Trade Policy

The Millennium Development Goals (MDGs) challenge industrialized countries to partner with poor countries through a comprehensive approach to eradicate extreme poverty including increased poverty-focused development assistance, debt cancellation and fair trade rules. While more aid and further debt cancellation allow poor countries to address the immediate needs of their people (schools, health care, agricultural assistance, etc.), fair trade is a long-term solution that will help people in developing countries lift themselves out of poverty. Fair trade ensures poor countries achieve economic sustainability and self-sufficiency by allowing them to sell products more easily in the global market place.

Current international trade rules have created an uneven playing field for the rich and poor. Currently, 150 countries belong to the World Trade Organization (WTO), which regulates international trade. While all members of the WTO have one vote, rich nations dominate the WTO system because they can afford to pay for a number of official negotiators to protect their many interests. Of the 38 African countries that participate in the WTO, 15 cannot afford to pay even one staffer to be stationed at the headquarters in Geneva. It is no wonder that today, the poorest 49 countries that make up 10 percent of the world’s population account for only 0.4 percent of world trade.

Three key trade reforms are necessary so that poor countries have a fair chance to benefit from globalization, including:

Liberalization Policies: International financial institutions have encouraged liberalization practices that remove domestic protections on poor countries’ developing industries (for example, coffee), exposing them to markets with which they cannot compete. Developing countries should be allowed to determine their own country-driven trade policies that account for the diversity and special needs of their local industries, and thus their nations’ economic well-being. A “one-size-fits-all” approach to trade and development does not benefit the poorest.

Subsidies: Rich countries subsidize their farmers and agricultural producers at a rate of one billion dollars a day. Subsidies harm developing countries when they encourage the overproduction of commodities (such as cotton), which are then sold on the international market (in the above example in West Africa) for a fraction of their worth, effectively dominating the global market and undermining poor countries’ local markets. While developing countries have to diversify exports and undergo other economic reforms to benefit from the global economy, a “level playing field” in the global marketplace will not be achieved without reform of rich country subsidies.

Market Access: Rich countries spend more than $100 billion a year to protect their domestic industries through tariffs, duties and quotas that prevent poor countries from competing in their markets. It is necessary to end free trade agreements that promote the double standard of poor countries being pressed to open their markets while rich countries protect theirs.

You can help ensure world leaders and the U.S. Congress do more to make trade fair. Together, with 2.4 million other Americans committed to ONE: The Campaign to Make Poverty History, your voice can help millions of poor people in the world lift themselves out of poverty through trade. Join the ELCA e-advocacy network at www.elca.org/advocacy to stay informed about how you can take action in support of fair trade.

To learn more, click here  to read the entire ONE Lutheran trade fact sheet.