From poverty to power - Oxfam-Québec

5 THE INTERNATIONAL SYSTEM TRADINGBarriers: Trade rules allow rich countries to use tariff and non-tariffbarriers to keep developing-country exports out of lucrative markets.The average US tariff for all imports is 1.6 per cent, but this rises to14–15 per cent for some least developed countries (LDCs) in Asia,such as Bangladesh, Nepal, and Cambodia. As a result, in 2004 the USTreasury collected roughly the same amount in tariff revenue onimports from Bangladesh ($329m) as it did on imports from France($354m), even though France exports 15 times as much to the USA.In the same year, US aid to Bangladesh was just $74m. 52Subsidies: Agricultural trade rules allow US and EU agriculturalsubsidies to drive down world prices and make it impossible for poorproducers to compete. The value of subsidies and other support toagriculture in OECD countries now runs at $268bn a year, more thandouble the value of global aid. 53 Due to massive subsidies and othersupport, the USA is able to export its cotton and wheat at 35 per centand 47 per cent respectively of their cost of production. The EUexports sugar and beef at 44 per cent and 47 per cent respectively oftheir internal cost of production. 54Forced liberalisation: Trade rules oblige some poor countries toreduce tariffs, removing a key source of government revenue, turningartificially depressed world market prices into local prices, andundermining both farmers’ livelihoods and longer-term efforts toindustrialise the economy. The World Trade Organization, along withmany bilateral and regional trade agreements, seeks to elevate principlesof deregulation, liberalisation, and equal treatment between foreignand domestic companies to a status akin to that of human rights, eventhough they run counter to the historical experience of successfulcountries. Such agreements tend to erode the ‘policy space’ needed toupgrade the economy and to build strong national champions inmodern industries. For example, limits on foreign investment in keyindustries, used by (among others) Japan, South Korea, and even theUSA during their take-off periods, now fall foul of the WTO’s ‘nationaltreatment’ principle; the widespread use of ‘local content requirements’to oblige companies to source from local suppliers violates theWTO’s TRIMS (Trade Related Investment Measures) agreement, aswould Taiwan’s use of export requirements, obliging foreign companiesto reach a certain level of exports. 55319