Friday, March 27, 2009

Trade out of Poverty

This is a policy I am putting forward at the Eastern Regional Young Liberal Policy Parliament:

Reclaiming classical liberalism: Having the Liberal Party of Canada support a “Trade out of Poverty” Agenda

WHEREAS, a significant factor of the Great Depression was the imposition of tariffs by nations against each other, stiflingly global trade and the global economy,

WHEREAS, the World Trade Organization predicts a 9% fall in world trade this year, the largest drop since the World War 2,

WHEREAS, exporting nations such as Canada, and developing nations will be the hardest hit by such a downturn in global trade,

WHEREAS, basic values of both classical liberalism and modern liberal internationalism are freedom of trade and freedom of global economic growth,

WHERAS, the Liberal Party must be a party which recognizes the positive role that globalization and the free market economy can have in alleviating global poverty,

WHEREAS, the “Trade out of Poverty” campaign, first launched in the UK, has drawn support from all sides of the House of Commons,

BE IT RESOLVED THAT, in a time of global economic trade downturn, this policy recommends the Liberal Party of Canada adopt a “Trade out of Poverty” Agenda.

Policy Background

-Have a Liberal government play a global leadership role in further opening its market up to international trade, particularly from the developing world, to help develop the trading economies of the developing world, lifting them out of poverty, and helping the Canadian economy grow and help reverse downward economic trends.

-Simplify trade rules to let developing countries share in world trade. “Rule of Origin” rules often cloud so-called free trade agreements. (Rules of Origin specify that the exports must genuinely have been made to a significant extent in the country it is intended to help – to prevent more developed countries evading tariffs by routing their exports through a low income country.) Existing Rules of Origin are so complex that many exporters find it more costly to prove compliance than pay the full tariffs. These rules also make it difficult for poor countries to participate in the complex supply chains - with components and processes carried out in a series of countries - which increasingly characterize international trade. At present fruit grown in one country, processed in a neighboring state and bottled in a third may fall foul of existing Rules of Origin even though it would comply if all operations were carried out in any one of these countries. So it is vital that future Rules of Origin recognize the cumulative value added in different Low Income Countries.

-Have a Liberal government lower Canada’s domestic and export subsides, as these discourage trade during an economic downturn even more, particularly with the developing world. Developing countries are particularly vulnerable to dumping of subsidised exports by rich countries. For example, EU farm subsidies amount to $2 1/2 per cow per day (more than the daily income of the majority of people in Low Income Countries) which enables the EU to export dried milk artificially cheaply and makes it hard for poor countries to export meat products to the EU. A Liberal government must resist the calls for protectionism and be a leader, both home and abroad, in promoting a trade.

-Helping Reduce Tariffs between developing countries
Due to a low tax base, developing nations often impost high tariffs and trade with each other. This policy is self-destructive and a Liberal government must play a role in getting developing nations to liberalize their markets to each other. Donors must help developing countries to reduce barriers against their neighbours through financial support until new revenue sources come on stream. In order for developing nations to qualify for Canadian support and aid, they must not only lower tariffs with the developed world, they must demonstrate a commitment to increasing trade with fellow developing nations.

-Help develop trade infrastructure
In order to make lasting benefits from more open trade, Low Income Countries need the physical capacity to get goods to market – roads, rail and ports. Under this policy, Canadian aid dollars would be focused on helping developing nations establish greater trade infrastructure.


I believe this Policy is something right up the Liberal alley, because it addition to advancing our economic cred as pro-market, pro-trade, pragmatic centrists, the values and ideals behind the policy is the use of market mechanisms to promote a social justice agenda (something neither the Conservatives nor NDP have any interest in, as they dislike social justice and market mechanisms respectively). With Canada's trade reliant economy and role on the world stage diminishing under Harper, a Trade out of Poverty agenda under a Liberal government will help Canada recover from the recession, help developing nations participate in the global economy, and give Canada a leadership role in promoting free trade and combating protectionism globally.

For more information, here is the website of the British campaign this policy seeks to emulate:

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