Contact: Hope Chu 202 463 2265 (office)

WTO "Doha Development" Round Will Not Aid Development

Wolfowitz statements ignore World Bank's history in poverty

World Bank president Paul Wolfowitz has spoken optimistically about the upcoming round of World Trade Organization (WTO) negotiations taking place this week in Hong Kong, claiming that free trade is the "missing link to jobs and opportunity," and that developing countries need access to markets to escape poverty. However, critics of the World Bank and the International Monetary Fund (IMF) say that further trade liberalization will not help poor countries, but will continue to impoverish and marginalize them in the global economy.

"The number of people in the world living on under $1 a day has increased, not decreased, since the founding of the WTO," said Sameer Dossani, Director of the 50 Years Is Enough Network. "More free trade does not equal less poverty; a study released by the World Bank itself predicts that removing wealthy countries' agricultural subsidies will result in rising world prices for food and agricultural goods. The same study also predicts that nearly 80% of the gains from the proposed Doha agenda will benefit wealthy countries. These outcomes can hardly be considered good for development."

"The World Bank's assertions assume a causal relationship between a free trade agenda and economic growth and poverty reduction," said Hope Chu, Communications Coordinator at the 50 Years Is Enough Network, "This is a gross overstatement. Recent studies comparing economic growth in developing countries between 1980 and 2000 - the years that many countries began to adopt free trade regimes - with growth during the previous 20 years show that most developing countries experienced a significant drop in growth in the second period."

World Bank and IMF critics point to the institutions' involvement in promoting free trade to developing countries as a major cause of poverty. Chu says IMF and World Bank loan conditions on trade have led to increasing trade deficits and a decline in real wages and formal employment. "For decades, the World Bank and IMF have required countries to drop tariffs, quotas, and other import restrictions," said Chu, "These policies allow consumer goods manufactured by well-subsidized producers in developed countries to flood developing countries' markets, driving local manufacturers and farmers out of business, and resulting in a dramatic rise in unemployment and poverty in those countries."

The World Bank and IMF have also unveiled an "aid for trade" program during the lead up to the Hong Kong ministerial. "This scheme does nothing to address the fundamental injustice of the trade agreements," said Dossani, "The institutions have framed it so that developing countries would be rewarded for agreeing to trade agreements tilted towards developed countries. There is not any real indication of where the money would come from to implement them, and even if implemented, these programs are even more likely to benefit elites in the North and the South, rather than the poor."

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