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Global Poverty Reduction 2001 : III. Policy Actions to Help Poor People Gain from Globalized Markets
A. Actions by developed countries53. Estimates of gains for developing countries from full merchandise trade liberalization worldwide exceed US$100 billion per year. This is more than twice the official development financing, which amounted to US$47.1 billion in 2000. Estimates that take into account full services liberalization and productivity responses are much higher, over US$400 billion (World Bank 2001c, IMF/World Bank). 54. The EU's Everything But Arms initiative, recently ratified by the Council of Ministers, is an important step forward in opening up markets to the 49 least developed countries (LDCs). All imports, except arms, from these countries will enter the EU free of duties and quotas. Tariffs on sugar, rice, and bananas will be phased out over the next eight years. New Zealand and Norway have also committed to providing duty- and quota-free access for exports from LDCs. Among G7 countries, Canada, Japan, and the US have also implemented initiatives to increase market access for LDCs, but they fall short of liberalization across all products. Recent World Bank studies show that if Canada, Japan, and the US, in addition to the EU, gave free access to imports from the 49 LDCs, these countries' net exports would increase by about 11 percent (2001d). Non-oil exports from sub-Saharan Africa would expand by 14 percent (2001b). The costs to other countries of such preferential access would be minimal. Developed countries should fully open their markets to developing countries. 55. Agriculture subsidies in developed countries undermine developing countries' exports by depressing global prices and pre-empting markets. For example, developed countries give some US$266 billion annually for farm subsidies (1997-1999), which accounts for about 35 percent of gross farm receipts. This amount is more than five times the level of all official development assistance to developing countries. Developed countries should progressively reduce the agricultural subsidies and high tariffs on agricultural goods that make it difficult for developing countries to penetrate markets of developed countries. 56. Developed countries are not only challenged to further liberalize trade, they also face important responsibilities to work toward a more robust international financial architecture. A strong international architecture that can help prevent and manage financial crises is a global public good that would benefit all countries and peoples, including the poorest, who have fewer resources to fall back on when crises strike. developed countries should continue to support initiatives to ensure the stability of financial markets. In addition, they should continue to help improve the external sustainability of the heavily indebted poor countries by actively supporting and participating in the HIPC initiative. 57. Related to trade issues that are the focus of this report, agreements on investment, intellectual property, and standards should also take into account the needs and implementation capabilities of developing countries. Greater attention needs to be given to the effects on developing countries of changes in standardsmany developing countries are not adequately equipped to deal with product standards, including sanitary and phytosanitary standards (Wilson 2000).and to the creation of mechanisms to facilitate participation by developing countries in the setting and enforcement/implementation of standards. Ongoing legal action on trade in pharmaceuticals and debates on how to deal with environmental and labor standards are key tests of whether the existing system can find answers to new problems in ways that are least harmful to trade.
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