Reducing disparities

AIM: Discuss the different ways in which disparities can be reduced with an emphasis on trade and market access, debt relief, aid and remittances. Evaluate the effectiveness of strategies designed to reduce disparities.

Free vs Fair Trade: case study Windward Island
1.List the reasons why the Windward Islands became involved in
banana production for export to the UK
2.What were the disadvantages of banana production in the Windward
Islands?
3.Despite farming difficulties, what were the outcomes of the banana
trade with the UK?
4.What occurred to change trade in Caribbean bananas?
5.What regions benefitted from this change?
6. What were the advantages of banana production in these areas?
7. What were the consequences of banana production in these areas?
8.What were the consequences of Free Trade for the Windward Islands?
9.What has the introduction of Fair Trade done for the Windward
Islands banana producers?

Windward Island...an update Oct 2009 Still a price war Want EU help – storms, pest costs This year: 50% red in exporting farmers (Dom), 30% St Vincent West African plantations also http://www.guardian.co.uk/environment/2009/oct/11/banana-price-war-supermarkets AID and Fair Trade with OXFAM

Trade Case study 2 OECD conference 2008

Trade Case study 1 OECD conference 2008

SAP
Privatisation of state enterprises to try and attract FDI
Remove tariffs and barriers to allow FDI and imports (less protection for home industries)
Reduction in government spending
CASE STUDY: UGANDA Read the article and decide if Uganda’s SAP has been beneficial

DEBT Why?

Aid: HIPC Post-Completion-Point Countries Benin Guyana Niger Bolivia Haiti Rwanda Burkina Faso Honduras São Tomé & Príncipe Burundi Madagascar Senegal Cameroon Malawi Sierra Leone Central African Republic Mali Tanzania Ethiopia Mauritania Uganda The Gambia Mozambique Zambia Ghana Nicaragua Interim Countries Afghanistan Democratic Republic of the Congo Guinea Bissau Chad Côte d'Ivoire Liberia Republic of Congo Guinea Togo Pre-Decision-Point Countries Comoros Kyrgyz Republic Sudan Eritrea Somalia

Different types of aid BILATERAL Aid given from one country to another in the form of money, goods or services MULTILATERAL Aid given from several countries through large organisations such as the World Bank TIED AID (Conditions! ) E.G. the recipient country may have to agree to spend the money in particular ways or can only spend the money on goods from the country giving the money SO WHAT’S THE PROBLEM?

BAND AID 1984

Remittances ‘ a payment of money sent to a person in another place’ (Princeton) Latin America & Caribbean 2008 - $69bn, 2009 - $64bn Why? Effect 1m households will not receive money in 2009, 4m will receive 10% less IMF 65% of LA migrants in USA (75% of all remt) 2009 2010 Germany -2.5 0.1 France -1.9 0.7 Italy -2.1 -0.1 Spain -1.7 -0.1 Japan -2.6 0.6 UK -2.8 0.2 Canada -1.2 1.6 USA -1.6 1.6

Trade AUSTRALIA AUSTRIA BELGIUM CANADA CZECH REPUBLIC DENMARK FINLAND FRANCE GERMANY GREECE HUNGARY ICELAND IRELAND ITALY JAPAN SOUTH KOREA LUXEMBOURG MEXICO NETHERLANDS NEW ZEALAND NORWAY POLAND PORTUGAL SLOVAK REPUBLIC SPAIN SWEDEN SWITZERLAND TURKEY UK UNITED STATES OECD WTO (replaced GATT) EU BILATERAL

GATS Jan 1995 Framework within which firms and individuals can operate. 2 parts: a) general rules & disciplines b) national “schedules” - countries’ specific commitments on access to their domestic markets by foreign suppliers. E.g. a country making a commitment to allow foreign banks to operate in its territory may limit the number of banking licenses to be granted (a market access limitation). It might also fix a limit on the number of branches a foreign bank may open (a national treatment limitation ). Predictability! ‘ The liberalization of trade in goods, which has been promoted through negotiations in the GATT over the past 50 years, has been one of the greatest contributors to economic growth and the relief of poverty in mankind's history.’ (World Trade Organization) SRI LANKA - telecommunications ‘

Millions of US Dollars Share (percent) Population PerCapita (Dollars), 2008 Baja California Norte $342 1.4% 5,595,760 $61 Sonora $318 1.3 2,473,678 $129 Chihuahua $475 1.9 1,661,813 $286 Coahuila $300 1.2% 2,648,330 $113 Nuevo Leon $331 1.3% 1,267,087 $261 Tamaulipas $512 2.0% 6,960,799 $74 Total Border States $2,278 9.1% 20,607,467 $154 Rest of the States $22,867 90.9% 65,467,584 $349 National $25,145 100% 106,682,518 $235.70

