What We Want…Trade

We have seen how we need more aid , better aid and give debt relief to help Africa escape from poverty. Now let's look at what we want on Trade.

What is trade?

All over the world people, companies and governments buy and sell goods and services from other countries. The Commission for Africa Report shows how trade has been an engine of growth in the world economy, lifting more people out of poverty than anything else in history. Tragically, Africa has been almost entirely excluded, and is even slipping further behind. Africa's share of world trade has fallen from 6% 25 years ago to less than 2% now. And each percentage point lost means that $70 billion dollars is lost, equal to three times all current aid to Africa.

More on why trade really matters in the fight against world poverty

Why should Africa trade with the rest of the world?

The World Bank estimates that if the rich nations made it easier for poor countries to trade, the number of people surviving on less than $2 a day could be reduced by over 144 million, 60 million of those in Africa. The benefits of free and fair trade far outweigh the benefits of aid.

What problems does Africa face?

Africa faces two major problems with trade. It faces barriers that make it difficult, or even impossible to sell to the developed world, and it is not able to produce enough goods at a quality and price that the rest of the world wants to buy.

More trade, fairer trade

The Commission for Africa Report makes it clear that trade barriers are unacceptable and must go. It finds them politically antiquated, economically illiterate, ethically indefensible, and environmentally destructive. The Commission calls on rich nations to do things differently:

Abolish subsidies - When rich countries pay subsidies - money from the taxpayer to help them out - to their farmers, the price for goods falls to a level that people in poor countries cannot hope to compete with. This gives farmers in rich countries a massive and unfair advantage. Despite employing a small fraction of the population, the main beneficiary in developed countries of subsidies is agriculture, through things like the European Common Agricultural Policy (CAP). CAP means that cows in rich countries actually earn more in subsidies than most Africans have to live on each day!

Lower the barriers to trade - Extra costs, or tariffs, are often added to goods when they enter a new country. Some products that African and other developing countries can produce easily such as sugar, cotton, peanuts and tobacco have to pay these tariffs. The Commission for Africa calls on rich countries to abolish all trade distorting supports to cotton and sugar now and agree this year to end all export subsidies and trade distorting supports to agriculture by 2010.

Bureaucratic barriers, such as ensuring that goods meet our complex health and safety standards, also make it difficult to sell to rich countries. Standards are important, but we must make sure that these standards are not used as an excuse to lock poor countries out.

It is not all bad news. 49 of the world's Least Developed Countries, most of which are in Africa, enjoy free access to the markets of the European Union - though they still have to jump the bureaucratic hurdles. Much more must be done.

The ability to trade

In order to trade Africa must also do things differently. Bad roads, ports and airports make getting goods to market expensive and time consuming. Excessive bureaucracy, cumbersome and expensive customs procedures, and corruption all add to the burden on companies struggling to survive - making Africa an unattractive place to invest. All these things and more must radically improve for Africa to really benefit from trade.

Can Africa compete? Aid for Trade

Governments across Africa are committed to reform, but they need the help of the international community. Simply opening our markets and removing subsidies is not enough. Help must be given to poor people to take advantage of the new opportunities and to cope with the impact of a more open system of world trade. New infrastructure, customs reform, improving regulations to help African businesses, and sensitively timing the opening of markets to competition will all help poor countries to trade.

Opening up to competition will be difficult and will take time. Poor countries need to be given the time and support to do it. It is the only long-term route to economic prosperity, and aid should be targeted to help meet the economic and social costs of what will be a very big challenge.

What about Gleneagles?

The G8 countries are among the richest and most powerful in the world. It was vitally important that the G8 leaders committed at Gleneagles to ending the terrible inequality of trade between rich and poor countries. Without the G8 nothing will change.

However, the real decisions are taken at the World Trade Organisation meeting in Hong Kong this December. The G8 agreed to push for a successful outcome to the WTO Ministerial meeting in Hong Kong in December. An ambitious and successful meeting could potentially lift 140 million people out of poverty.

The G8 leaders also committed to ending damaging export subsidies with a date to be set hopefully by the end of the year. We will make sure that Preference Schemes are transparent, simple to follow and do not stop eligible developing countries from trading with us. National standard setting and regulatory bodies will work with African exporters and governments to help Africans export to our markets. We will provide resources and training to help African producers meet our health and safety standards for food exports and other products.

Some of the extra $25 billion agreed at Gleneagles will be spent on helping Africa to take advantage of the new opportunities that will result from the WTO’s Doha Development Round. We will help African countries to improve their investment climate, to build up their much needed infrastructure and to trade with each other as well as the developed world.

The WTO Ministerial in Hong Kong will show whether rich countries refuse to continue to ignore the plight of the poor. If ordinary people in Africa, Latin America and Asia are given the opportunity to work their way out of poverty. If we really can Make Poverty History.

Finally we will see that, by themselves, more aid or better aid, debt relief or trade, will not have the impact that Africa deserves. It is only through a Big Push, a comprehensive approach that combines all of these, that Africa will really benefit.