executive summary introduction

There is a paradox at the heart of international trade. In the globalised world of the early twenty-first century, trade is one of the most powerful forces linking our lives. It is also a source of unprecedented wealth.

Yet millions of the world's poorest people are being left behind. Increased prosperity has gone hand in hand with mass poverty and the widening of already obscene inequalities between rich and poor. World trade has the potential to act as a powerful motor for the reduction of poverty, as well as for economic
growth, but that potential is being lost.

The problem is not that international trade is inherently opposed to the needs and  interests of the poor, but that the rules that govern it are rigged in favour of the rich. The human costs of unfair trade are immense. If Africa, East Asia, South Asia, and Latin America were each to increase their share of world exports by one per cent, the resulting gains in income could lift 128 million people out of poverty. Reduced poverty would contribute to improvements in other areas, such as child health and education.

In their rhetoric, governments of rich countries constantly stress their commitment to poverty reduction. Yet the same governments use their trade policy to conduct what amounts to robbery against the world's poor. When developing countries export to rich country markets, they face tariff barriers that are four times higher than those encountered by rich countries. Those barriers cost them $100bn a year - twice as much
as they receive in aid.

Various polite formulations can be found to describe the behaviour of rich-country governments. But the harsh reality is that their policies are inflicting enormous suffering on the world's poor. When rich countries lock poor people out of their markets, they close the door to an escape route from poverty.

Lack of market access is not an isolated example of unfair trade rules, or of the double standards of Northern governments. While rich countries keep their markets closed, poor countries have been pressurised by the International Monetary Fund and World Bank to open their markets at breakneck speed, often with damaging consequences for poor communities.

The problem of low and unstable commodity prices, which consigns millions of people to poverty, has not been seriously addressed by the international community. Meanwhile, powerful transnational companies (TNCs) have been left free to engage in investment and employment practices which contribute to poverty and insecurity, unencumbered by anything other than weak voluntary guidelines.

The World Trade Organisation (WTO) is another part of the problem. Many of its rules on intellectual property, investment, and services protect the interests of rich countries and
powerful TNCs, while imposing huge costs on developing countries. The WTO's bias in favour of the self-interest of rich countries and big corporations raises fundamental questions about its legitimacy.

Reform of world trade is only one of the requirements for ending the deep social injustices that pervade globalisation. Action is also needed to extend opportunity, and reduce inequalities in health, education, and income distribution. However, world trade
rules are a key part of the poverty problem. Fundamental reforms are needed to make them part of the solution.

The Oxfam Trade Campaign

This report sets out Oxfam's analysis of the rules that govern world trade. The campaign that it launches aims to change those rules in order to unleash the potential of trade to reduce poverty. It is motivated by a conviction that it is time to end double standards and to make trade fair. The following are among Oxfam's main policy goals:

• Improving market access for poor countries and ending the cycle of subsidised agricultural over-production and export dumping by rich countries.
  
• Ending the use of conditions attached to IMF-World Bank programmes which force poor countries to open their markets regardless of the impact on poor people.
  
• Creating a new international commodities institution to promote diversification and end over-supply, in order to raise prices to levels consistent with a reasonable standard of living for producers, and changing corporate practices so that companies pay fair prices.
  
• Establishing new intellectual-property rules to ensure that poor countries are able to afford new technologies and basic medicines, and that farmers are able to save, exchange, and sell seeds.
  
• Prohibiting rules that force governments to liberalise or privatise basic services that are vital for poverty reduction.
  
• Enhancing the quality of private-sector investment and employment standards.
  
• Democratising the WTO to give poor countries a stronger voice.
  
• Changing national policies on health, education, and governance so that poor people can develop their capabilities, realise their potential, and participate in markets on more equitable terms.

Why campaign on trade, and why now? There are three answers to this question. The first is that the existing trade system is indefensible. No civilised community should be willing to tolerate the extremes of prosperity and poverty that are generated by current trade practices. And none of us should be willing to accept the abuse of power, injustice, and indifference to suffering that sustains those practices.

The second reason for action can be summarised in a simple phrase: 'enlightened self-interest'. What is happening today is not just indefensible, it is also unsustainable. Large parts of the developing world are becoming enclaves of despair, increasingly
marginalised and cut off from the rising wealth generated through trade.

Ultimately, shared prosperity cannot be built on such foundations. Like the economic forces that drive globalisation, the anger, despair, and social tensions that accompany vast
inequalities in wealth and opportunity will not respect national borders. The instability that they will generate threatens us all. In today's globalised world, our lives are more inextricably linked than ever before, and so is our prosperity. As a global community, we sink or swim together. No country, however strong or wealthy, is an island.

The third motivation for Oxfam's trade campaign is the conviction that change is possible. The international trading system is not a force of nature. It is a system of exchange, managed by rules and institutions that reflect political choices. Those choices can prioritise the interests of the weak and vulnerable, or they can prioritise the interests of the wealthy and powerful.

Trade is reinforcing global poverty and inequality because
the international trading system is managed to produce these outcomes. The rules of the game reflect the power of vested interests. Concerted public campaigning can change this. As demonstrated by the international campaign to cancel the debts of poor countries, public action can force the interests of the poor on to the international agenda. And it can achieve real gains for human development.

Ultimately, there is a clear choice to be made. We can choose to allow unfair trade rules to continue causing poverty and distress, and face the consequences. Or we can change the rules. We can allow globalisation to continue working for the few, rather than the many. Or we can forge a new model of inclusive globalisation, based on shared values and principles of social justice. The choice is ours. And the time to choose is now.

the trade report executive summary: part 1 >