NATIONAL TREATMENT - Forbids governments from favouring domestic firms over foreign-based companies. MARKET ACCESS - Guarantees irreversible/unrestricted access to the markets of other member countries. DOMESTIC REGULATION - Members must illustrate that there are no unnecessary barriers to trade in services which discourages governments from passing and enforcing env, labour & health reg. EXPANSION RULE - Member countries commit to successive negotiations to expand the agreement and increase the number and type of services that will be included. Create further problems. SECURITY EXEMPTION - Governments are exempted from WTO rules governing trade in goods and materials it considers necessary to protect ‘essential security interests’. This permits subsidies to the aerospace and military industries & encourages traffic in arms. PENALTY RULE - Countries can’t change their commitments within the first three years and changes made after three years require countries to negotiate ‘compensatory adjustments’. This means a country will have to agree to compensate all other member countries.

CAP - The Common Agricultural Policy (1962)
After World War II Europe wanted to be agriculturally self-
sufficient and protect its farmers. 2 ways :
1Farmers are paid for their produce at an agreed price even when the market
price falls. Therefore the EU buys in supplies of the food commodities
produced in its member states when they are in oversupply. When supply
cannot meet demand the stocks are sold onto the market.
2.Tariffs are applied to specified goods imported into the EU. These are set at a
level to raise the World market price up to the EU target price. The target price
is chosen as the max desirable price for those goods within the EU. Quotas are
also used as a means of restricting the amount of food being imported into the
EU.
BARRIERS TO TRADE – SUBSIDIES AND TARIFFS

Achievements Problems More was produced since farmers could buy more fertiliser/machines Destruction of hedges destroys wildlife/soil erosion Farmers/rural community kept alive High cost of subsidies High income for farmers LEDCs find it difficult to import food into EU / Undercut Surplus one year can offset a crop failure the next Creation of food mountains and lakes

THINGS HAD TO CHANGE!

SET-ASIDE Farmers with over 20 hectares of land must now leave 10-15 % uncultivated and they receive a grant. GRANTS Payments can be made to farmers to improve their land, to use new techniques or because they farm in a difficult place. UK has most of the largest farms in the EU. Some are areas are difficult to farm and are officially known as Less Favoured Areas. In LFA further payments were given based on the number of animals kept, to ensure people could continue to farm in those regions. QUOTAS More milk and dairy products are produced than consumed. Farmers are told how much milk they can produce and this was introduced in 1984. If farmers produce more than their quota they are fined. 2004 – farmers were paid 78p per litre for milk produced. Quotas and set-aside was introduced to reduce these mountains.

45 per cent of the EU budget is spent on CAP. Prince of Wales = approx $1,300,000 last year, the Queen approx $1,000,000 . One person received $3.5m for one farm. Cancelling debt and giving aid is less than the amount given to EU farmers. said rich countries supported their farmers to the tune of pounds £154 bn a year "10 times the amount given in aid to Africa. Not just the EU – US farmers are subsidised heavily. EU also pays export subsidies to EU farmers - excess is ‘dumped’ on world markets. EU exports to milk to Brazil, sugar to South Africa for example. Agriculture in the EU = 3% of GDP, but its 90% of Africa’s. Meanwhile corn (e.g. Malawi) is kept out of the EU.

Current situation with cereal
Falling stocks
World surplus of 18% this year (30% in mid-2000s)
Wheat prices are high
Production is up though
How are governments responding?
North Africa:
Morocco cut import tariffs, may subsidies importers
Egypt signed a deal with Kazakhstan
Benin, Senegal got rid of tariffs
Ethiopia has banned exports
Pakistan banned wheat export to Afghanistan
Malaysia going to increase production

Solutions in Kibera
One of the largest in the world is Kibera, with an estimated population of over one million.
Kenya’s Ministry of Housing, in partnership with UN-Habitat, has embarked on an upgrading project — the development of apartments, with financial instruments provided for residents of Kibera to access loans for purchase of their properties.
The project is in its early stages, but if successful, it could be used as a blueprint for future urban upgrading projects.
Building upwards means better utilisation of space and the provision of legal ownership documents ensures housing security for the urban poor.
A unique approach is that each unit has an extra room that can be leased to ensure there is income to cover monthly repayments.
A change of approach in land tenure and land management is vital for Africa. While it is the least urbanised continent, by 2030, it is estimated that Africa’s urban population will exceed the total population of Europe.
While most developed nations have land records that cover most of their territory, only a small number of developing countries have land records covering 30 per cent of their territory.
Corruption is a big factor. The lack of equity and integrity in land allocations and ownership has also been a driving force for conflicts on the continent.
Without a doubt, just and sound land policies are required for peace-building.

Reducing disparities

by YCIS Beijing on Apr 12, 2011

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