Global Trade Mailing List Archive

["Tom Lines" <<address removed>>]

Having failed to join in this discussion so far due to pressures of work,
I'm going to be greedy now and send in three submissions at once!  I have
read the debate with great interest, and it seems better to respond to
different aspects separately than in one single, extremely long e-mail.

My three fields of thought are:
1.    A general picture of the relationship between trade, agriculture and
poverty.  The linkages are complicated but some view of what they are, and
where they lead at the present time, is surely the first requirement in
determining policy towards them.  This e-mail will offer my own thoughts on
that.
2.    Global markets - their deficiencies and what needs to be done about
them.  This will encompass the issues of market concentration and corporate
power on one hand, and supply management on commodity markets on the other.
3.    What DFID can do - since Duncan has enjoined us to concentrate on this
as much as possible.  Besides points arising from the first two e-mails,
this will take up Duncan's request for suggestions on WTO, RTA and CAP
issues, including the thorny question of trade preferences.

So here goes.  On the general picture, I am struck - but not surprised - by
Duncan's repeated calls for success stories, and the limited response they
have received.  Rural poverty in many developing countries is so
intractable - at least under current policy arrangements - that it must be
hard to find unambiguous cases of success.  It seems to me that the export
orientation dogma of the 1980s has led countries into a trap from which it
has become exceedingly difficult to extricate themselves.  It is noteworthy
that in 11 of the 30 countries with the lowest UNDP human development
indicators, real (PPP) GDP per capita reached its highest point before
1980 - i.e. before the Debt Crisis, structural adjustment and trade
liberalisation took hold.  I think it is clear by now that trade in itself
is not the way out of the deepest poverty.

But no country can live without trade, and a North Korean-style closed
economy is not the answer either.  Every country has to earn foreign
exchange to pay for necessary imports.  But if they have nothing more
remunerative than coffee, cotton or groundnuts to sell, they must not be
expected to rely on them alone.  Given the experience of the last 20 years,
they should certainly not expect such exports to be a motor for development
or poverty reduction.

Peter Robbins' book illustrates the widespread oversupply leading to gluts
on many markets and a collapse in prices.  Among 12 leading tropical export
crops, he finds that the one whose price had performed the best since 1980
(jute) suffered a 50 per cent fall in the dollar price in real terms.  The
worst performer was, notoriously, also the largest of the markets listed,
and one which is primarily supplied by smallholders: coffee, whose real
dollar price fell by 86 per cent between 1980 and 2002.

Every one of the 30 countries at the bottom of the HDI list is a
food-deficit country, according to the FAO, and if they try to make up for
declining prices on their agricultural exports by producing more of them,
that probably means less land for food production.  And with the terms of
trade moving against them, it might not do the trick anyway.

So policy for the rural sector should start not with trade but with food
security - especially in food-deficit countries.  That means concentrating
on building up the domestic market by such means as providing sources of
credit, transport links in remote areas and so on.  There have been many
suggestions in this and other parts of the consultation from people who know
far more about it than I do, so I will not say more on that.  But my general
view is that rural poverty reduction should be seen as primarily a domestic
concern.  International measures are required to sort out the price and
marketing problems of the ag. export sector, but while they could have a
considerable impact on poverty, they should not be seen as central to
poverty reduction itself.

Best wishes,
Tom Lines
Consultant in Trade and Development


57 Victoria Road
Oxford
OX2 7QF
Tel./fax +44-1865-559198

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