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wto hong kong ministerial
Who benefits from trade liberalisation?
John Audley

          Next week, trade negotiators from more than 150 countries will meet in Hong Kong to begin the last leg of the first trade round dedicated to promoting economic development and poverty reduction. They will be besieged by the motley circus of media, business people, non-governmental organisations (NGOs) and protesters that has followed the World Trade Organisation (WTO) since Seattle in 1999.
The Hong Kong meeting will round off a year of mass demonstrations, pop concerts and high profile political and celebrity endorsements of an NGO-led campaign to use aid, trade and debt relief to Make Poverty History. To find out whether any of this has made a difference to how people in the US and Europe see the relationship between trade, development and poverty alleviation, the German Marshall Fund of the United States commissioned a public opinion survey of a representative sample of 6,000 people across six countries. The results make for sobering reading.
The headline is that the development case for reforming protectionist policies such as farm subsidies and tariffs -- the key to success at Hong Kong -- has yet to be won. Even though our US, British, French, German, Italian and Polish respondents express support for the broad concept of international trade, more than one-third of Europeans and almost half of Americans say they support raising import tariffs and are willing to pay more for products to keep jobs at home.
Asked whether they support subsidising their own farmers, even when it is harmful to poor farmers in developing countries, nearly two-thirds think it is acceptable to maintain subsidies. Perhaps most disappointing is the fact that, after making policies towards sub-Saharan Africa the centrepiece of the Group of Eight (G8) wealthy nations' summit and the Make Poverty History campaign, more than half of all respondents, except for the Polish, do not see why African countries should get special treatment compared with other low-income developing countries.
Europeans and Americans are of one voice when it comes to who benefits from trade: big multinational companies and the rising economic powerhouses such as China and India are the winners, not small businesses or consumers. Apart from the British, whose optimism is driven by low unemployment rates and a healthy economy, most people think trade costs more jobs at home, than it creates and a substantial minority does not have faith that trade creates jobs and real opportunities in poor countries. This last point is important, because overwhelming majorities pick trade over aid as the best way rich countries can help people living in poor countries.
With a negotiating agenda weakened by their inability to reach agreement over important issues such as agriculture and trade in services, political leaders must work to re-energise the trade-for-development agenda. First and foremost, the case for farm subsidy reform and import barrier removal must be made at home on solid domestic policy grounds. The people in our survey want their governments to do more on education and skills and promote innovation and competitiveness. This should enable European leaders to place more emphasis on the so-called Lisbon agenda of economic reform and less emphasis on wasteful handouts to farmers. This leads to the second point: making the case for the benefits of trade to poor people in poor countries will continue to fall on deaf ears until people in rich countries feel confident that further trade liberalisation will bring benefits to them or, at the very least, will not hurt them through mass job losses. Rather than point to the "giant sucking sound" of globalisation, elected officials have a duty to seize the opportunities that a global division of labour offers for job creation at home.
Negotiators meeting in Hong Kong must combine their efforts to liberalise world markets with development assistance that works hand-in-hand with the new opportunities for trade. When designed to enhance fair competition, promote respect for human rights, democratic governance and the rule of law, trade liberalisation is viewed by both Europeans and Americans as a way to bring the world closer together. Finally, negotiators, business leaders and civil society groups alike must present the public with the positive aspects of trade, to help both rich and poor see why trade liberalisation is an essential component of any effort to make poverty history. (The writer is a senior transatlantic fellow at the German Marshall Fund (GMF) of the United States. He was the principal author of the GMF report, Perspectives. on Trade and Poverty Reduction. FT Syndication Service)


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