CAFOD response to UK government white paper on trade issues

The government today published Trade and investment for growth White Paper. CAFOD's economics analyst Christina Weller said: "During the economic crisis, farming and setting up small businesses kept heads above water in the poorest countries. They are the backbone of most poor economies and the way out of poverty for three quarters of their population. Investing in these small-scale sectors of poor economies is critical, as is tailoring trade policy to their needs. They are particularly vulnerable to surges in imports and unfair competition – problems that remain to be tackled in the WTO’s development round or in spending on aid for trade.

"We are meant to have learnt the lessons of the economic crisis, but the government’s new strategy relies on outdated assumptions about trade, growth and development. Vince Cable cited that open economies grow three times faster - but growth is not enough.

"To paraphrase Kennedy and Cameron, measuring growth captures everything except what matters. CAFOD believes that growth is only a tool that must be used to reduce poverty and increase wellbeing, without jeopardising the environment. Recent research found no strong relationship between export or even regional trade strategies and this 'quality' growth. In fact, our strongest finding was that there was a negative relationship between a high dependence on exports and improvements in human development.

"Clearly other things than how open an economy is matter. Bangladesh is often used as a liberalisation success story, but only 15% of its GDP comes from exports, and Bangladesh has worked hard to foster micro-entrepreneurship among women (not without difficulties).

"It is too early to say whether the government’s trade strategy will deliver for the poorest. So much of the detail on aid for trade or making the Doha Round work for poor countries is not yet set out and so we can only be sceptically optimistic."