Trade: Facts and Figures

A tea-plucker for Fairtrade [Fairtrade Foundation]

The global costs of unfair trade.
The real cost to real people.
The myth of ‘free’ trade.
Rich farmer vs Poor farmer

The Cost of Unfair Trade

World trade rules stifle the development of poor countries. A lack of income from global trade means that poor country governments can’t afford education facilities, health care and other infrastructure, such as roads and electricity, which would help to bring about the end of poverty.

$1.3bn – the amount developing countries lose every day due to unfair trade rules
£14 – The amount lost by developing countries due to unfair trade rules for every £1 they’re given in aid
50% – The drop in poor countries’ share of world trade since 1981. It is now just 0.4 per cent [3]

The myth of ‘Free Trade’

Many people believe that ‘free trade’ is the answer to ending hunger, disease and poverty. But can trade ever really be totally ‘free’? And would this be fair to small, undeveloped countries anyway?

16 countries in sub-Saharan Africa have lower trade barriers than the EU. Yet these countries are still struggling to improve living conditions for their people [4]
$2.6 billion – The amount rich countries admit Africa will lose every year if their tariffs are reduced by 30%, as rich countries are forcing them to do [5]
80% - the proportion of the production cost of rice which is subsidised in rich countries

The real cost of current trade policies

World trade rules have a massive financial impact on individual people in the world’s poorest countries, most of whom make their living from agriculture. Global poverty can only be ended if trade rules let the poor earn an honest wage, for an honest day’s work. Subsidies, tariffs and dumping currently prevent this from happening.

63.5% of people in sub-Saharan Africa make their living from agriculture. In the EU just over 4 per cent of people work in agriculture [6]
$3.9bn – the amount spent by the US on cotton subsidies in 2001/2002, 60% more than the entire GDP of Burkina Faso where two million people depend on cotton production to make their living [7]
689 million - the number of people living in sub -Saharan Africa, whose combined income is equal to the amount paid by the EU in agricultural subsidies [8]
£16 – the amount paid every week in taxes and higher food prices by a typical European family of four, which goes to prop up the Common Agricultural Policy, which has a disastrous track record of overproduction, environmental degradation, and food safety scares [9]

The real costs to real people

Many small scale farmers in developing countries rely on one crop for their entire income. If trade rules regarding this crop mean that they can’t get a reasonable price for it, they will struggle to make any living at all, their children won’t be able to go to school, they will go hungry and they may not be able to afford to grow their crop next season.

35 % - drop in the value of maize to Mexican farmers since the North American Free Trade Agreement in 1994 [10]
1.8m – the number of Sri Lankan families whose livelihood will be threatened by increases in cheap rice imports, resulting from rich country proposals. [11]
$16,028 – the average equivalent received by each EU farmer per year in agricultural support. [12] This is 100 times more than the average annual earnings of the rural poor in sub-Saharan Africa. [13]

Rich farmer vs Poor Farmer

1.5 hectares – average landholding in Ethiopia [14] vs 69.3 hectares the average agricultural holding in the UK. [15]
962 kg – average cereal yield per hectare in sub-Saharan Africa vs 7,122 kg in the UK. [16]
769 hectares - for every one tractor in sub-Saharan Africa vs 12 hectares for every tractor in the UK. [17]

Millennium Development Goals

Rich countries are failing to give sufficient aid and debt relief to allow poor countries to reach the millennium development goals. Trade could help counter-balance this short-fall, but rich countries are preventing trade from fully benefiting the poor.

184 million – the number of people who will still be going hungry in 2015 if current policies remain unchanged, according to the UN’s Food and Agriculture Organisation. [18]

Why it doesn’t have to be like this

Trade is central to every economy. World trade has grown at an unprecedented rate over recent decades, but the poor have seen little of the increase in global wealth. Whilst living standards have risen year-on-year for the rich, life expectancy in some poor countries is actually getting less.

10 – The number of times world trade has increased since 1970, whilst the number of people going hungry in Africa has doubled.
33 years - Life expectancy of a baby born in Zambia in 2001
47 years - Life expectancy of a baby born in Zambia between 1970 and 1975. [20]

What CAFOD wants from the WTO

Special and differential treatment for developing countries.

Poor country governments must be allowed to decide on trade policies that suit their development needs and help them to end poverty.
In agricultural negotiations, developing countries should be able to protect crops that are essential for food security, livelihood security and rural development from further liberalisation.WTO negotiations should accept the G33 special products proposal.
In the case of a drop in prices or an increase in the volume of imports, a Special Safeguard Mechanism should provide flexibility to developing countries to protect small farmers.

Stop trade distortion that generates poverty.

Stop dumping of rich country exports on developing country markets, which destroys the livelihoods of millions of poor farmers and threatens a country’s ability to feed itself.
Northern countries must commit to substantial further reform of their agricultural subsidy regimes.

Agriculture given a clear priority.

Agriculture is central in the battle against poverty. Securing livelihoods, food security, fighting hunger and promoting gender equality must be the key priorities in the negotiations.
Concessions given in agriculture by rich countries should not come at the expense of conditional liberalisation by poor countries in other areas of WTO negotiations

CAFOD is part of the Trade Justice Movement and Make Poverty History.

Footnotes:
[3] Taken from TJM website
[4] Taken from TJM website and according to the International Monetary Fund (IMF)
[5] UN Secretary General's report to the UN Preparatory Committee on Financing for Development, 2001
[6] FAOSTAT 2004
[7] CAFOD ‘Fair Trade and Cotton’ report
[8] CAFOD’s ‘Dumping on the Poor’ report
[9] CAFOD’s ‘Dumping on the poor’ report
[10] Interview with Victor Suarez, ANEC (Association of Small Producers), Mexico, June 2001
[11] FAO (1999) ‘Agriculture, Trade and Food Security Issues and options in the WTO Negotiations from Sri Lanka’
[12] Producer support estimates per European farmer 1998-2000 from OECD (2001) ‘Agricultural Policies in OECD Countries, Monitoring and Evaluation’ Paris: OECD
[13] Average income is US$163 per annum, The Commission for Africa (2004) ‘Commission for Africa: An overview of the Evidence’ London: The Commission for Africa
[14] Average income is US$163 per annum, The Commission for Africa (2004) ‘Commission for Africa: An overview of the Evidence’ London: The Commission for Africa
[15] European Commission (2002) ‘European Agriculture entering the 21st Century’ Brussels: European Commission, Directorate-General for Agriculture
[16] Figures for 2002, World Resources Institute (2003) ‘World Resources Report’ Washington DC: World Resources Institute
[17] Figures for 2000, World Resources Institute (2003) ‘World Resources Report’ Washington DC: World Resources Institute
[18] ‘Meeting Basic Needs’ - Statement by the Director-General of FAO at the FAO Panel on Agriculture and Sustainable Food Security in Africa , New York, United States of America, 27 April 2001
[20] UNDP Human Development Report on Zambia, 2003.

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