I agree that trade rules must be improved to benefit the poor. Our policy commitments on trade and development, as well as our objectives for the current Round of multilateral trade talks, are set out in the White Papers, Making Globalisation a force for Good (July 2004) and Eliminating World Poverty: Making Globalisation Work for the Poor (December 2000).

World Trade Organisation negotiations under the GATS (the General Agreement on Trade in Services), cannot force any country to privatise essential services, such as water. The former Director General of the WTO, Mike Moore, set the position out very clearly in his book "A World Without Walls": " GATS does not require the privatisation or deregulation of any service. Any individual commitments would not affect the right of governments to set levels of quality, safety, price and other policy objectives as they see fit, and the same regulations would apply to foreign suppliers as to nations". It is up to each country to decide which markets it wants to open and which it doesn't. Experience has demonstrated that no WTO Member will agree to a request that is not in their national interest. 

Poor countries are not being forced to adopt free trade. New trade rules made in the WTO have to be agreed by consensus and thus all countries have the right to veto any agreement they do not consider to be in their best interests. It is correct, however, that trade rules should take account of different countries' development needs, but the answer is not greater protectionism in the form of higher tariff barriers. This will limit the opportunities for poor countries to trade with each other and with developed countries, excluding them further from the benefits of international trade. Instead, we believe that existing and new trade rules should be made flexible enough so that they meet developing countries' needs. That is the policy the Government is pursuing in the WTO.

Giving special treatment to Developing countries in the WTO gives their governments longer to put in place the right domestic policies and longer for their industries to adjust to market opening. Subsidies, although they are not the most pro-poor use of scarce resources by developing countries, are exempt from domestic support reduction commitments in the WTO if they support agricultural growth or poor producers. 

We are working to ensure traders and farmers in developing countries benefit from trade. If a country liberalizes without putting in place the right institutions, and ensuring that transport and marketing arrangements for small farmers are in place, the result can be a sudden surge of imports. That is why we have worked with NGOs and developing countries to amend WTO rules to allow extra protection to producers of staple foods and other crops that are produced by poor farmers.

We recognise that too often in the past low income countries have had little say over the trade conditions attached to World Bank and IMF loans. Macroeconomic policies and structural reform programmes should take into account the specific needs of individual countries. For this reason, we have strongly supported the development of national strategies to reduce poverty.

The World Bank and the IMF have, for all low-income countries, made new commitments to analyse the impact of reforms supported by their programmes. They have also agreed to delay the introduction of measures where the impact is found to be negative, and to support the introduction of mitigating measures. While we would have liked the World Bank and IMF to put these new commitments into effect more quickly, we strongly endorse this approach and are supporting the Bank and the Fund to develop practical approaches to this work, including by funding six pilot studies and seconding staff to work with them.

These measures are beginning to have an impact. As an example, Mozambique recently challenged the timetable prescribed for reducing barriers on cashew nuts, winning more time in which to dismantle the tariffs and allowing longer for its domestic industry to adapt. It is this kind of case-by-case consideration, with a particular emphasis on impact on poorer groups, which we will continue to encourage.

Please note that DFID has published a 'Trade Matters' booklet, which explains more about the potential benefits of international trade for developing countries.

I hope this is helpful.

HILARY BENN
SECRETARY OF STATE FOR INTERNATIONAL DEVELOPMENT