THE WISDOM FUND: News & Views
December 17, 2005
The Washington Post

World Bank Reconsiders Trade's Benefits to Poor

'They can say even the World Bank doesn't think free trade would do much for reducing poverty.'

by Paul Blustein

In a recently released book, the World Bank says that the potential benefits for the world's poor of a far-reaching trade deal "are significantly lower" than it had previously thought.

The bank has long served as a source of authority for claims -- by commentators, public officials and others -- that the ongoing trade negotiations, known as the Doha round, could lift multitudes of people out of poverty. The scaling back of the bank's projections is noteworthy, and comes at a sensitive time, as the Hong Kong meeting of the World Trade Organization remains stalled due to fierce disputes among the WTO's 149 member nations.

The bank estimated three years ago that freeing international trade of all barriers and subsidies would lift 320 million people above the $2 a day poverty line by 2015. Now, however, bank economists project the figure at between 66 million and 95 million people. And even that assumes the WTO negotiators would completely abolish tariffs, quotas and other obstacles to commerce - a fanciful scenario, calculated only to show what a maximum deal would produce.

Assuming a more plausible outcome in which the WTO members agree to some deep cuts in tariffs and subsidies while stopping short of pure free trade, the reduction in the number of people below the $2-a-day line by 2015 would be only about 6.2 million to 12.1 million people, the bank now reckons. That is less than 1 percent of the people living below the line.

"This is a windfall for anti-globalists," said William R. Cline, a scholar at the Center for Global Development. "They can say even the World Bank doesn't think free trade would do much for reducing poverty.". . .

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Amy Chua, "Free-Market Democracy: Our Most Dangerous Export," Guardian, February 28, 2004

John Pilger, "The Rise Of America's New Enemy," New Statesman, November 10, 2005

[Since Mexico signed the Nafta (North American Free Trade Agreement) deal with the US and Canada in 1992, its annual per capita growth rate has barely been above 1%. Vietnam has grown by around 5% a year for the past two decades. Poverty in Vietnam has come down dramatically: real wages in Mexico have fallen.--Larry Elliott, "A look at Vietnam and Mexico exposes the myth of market liberalisation," Guardian, December 12, 2005]

[The growing intimacy between business and political leaders is leaving poor countries on the sidelines of the world trade game--Dominic Eagleton, "Trade secrecy," New Statesman, January 25, 2006]

[British households pay an extra 832 a year in grocery bills due to the huge EU subsidy system that is also depriving tens of thousands of African farmers of their livelihoods, a charity warns.--Maxine Frith, "EU subsidies deny Africa's farmers of their livelihood," Independent, May 16, 2006]

[ . . . the price of cotton is collapsing under the huge $4 billion subsidies given to agribusiness in the United States, which then dumps cotton on a world market with 50% reduction of price artificially.--Vandana Shiva, "Farmer Suicides, the U.S.-India Nuclear Deal, Wal-Mart in India and More," democracynow.org, December 13, 2006]

[The problem really is, is that the United States and the International Monetary Fund and the World Bank, all of which we, the United States, dominate, have for the last twenty-five, thirty years have insisted that in order to get the loans, which Haiti and these other countries, agricultural countries, need, in order to get those loans, Haiti had to change their economic system so that their country was open to competition from other countries on agriculture, trade, a number of other things. . . .

Well, it turns out that the competition doesn't do the same thing. And the main competition is the United States. So at this point, the United States exports over 200 million metric tons of rice every year to Haiti. And they're actually like our third biggest customer. And the reason is that our rice is cheaper than the rice that they could grow there themselves, because our rice is so heavily subsidized. A billion dollars a year of taxpayer money goes to rice farmers in the United States, plus we have a tariff. We have three different subsidies, three different programs that do that, plus we have a tariff that adds between three and 24 percent protection for our rice farmers. And as a result, the rich and powerful country of the United States, along with other rich and powerful countries in the world, have just really bullied these small countries into accepting our rice.--Bill Quigley, "The US Role in Haiti's Food Riots," democracynow.org, April 24, 2008]

[Shankara became one of an estimated 125,000 farmers to take their own life as a result of the ruthless drive to use India as a testing ground for genetically modified crops.--Andrew Malone, "The GM genocide: Thousands of Indian farmers are committing suicide after using genetically modified crops," Daily Mail, November 3, 2008]

[When McNamara took over the Bank, "development" loans (which were already outstripped by repayments) stood at $953 million and when he left, at $12.4 billion, which, discounting inflation, amounted to slightly more than a 6- fold increase. Just as he multiplied the troops in Vietnam, he ballooned the Bank's staff from 1,574 to 5,201. The Bank's shadow lengthened steadily over the Third World. Forests, in the Amazon, in Cameroon, in Malaysia, in Thailand, fell under the axe of "modernization". Peasants were forced from their lands. Dictators like Pinochet and Ceausescu were nourished with loans.--Alexander Cockburn, "McNamara: From the Tokyo Firestorm to the World Bank," counterpunch.org, July 7, 2009]

["free trade is by far a more formidable agent than war in the subjugation of a nation."--Nick Alexandrov, "Nothing to Celebrate: NAFTA at 20 Years," counterpunch.org, January 8, 2014]

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