Trade is the best form of aid

The protesters are right when they say the world trading system is unfair. But it's not a case of too much free trade; it's a case of too little free trade. Blaming the World Trade Organisation for these injustices is a bit like blaming the Red Cross for World War I.

These imbalances exist because any deal is only yesterday's best compromise.

This month the leaders of the G8 meet in St Petersburg, then in Evian, France. The authorities expect the protesters to number in the hundreds of thousands. As at the Genoa G8, which I attended, some of the extremists are saying they want to stop the leaders meeting. How stupid and undemocratic. Leaders should meet. The protesters should say, "we want you to meet but will not let you leave until you show some direction in attacking the core injustices that exist worldwide".

Despite what well-meaning protesters say, globalisation is not the enemy of poor people in poor countries: marginalisation is. There are more internet connections in London than all of Africa. Singapore gets more investment than Africa.

What does this teach us? Free trade in agriculture would return to Africa five times more than all the overseas development aid put together. Rich countries spend a billion US dollars a day in subsidies that make food dearer and reduce choice. This is a tax on the poor in rich countries.

Take coffee, sugar and cotton.

Ten years ago, the world coffee market was worth $US30billion and farmers received about $US10billion. Now the industry is worth $US60 billion ($91 billion) and the farmers get about $US5.5 billion. In real terms, prices are the lowest in 100 years. Coffee accounts for 64per cent of Ethiopia's exports, 60per cent of Uganda's exports and 25per cent of El Salvador's exports. When growers in poor countries want to add value jobs at home, they are faced with an escalation of tariffs, so those jobs end up in the US or Europe.

Why? A few years ago, well-meaning rich countries thought they should help an impoverished Vietnam, which didn't grow coffee. Vietnam is now the second-biggest producer of coffee. Half a million jobs have already been shed in Latin America in this one product area alone. The former president of Colombia, Andrés Pastrana, told me the climate to grow coffee provides exactly the conditions necessary to grow heroin, the emerging drug of choice for many in rich countries.

Let's look at sugar. Ninety per cent of sugar supplies are sold at prices above world price. In the US, 42 per cent of the total benefits to sugar growers went to just 1 per cent of growers. Last year Kraft closed a LifeSavers plant in Michigan, shedding 600 jobs, and moved it to Canada, which can source cheaper sugar inputs from the Caribbean.

One Florida family supplies the US with about 15 per cent of its sugar through its land holdings in Florida and the Dominican Republic, and collects between $US52 million and $US90million in benefits from price supports for US production and quota rents on Dominican sugar exports. The removal of price supports would cause prices to fall by about 65 per cent in Japan, 40 per cent in western Europe, 25 per cent in the US, Mexico, Indonesia and eastern Europe and about 10 per cent in China and Ukraine.

Cotton is one of the few products in which Africa is internationally competitive. World prices have fallen 66 per cent since 1995. The World Bank estimates that if subsidies were removed, production in rich countries would fall, world prices would rise and the revenue increases for west and central Africa would be about $US250million.

Australia's Trade Minister Mark Vaile explained recently at a family farmers summit that the European Union's out-of-quota tariffs for barley, sugar and beef were well over 100 per cent and their out-of-quota tariffs on agriculture items were about 45 per cent.

All these issues are now on the table for negotiations in the Doha Development round. The stakes are high, especially for poor countries. But it's a win-win opportunity. Low-paid workers in rich countries will get cheaper food and clothing; poor people in poor counties will get more jobs and opportunities.

The protest movement should repaint their placards to say: "Justice now - finish the round". Then I just might join them.