Rich countries urged to lead by example on trade access

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Improving market access for developing countries is one of the most important steps that rich countries can take in fighting global poverty, according to the chief economists of the World Bank and the IMF. Both institutions highlighted the issue during their recent Annual Meetings.

Market access was the theme of a joint report and press conference, and a seminar.

Agricultural subsidies in rich countries amount to almost $1 billion a day, roughly six times the level of aid to developing counties. "It's hypocrisy to encourage poor countries to open up their markets while imposing protectionist measures that cater to powerful special interests in the rich countries,"Nicholas Stern, chief economist of the World Bank, told reporters at a September 27 press conference to publicize the release of a joint report,Market Access for Developing Country Exports-Selected Issues. "Rich countries," he said, "should lead by example."

Kenneth Rogoff, Economic Counsellor and Director of the IMF's Research Department, was equally critical. "The sheer magnitude of the support given to farmers in rich countriesPage 322 is stunning-over 30 percent of farmers' income," he said.

Stern tried to put the findings of the joint report in perspective with an illustration. "The average European cow receives around $2.50 a day in subsidy.

The average Japanese cow receives around $7.00 a day in subsidy. In sub-Saharan Africa, 75 percent of the people live on less than $2.00 a day.

By anybody's standards, these subsidies are huge," he stated.

Estimates varied on how much developing countries would benefit from a lowering of industrial country tariffs. "The bottom line is that if we got rid of all of the trade barriers, you'd be seeing gains in the world economy about 10 years from now-it would take time to do-of the order of $500 billion. That compares, of course, with aid at $50 billion. At least half [of the $500 billion] would go to developing countries. So we're talking about really big numbers compared with aid," Stern said.

Best way forward

Rogoff argued that the best way to remove agricultural support was multilaterally. "Multilateral liberalization will secure the greatest benefits to all and help to neutralize the influence of special interests," he said. Industrial countries were best placed to take the lead in promoting such liberalization, given their wealth and the relatively...

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