Rav recognizes what the UN argues in their 2004 report on strategies to meet the Millennium Development Goals that the "the slogan 'trade, not aid' is misguided." (p46). "Trade, not aid" is a common refrain used by conservatives arguing against increasing aid to Africa, but also by an increasing number of social entrepreneurs seeking to move beyond government foreign aid which is not sustainable. The debate is no less intense as two past posts from my other blog indicate. A Question of Nets Malaria and Social Aid A Question of Nets Malaria and Social Aid 2
Trade and aid are not mutually exclusive. Trading with other countries has helped transform Asian developing economies and slashed poverty. It is not the whole story and it is not a choice of either supplying aid to help keep people alive or compelling trade to force developing countries to pull themselves up by their own bootstraps. First, you have to have boots.
The report is also explicit in its belief that, "in the long term, free trade is in everyone's best interest", meaning that both free trade and fair trade must be realized to achieve the Millennium Development Goals. Putting these two concepts together in the same beaker may be more difficult than combining the concepts of private trade and public aid. Rav provides an example by pointing out that the UN report is at odds with the Commission for Africa, whose own report emphasized poor countries' right to protect their economies (pdf). I won't deny the need for poor countries to protect their economies, which is one of the premises of fair trade, the challenge will be in creating the correct balance, the argument will be on where the point of balance is.
Abolish agricultural subsidies. They are both expensive and harm poor countries by making exports from rich countries cheaper than goods grown at home! (p46). Rich countries are being neither fair nor free in their practice. For the first I will turn to to this Stigliz article from the Ghana Graphic Online and for the second to my favorite Libertarian-light economist Tyler Cowen – Kill the Farm Bill.
Manufactured goods made in poor countries when exported to rich countries face crippling import tariffs that make them too expensive to succeed. Because rich countries have agreed various free-trade initiatives through groupings like the EU, many place higher tariffs on goods from poor countries than on goods from other rich countries.
Barriers placed by developing countries are meant to prevent goods flowing in from rich countries, also act as trade barriers between fellow poor countries - preventing, for example, trade between neighboring African states, which could both help those economies grow, but also help reduce conflict between African states. The UN report calls for a quick reduction to zero of tariffs on imports of nonagricultural goods proposing a deadline of 2025 for the removal of their barriers for developing countries and 2015 for rich countries. (p46-7). Meaning that there is a ten (10) year gap before fair trade and free trade are effectively blended together. Prior to that time they are likely to be an admixture of competing policies and philosophies.
Rav also looks at free trade in services being a controversial idea, "with many arguing that poor countries could be forced to sell off their remaining public services and to remove regulations on things like banking to fulfill the requirements of the World Trade Organization's GATS initiative". UNESCO has raised the issue of education, university quality and mobility in the past. The GATS initiative is another example of a practice I need to learn more about where developing countries struggle with their own economic engines, but developing countries get to write the owner's manual. I am not saying it is necessarily wrong just needs to be studied more. More on that and other issues raised by Rav in another post.
