Thursday, December 14, 2006

Trade on Human Terms

Event Title: Trade on Human Terms
Sponsor: Carnegie Endowment for International Peace
Location: Carnegie Endowment for International Peace
Date: October 18, 2006
Time: 12pm - 2pm
Approximate Number of Attendees: 100
Intern Attending: Kristin Broyhill

Speakers: Hafiz Pusha, UNDP Asia-Pacific Regional Director; Sandra Polaski, Carnegie Endowment; David Walters, United States Trade Representative.

In July 2006, the United Nations Development Program published the Asia-Pacific Human Development Report: Trade on Human Terms, concentrating on the needs of balanced trade, transitional periods, trade protections and free trade agreements among the developing Asian countries.

Trade liberalization carried promises of increased development leading to poverty reduction. However, the WTO failed to properly manage globalization, which resulted in an unequal balance of trade. This in turn led to unequal development within and among regions. Looking at these results, it can be argued globalization has failed to deliver its promises to the masses.

Beginning in the 1980’s, Asia’s strong holds, China and India, took advantage of trade liberalization and built strong economies via their manufacturing and service industries, respectively. However, with China and India’s regional and global trade domination, the area’s Least Developed Countries (LCDs) were unable to compete in and had little to no access to their regional trading markets; much less the global markets. This trade imbalance left LCDs further behind in development and poverty alleviation. Special treatment of LDCs regarding tariffs and critical economic sector protections is necessary in order to enable LCDs to survive and specialize internally before being exposed to the global market.

Since the 1980’s, export product numbers and revenue throughout Asia-Pacific have soared. What is not reflected in those numbers, however, is the increased unemployment rate, decreased wages and depleting working conditions. These have developed partly in response to a lack of monitoring, and increased implementation of competitive quotas by international companies.

To put uneven growth and the regional trade inequality into perspective, in the 1990’s the manufacturing sector of India grew by 11 percent, while job growth was less than 1 percent. Asia-Pacific’s textile exports added up to 18 billion dollars, but the breakdown consisted of almost 15 billion from China, close to 3 billion from India, and the rest split amongst the fourteen other regional LDCs. LDCs have little or no access to China’s market. In 2005, the fourteen Asia-Pacific LDCs together exported 300 million dollars worth to China, while importing 4 billion from China.

The speakers noted that the rural agricultural economies have been hit the hardest by globalization. Western subsidies and free trade agreements have enabled Western producers to sell their products in developing countries at prices that undercut local producers and their product prices.

Trade is an important part of poverty reduction. However, the WTO and developing countries must look at employment implications sector by sector and plan accordingly in order to absorb and train those recently unemployed. To ensure a balance and smooth transition, protections and gradual sequencing of the steps toward trade liberalization need to be put into place and monitored over a number of years to minimize destabilization, poverty and unemployment.

Most importantly, argued the speakers, rather than a focus on production numbers, trade policy must create a middle class of consumers in order for globalization and trade liberalization to be profitable and sustainable for all.

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