade-related research programmes funded by DFID
please visit our
Research
for Development database.
And to find out more about the food miles debate, read our feature
Balancing the cost of food air miles: Listening to trade
and environmental concerns. Also, read Gareth
Thomas's response to the Soil Association's decision to withdraw its organic
certificates from some products transported by air.
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Links
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Department
for Business, Enterprise and Regulatory Reform