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. Last Updated: 07/27/2016

Time to Lead by Example

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As finance ministers gather in Washington this weekend for the World Bank and International Monetary Fund annual meetings their focus will be on implementing the historic compact between rich and poor nations that emerged from a year's worth of global summits in Doha, Monterrey and Johannesburg. The agreement is simple: Rich and poor countries have pledged to speed poverty reduction and progress toward the 2015 Millennium Development Goals, including urgent improvements in health and education levels for the world's poorest people. Action on trade is one of the best places to start.

At the World Trade Organization summit in Doha last November, world leaders agreed that trade talks should focus on a development agenda addressing the problems faced by poor people. But rich countries need not wait for the WTO ministerial conference in Mexico next year to make good on their pledges. They can lead by example now by reducing tariffs, subsidies, capricious product standards, protectionist anti-dumping actions and other impediments to developing countries' efforts to compete in global markets.

Taking these steps won't be easy. Vested interests will try to protect the advantages they enjoy under the status quo or indeed push for more. But the momentum for change is large and growing. Civil society groups that successfully pressed for action on debt reduction and landmines are insisting that developing countries receive a fair shake in the global market place. The United Nations, multilateral financial institutions, academic economists and leaders of developing countries are all urging that rich countries show the way when it comes to trade.

Major trading nations have taken steps in the right direction. The United States, Europe, Japan and Canada have adopted programs to improve market access for exports from the poorest countries. There are encouraging signs in the recent passage of Fast Track Authority in the United States, and talk in Europe and the United States of addressing agricultural subsidies. But there have also been recent and damaging setbacks, and there is still a long way to go. Now is the time to build on these pledges and partial initiatives by removing the remaining impediments to developing countries' participation in the global economy.

Tariff peaks -- exceptionally high tariffs on goods that poor countries are best able to produce -- can be particularly pernicious. In the United States, tariff peaks are concentrated on textiles and clothing; in Europe and Japan on agriculture, food and footwear. These are precisely the labor-intensive products that offer the first step up the technology ladder to developing countries. Tariffs and quotas for textile exports to developed countries cost developing countries an estimated 27 million jobs. Every textile job in an industrialized country saved by these barriers costs about 35 jobs in these industries in low-income countries, where being a bread winner literally means putting bread on the table. Meanwhile, in the high-income countries, tariffs on food and clothing raise prices, straining the household budgets of low-income families.

Escalating tariffs -- duties that are lowest on unprocessed raw materials and rise sharply with each step of processing and value added -- undermine manufacturing and employment in industries where developing countries would otherwise be competitive. Escalating tariffs in rich countries help confine Ghana and Ivory Coast to the export of unprocessed cocoa beans; Uganda and Kenya to the export of raw coffee beans; and Mali and Burkina Faso to the export of raw cotton.

Agricultural subsidies in rich countries of about $350 billion a year -- nearly $1 billion per day -- undercut poor farmers in developing countries. These subsidies, which go mainly to large agribusiness corporations, are seven times the $50 billion that these countries provide annually in foreign aid. Sugar prices in the United States and Europe are three times higher than in the world market due to subsidies and protection, to the detriment of low-cost producers such as Brazil. Does it really make sense to be subsidizing production of sugar beets in Northern Europe?

Other non-tariff barriers -- standards and anti-dumping actions -- are often applied in ways that impose undue burdens on developing country producers and sometimes amount to underhanded protectionism. To meet EU standards, mango pulp processors in India must keep detailed records of each delivery from the small farmers who grow the fruit. Would it not be better to focus directly on quality standards instead? Meanwhile, anti-dumping actions hit especially hard at the small countries and small firms, who lack the deep pockets needed to demonstrate in court that they are not selling at less than the cost of production.

Developing countries are working hard to become more competitive and are eager to enter the international market place given a fair chance to do so. I have heard this again and again in meetings with leaders of developing countries around the world. Give us market access, give us a level playing field for our products and goods, give us a trade partnership that is more than just in name. That is what these leaders and many others are saying.

The world is watching to see how the leaders of the rich countries will respond.

James D. Wolfensohn is president of the World Bank Group. He contributed this comment to The Moscow Times.