At the present moment 925 million are hungry and more than a billion live on less than $1.25 per day. Poor nutrition causes 45% of all deaths of children under five, or 3.1 million each year.
In terms of deaths this is equivalent to a Holocaust every two years, and that only factors in fatalities of under-fives. Countless millions more perish each year due to their impoverished states.
Despite this hideous stain on humanity, the menace of poverty and aid dependency has been successfully overcome to a large extent in countries such as China, where 600 million have cast off the shackles of poverty through trade, not aid.
No nation has ever become sustainable and wealthy through aid, while many have prospered from free trade where international resources can be allocated most efficiently to effectively utilise each region’s comparative advantages. While global trade barriers have come down since the Second World War, agricultural trade remains the most protected through tariffs, quotas, subsidies and regulations.
This is especially significant for developing nations as the majority of their workforce is employed in agriculture, while this industry constitutes a much higher proportion of developing countries’ GDP when compared to the advanced economies.
In 2011 OECD countries spent US$252 billion on support for their agricultural sectors. European cows are subsidised at the rate of $2 per day, meaning they in effect receive more than over a billion humans.
Health and safety regulations are also prone to abuse, for example Dutch tulips are effectively prohibited from entering Japan due to requirements that imports be sliced down the middle for inspection. American consumers pay double the world price for sugar, while Australian and EU residents pay significantly more for bananas due to various trade bans and restrictions.
Regulations without valid scientific foundation are common and can have devastating consequences. For example, a World Bank report found that further European Union regulations on aflatoxin (a carcinogenic fungus) would see food exports by some African nations plummet by 64%, but only reduce the number of deaths by 1.4 per billion annually.
Australiahas some of the world’s lowest agricultural subsidies and formal barriers to trade, but has much ‘hidden’ protectionism through regulations which have been found on many occasions to be scientifically invalid, such as for restrictions on Canadian salmon and New Zealand apples. When there is no genuine health risk, these regulations simply result in higher prices for consumers.
Pleasingly, Australia, the EU, US, Japan and others have instituted schemes that provide tariff and quota concessions for trade with the world’s Least Developed Countries (LDCs). This is particularly important for further alleviation of poverty as LDCs typically have a higher proportion of their population in absolute poverty, meaning that further gains must be made in these nations to achieve poverty targets.
In an ideal world, trade barriers would be removed by all nations on all trade. A 2003 World Trade Organisation report estimated that a ‘good’ outcome to the agriculture focussed Doha round of negotiations that have since stalled would have provided between $290 - $520 billion in benefits by 2015 for both developed and developing countries while bringing 144 million more out of poverty.
However, in the real world powerful political pressure groups mean that significant, sudden cessation of agricultural protectionism looks unlikely in the short term. Farmers and agricultural companies opposed to a removal of their protections hold significant political influence in a variety of nations. That said, there should be consistent pressure on protected economies to embrace the benefits of free trade.
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