Referring to yesterday’s post about EU providing aid for Africa, I’d like to explore it a bit further. A well known proverb says that “don’t give hungry man a fish, teach him how to fish”. This could be converted into “don’t let poor countries rely on your aid, give them a chance to make their own money”. Mary Robinson, former President of Ireland states it well:

If poor countries could increase their share of world exports by just one percent, they could lift 128 million people out of poverty. In Africa alone, this would generate US$70 billion – more than five times what the continent receives in aid.

As I have understood, the main one of the main problems, or obstacles for development is subsidies. Rich/developed/the North nations pay subsidies for their producers to export their products or just for them to stay in bussiness. This way producers can keep the prizes low and dump the product for example rice to poor countries making it impossible for local farmers to compete thus keeping them poor or even worsening their situation. Edward Gresser gives a good example of this with olive oil:

The olive tree grows all around the Mediterranean, and should bring income and rural employment to Morocco, Tunisia and Lebanon – but it doesn’t. Each year the European Union spends $2.5 billion or so to supplement the incomes of growers in Spain, Italy and Greece. The subsidy, at more than two dollars for every dollar of global olive oil trade, keeps Moroccan and Lebanese oil out of American supermarkets, even as tariffs and quotas limit oil sales to Europe.

President Yoweri Museveni of Uganda has stated:

“By blocking value-added products, our partners in the world kill the following opportunities: ability to earn more foreign currency, employment, enhancing the purchasing power of the population, expanding the tax base for the governments of Africa and the chance to transform African societies from the backward, pre-industrial states – in which they are now – to modern ones by building a middle class and a skilled working class.”

The WTO delegates in Hong Kong last December, were in charge with an agricultural trade reform plan, which was designed to open markets for farmers and in particular to cut the subsidies, tariffs and quotas of the WTO’s wealthy members. They were not able to do this. Export subsidies will continue untill 2013 and after this countries can simply increase the WTO-legal subsidies, domestic subsidies to keep the “bussiness as usual”. Doesn’t sound like free trade that rich nations have been after, does it? Another proverb says: “Don’t talk the talk, if you can’t walk the walk”!
Future plans of rich nations is to pressure developing nations to open their markets in services (finance, telecommunications, distribution, education, postal services, computer and business services etc.). Road side food stalls and small bussiness competing with hypermarkets, right.
Further reading:

Africa Needs Fair Trade, Not Charity

Fate of the Farmers in Balance

QUICK GUIDE: THE DISASTER THAT IS THE HK MINISTERIAL DECLARATION

DECEPTION – EU to Still Provide 55 Billion Euros in Export Supports Even if Export Subsidies are Cut