Trading on primary commodities on the decline

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Given the findings of the report, the author made several suggestions and recommendation saying: “Meanwhile, even within its current mandate, the WTO could do a few important things for the environment. The most obvious contribution would be to address remaining trade barriers on environmental goods and services in order to reduce the costs of investing in clean production technologies and environmental management systems. Another contribution would be to seek reductions in government subsidies that harm the environment, including energy, agriculture and fishing subsidies. ”

It further added that trade barriers are poor environmental policies and that environmental problems are best addressed at source, whether they involve polluting production processes or undefined property rights over natural resources. It pointed out those targeting indirect linkages, such as exports or imports of goods, can only partially correct market and policy failures, and at a higher price to society. (Paraphrasing made) Sensing the difference across culture of the different member countries and states it posited that environmental standards should not necessarily be harmonized.

It thus said this conclusion does not refer only to local pollution problems that are arguably best addressed by standards targeted to the specificities of the local conditions and neither poor nor rich communities (countries) are well served by setting standards at the average. The same report is however quick to state that the case is different for transboundary and global problems where policy harmonization and collective management of common resources is perhaps the only effective policy option. (Paraphrasing made)

Oxfam (2002) said: Rising tides are supposed to lay all boats. Over the past two decades, international trade has created a rising tide of wealth, but some boats have risen more rapidly than others, and some are sinking fast. In the previous chapter, we examined the potential of trade to reduce poverty. This chapter documents the failure to realize that potential. It shows how an unequal trade is limiting the rate of poverty reduction, reinforcing global inequalities and marginalizing poor countries and poor people.

It was once believed that globalization would lead the world into a bright new era of rapid poverty reduction and failing levels of inequality. Economics confidently predicted a process of income ‘convergence’, with increased flows of trade and investment enabling poor countries to catch up with average incomes in rich countries. Some believed that early promise has been delivered. ‘Global integration’, declares the World Bank, ‘is already powerful force for poverty reduction’ (World Bank, 2001a). The assessment is difficult to reconcile with the facts.

On the evidence of the World Bank’s own figures, the impact of global integration in poverty reduction appears less powerful than often suggested. Extreme poverty declined only slowly in the 1990’s. The proportion of the world’s population living on $1 a day fell from 28 percent in 1987 to 23 percent in 1998. At the start of the twenty-first century, 1. 1 billion people are struggling to survive on less that $1 a day, the same figure as in mid-1980s (World Bank 2001d). The proportion and number of people living on less that $2 a day a more relevant threshold for middle-income countries, shows similar trends.

In other words, the wealth that flows from liberalized trade in not trickling down to the poorest, contrary to the claims of the enthusiasts of globalization. (page 65) Oxfam (2002) said: In the 1990s, world trade in primary commodities was growing at less than one-third of the rate for trade in manufactured goods, and the gap is widening (UNCTAD 1999b). As a result, countries dependent on primary commodities have been trailing behind more dynamic exporters. More than 50 countries on the developing world depend on three or fewer commodities or more than half of their export earnings (International Task Force 1999).

Dependency is most pronounced in sub-Saharan Africa; there are 17 countries for which non-oil exports account or three-quarters or more of export earnings. In many cases, a large share of export earnings is earned by small group of products. Coffees alone accounts for 60-80 percent of export earnings for Ethiopia and Burundi. Cotton accounts for around half of Burkina Faso’s export earnings, and cocoa or nearly one-quarter of those Ghana (UNCTAD 2001a, World bank Data 1999-2000).

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