Launch of NZAid trade report by Jim Sutton Wednesday, May 28, 2003
As Trade Minister I want to talk about the next round of trade talks.
The round is after all called the Doha Development Agenda. This is because Ministers from 144 countries who met at Doha agreed that more needed to be done to help developing countries integrate into the world trading system and reap the gains. So development is at the centre of the current World Trade Organisation agenda.
New Zealand has important objectives for the Doha round.
One of them, shared by every member of the World Trade Organisation, is that we are looking for a better deal for our own exports of goods and services. Agriculture is the main item but our own export interests are much wider than that.
Another major New Zealand objective is that this Round must make the world trading system work better for developing countries. In the end, trade can do more than aid. To achieve sustainable development, poor countries need to expand their trade.
I have actively been pursuing both these objectives. Since well before Doha. In fact since I took over the Trade portfolio in 1999. It has not been an uncomfortable experience.
When it comes to the world trading system, the two objectives are highly compatible. It is in New Zealand's interests and the developing countries that there be fundamental reform of world trade in agriculture.
If we look just briefly at agriculture, the potential that real reform offers is huge.
The facts are that the vast majority of the world's poor are working on the land in developing countries. Rich countries are responsible for nearly US $1 billion per day in subsidies to their farm sectors; that's equivalent to the combined GNP of all of sub-Saharan Africa and six times the total of all official development assistance aid flows.
All these subsidies result in agricultural surpluses in the industrialized economies, which are dumped into developing country markets at prices below the cost of production. Sometimes, it goes as “food aid", which the recipients immediately put on the market.
Either way, the opportunities for the local subsistence farms to market their own meager surpluses at a profit and thereby place their countries on the first rung of the ladder of economic development are destroyed.
Kenneth Kaunda once described food aid to me as "fertilizer for a rich harvest of poverty",
That analysis is almost universal in the developing world. Last year, I co-chaired a Food and Agriculture Organisation workshop participated in by representatives of 48 countries, mostly developing countries. Almost every one listed export market access for their agricultural products as a key priority for their sustainable development.
Export subsidies may be the most egregious intervention on behalf of politically influential western farmers. But market access restrictions such as quotas and high tariffs and poorly targeted domestic subsidies are almost equally damaging.
The World Bank has estimated that full liberalisation of agricultural trade would raise global income by US $2 trillion over the 10 years from 2005-2015, with well over half of that accruing to developing countries. An additional 320 million people would be lifted out of poverty.
So we need to encourage reform, both in the interests of New Zealand's own exporters and the interests of developing countries. And, as Marian said, we need to work with developing countries so they can be fully involved in the process and so that they can properly capture the full potential of reform.
Finally, I want to congratulate all those who contributed to the formulation of the policy on Trade and Development. I know that it required an enormous effort from Marion's NZAID officials and on the trade policy side, my own trade officials were much involved. But thanks too to all of the rest of you out there who spent time and effort in making your views known. I was pleased with the final product and was pleased to sign it off together with Marian and Phil Goff.