Mercy Global Concern - 2005

Mercy Global Concern: Briefing paper 1, November 2005

Commission for Social Development
Forty-fourth session
8-17 February 2006

Item 3(a) of the provisional agenda;

Review of the first United Nations Decade for the Eradication of Poverty (1997-2006)

An NGO statement to the Commission for Social Development upon the Review of the first United Nations Decade for the Eradication of Poverty

On Poverty Eradication and Trade

Statement prepared and submitted by: Society of Catholic Medical Missionaries and Sisters of Mercy, both non-governmental organizations in special consultative status with the Economic and Social Council.

Statement endorsed and supported by:

Introduction: Eradication of extreme poverty, which is the first of the Millennium Development goals, is possible – if developing countries commitment to governance reform is matched by support from partners among the developed countries and international organizations. Overall reduction of poverty calls for a multidimensional approach to Poverty Eradication. Though the Decade was meant to eradicate poverty, what is seen in the ground, is countries and peoples going backward barring with a exception of a couple of nations. This is disturbing given the fact with all the advancement in technologies, millions live below poverty line and on less than a dollar a day.

Trade: While many factors play into keeping people in poverty if nations are really serious about eradicating poverty, a vital area that needs to be addressed among other things is the area of trade. Trade barriers among developed nations continue to play havoc for many developing nations. These barriers continue to keep people in poverty and this needs to be addressed without further delay if this noble goal of poverty eradication is to be achieved.

Trade is an important area for poverty eradication. Trade liberalization can increase poverty in low-income countries if not handled carefully. Developing countries should not be forced to follow developed-country agendas. International trade carries enormous potential for reducing poverty worldwide. A 1% increase in the developing countries’ share of the world exports would lift 128 million people out of poverty. But the current global trading system discriminates against developing countries and hinders poor country participation in the global economy. The two biggest problems are agricultural policies in rich countries and poor countries access to international markets.

Developing countries need to have the right to implement trade polices, including tariffs and other import barriers, which promote and protect local agriculture, rural livelihoods, and food–security. Proposals repeatedly put forward by developing countries are not being taken seriously in the trade negotiations.

For years the developing countries of the south had been pleading to address the issue of agricultural subsidies and not much is done in this area by those concerned. Even by a slight reduction in the total amount given by way of agricultural subsidies would go a long way in bringing millions above poverty. Tariffs and domestic subsidies of EU and US have serious consequences for poor farmers around the globe. Subsidies by rich nations foster over-production and thus lead to dumping food at prices below production on local markets. This creates unfair competition on local farmers, who are no longer able to sell even to their own regions.

More aid must be complemented by trade reform. For developing countries to boost economic growth through trade, the main barriers to their exports need to be removed. Tariffs imposed by wealthy countries especially in agriculture and manufactured goods, must be lowered or eliminated. The $350 billion is subsidies and other support that developed (OECD) countries provide each year to their domestic agricultural producers must be cut. They distort markets and reduce the potential export earnings of 70 per cent of the world’s poorest people who live in rural areas and who rely on farming to survive.

Fair trade, not aid is necessary in fostering more equitable international trade and development. There is a direct link between human rights, trade and development policy of national as well as the WTO, the World Bank, the IMF and regional development institutions and with the corporate sector and development practitioners.

Official Development Assistance (ODA) though promised 35 years ago, which would have enabled people to stand on their own feet was given least priority. Certain regions, especially in Africa will not be able to help themselves if initial aid is not provided. Talk of poverty eradication needs to be followed by increase in ODA. Development aid and private charitable donations are the main source of external financing for the poorest countries.

While official development assistance reached $79 billion in 2004 much more is needed. Aid remains at 25 cents out of every $100 of the donor countries’ national income.

If a country really need to address the poverty issues, it is important that the country be free to set its own development priorities and not be dictated by IFIs. Conditionalties imposed on developing countries by International Financial Institutions (IFIs) like liberalization has exposed workers in formerly protected industries to unemployment and poverty as was brought out in the Second Committee meeting in October 2005.

Most low-income countries population engages in agriculture for a living. For those countries working on eradication of poverty it is essential that they resort to labor intensive mechanisms. Global trading system can contribute to employment growth by facilitating the flow of export of goods. Global trading system needs to be decent and fair. There needs to be safety net for the poor, so that they do not fall between the cracks in the trading system. Removing basic food staples from trade agreement altogether would be more helpful and go a long way in reducing poverty.

Liberalization: Individual countries should be free to decide which sector they want to liberalize and not be dictated from outside. Developing countries should not be forced to privatize their essential services like water, health care and education.

International Financial System and Development:
The issue of reform of global economic governance to strengthen the voice and participation of developing countries in international economic decision making and norm setting is of critical importance. One of the key factors for poverty eradication is the inclusion of developing countries, particularly small developing countries, in international economic, trade and financial institutions, including the Bretton Woods Institutions and the World Trade Organization (WTO). Aid should not be tied to trade; delinking the two is crucial for poverty eradication.

The review of the Decade for the Eradication of Poverty ought to be well used to creatively come up with a viable solution to the problems that nations and peoples were not able address in the past ten years.

Recommendations

• Developed countries need to set firm and; monitorable time frame for the elimination of export and trade distorting subsidies.
  
  
• Developing countries should be allowed to use safeguard mechanisms to protect food security, rural livelihoods and development for poverty reduction.
  
  
• There needs to be a human rights approach and commitment to ensure more equitable trade and development policies.
  
  
• Develop recommendations for policy makers and trade development experts on issues such as health equity, agricultural subsidies and rights based approaches reform of multilateral institutions.
  
  
• Goal 8 calls for an open trading and financial system, more generous aid for poverty reduction. With political will a global deal on Aid, Trade and Debt Relief is possible. It calls for cooperation with the private sector to address youth unemployment, ensure access to affordable, essential drugs and make information and communication technologies more accessible.