Rich nations call the shots

Justin Frewen

For the majority of economists the critical factor in successfully tackling international poverty is economic growth.

Such required growth, they argue, can only be achieved through the increased promotion of free trade on a global basis.

The failure to adequately integrate "developing" countries into the world market is therefore the real obstacle to the elimination of poverty.

As Mike Moore, ex-head of the World Trade Organisation (WTO), claimed in August 2008: "Seven years ago, we introduced at Doha what was to be 'a development round'. All trade rounds are. President Kennedy, who introduced the Tokyo round, famously said: 'This will lift all boats and help developing countries like Japan.' Case made, I would have thought."

However, Richard Peet, a development theorist, argues that despite the surge in international trade over the past few decades among developing countries their increased exports have added little to their national income.

The dominant free trade model has been heavily criticised for preventing "developing" countries from introducing economic reforms suitable to their own growth and poverty-reduction needs.

By imposing a "one size fits all" approach, states in the global South have been greatly disadvantaged.

As Britain and the US industrialised, they freely applied tariffs and other economic policies to protect strategic industrial sectors.

Today, these options have been greatly curtailed.

As Ha-Joon Chang, the Cambridge economist, cogently argues, despite "developed" countries having adopted interventionist economic policies to facilitate their own growth, they now prevent "developing" states from adopting similar measures.

In this respect, the WTO, the foremost international trading body, has frequently been criticised. Established with the principal objective of liberalising and promoting free trade to foster global economic growth and development, the actual contribution of the WTO to increased trade is debatable.

The American economist Andrew Rose, a free-trade advocate writes: Membership in the GATT/WTO is not associated with enhanced trade, once standard factors have been taken into account. To be more precise, countries acceding or belonging to the GATT/WTO do not have significantly different trade patterns than non-members."

Many in the Southern Hemisphere (South) believe the WTO acts as a lever for the Northern Hemisphere (North) to increase its economic influence. Although constantly demanding market liberalisation, the North is slow to do so itself.

Perhaps most damning of all is the fact that the majority of trade agreements, both inside and outside the WTO, have relatively little to do with the promotion of free trade but instead are more concerned with the imposition of rules and the creation of a homogenous global marketplace, where the South is at a disadvantage.

The real problem is therefore not the South's lack of integration into the world market but rather the terms under which it has been integrated.

Rather than helping the South reduce poverty, the current international free trade structure is actually aggravating it. Already in a weakened position, the South is now deprived of many of the economic policies it needs to tackle them.

Justin Frewen is a Wanganui-based United Nations consultant, who has served the UN on humanitarian missions for almost 20 years.