Dear friends,

More trade – less hunger? is our topic today. Or more specifically, "Will the liberalization of trade solve or increase the problems of hunger and malnutrition?" Allow me initially to thank the Development Fund for the invitation to speak. This is indeed an important topic, in which the government has taken keen interest.

We must remember that trade – or more trade – is not a goal in itself. But trade can be an engine for economic growth. The trade liberalization process should result in increased market access, with better opportunities for developing countries to sell their products and services. Hopefully, this will lead to economic growth in these countries.

The reason why the possibility of "more trade" is currently attracting so much attention is of course the fact that a new round of trade negotiations has been launched in the World Trade Organization. It is not the first time. Since 1945, tariffs for industrialized products have been cut by more than 80 per cent in eight successive rounds of trade negotiations, and a vast range of non-tariff barriers have been removed.

The second part of the question deals with hunger and malnutrition. FAO estimates that nearly 800 million people, two thirds of the world’s absolute poor and mainly women and children, are still food insecure. The persistence of hunger in a world of plenty is unacceptable. It is internationally recognized that access to food is a human right. In the World Food Summit Plan of Action of 1996, national leaders pledged political will and commitment to achieving food security for all, and to eradicating hunger in all countries. This was followed up by the Millennium Summit in 2000, where the goal of halving the proportion of people who suffer from hunger was adopted. This places a strong moral obligation on us all to eradicate hunger wherever it occurs. Hunger and malnutrition are inextricably linked with poverty. Thus improved access to food must first and foremost be achieved through poverty reduction.

What is the role of trade in this endeavour? Can trade help to reduce poverty, hunger and malnutrition in the developing world? My message is that there is a positive link between trade, poverty alleviation and development. I will also outline the government’s views on trade and poverty, especially in the light of the new round of multilateral trade negotiations in the WTO.

International trade – friend or foe?

Trade is a very ancient human activity. No one knows when the first stone axe was traded for a fur – but we can be sure that it was a relatively local transaction. However, as transport possibilities improved, trade expanded to cover larger and larger areas. Norway has participated in international trade for at least a thousand years, with fish and timber as its major export products. Today trade has become global. It involves everyone – from the child selling drinks on the highway in Managua, to the company CEO on his or her cell phone on the way to a meeting in - say, Atlanta.

International trade has increased considerably in the last 50 years. During that period, more has been done to reduce poverty than in the previous 500 years. Illiteracy has fallen from 75 per cent to below 20 per cent in developing countries. In 1950 life expectancy in the developing world was 41 years, in 1998 it was 65. In 1950, 18 per cent or almost every fifth child died in the developing world, in 1995 the figure was 6 per cent. In 1950, almost 6 per cent of new-borns did not survive, now it is 1 per cent. Thirty years ago, workers in Taiwan earned seven and a half dollars a month, now it is seven and a half dollars an hour. If we go a bit further back in history, we see that trade was part and parcel of our own transition to an industrialized country. In 1860, Norwegian trade was worth 63 million kroner. A hundred years later the figure was 10 billion kroner. We all know the transformation Norwegian society underwent during those same one hundred years.

A more open world trade with improved market access for developing countries and more direct investment is more important for poverty alleviation than development assistance. Subsidies in the OECD countries are running at more than one billion dollars a day. With the interests of the poor countries in mind, the question has been raised of whether these policies are sustainable in the long run.

Furthermore, fewer restrictions on trade will contribute to increased commercial activity and closer economic relations between developing countries. This so-called "south-south" trade has a significant development potential, in Asia, South America and Africa. Selling your products across the border is always easier than exporting them thousands of miles away. In the WTO, several developing countries have underlined the importance of increased regional or "south-south" trade.

The Doha Development Round

Trade is not a magic wand that will eliminate hunger and poverty, but the rules of the multilateral trading system and the liberalization of trade can contribute to economic activity, investment and employment in poor countries. Rich countries should contribute by opening their markets to products from developing countries, especially agricultural products and textiles, and by providing more technical and financial assistance. This will make developing countries better able to utilize the benefits and possibilities offered to them by the multilateral trading system.

There is now an opportunity to create more open market conditions in the World Trade Organization, thanks to the launching of a new trade round in Doha last year. In addition to agriculture and services, it was agreed to begin negotiations on i.a. market access for industrial products, rules, including anti-dumping rules, and trade and environment, and it was also agreed to follow up the demands of developing countries regarding the implementation of existing WTO rules. An important reason for the successful launch of the new round was the willingness to place the needs and interests of developing countries at the heart of the work programme adopted in Doha. The common theme that runs through the Doha Declaration is the fuller integration of developing countries into the trading system. Provision is made in almost every area for helping developing countries participate in and profit from the negotiations. Governments have followed up, and established the Doha Development Agenda Global Trust Fund, with a core budget of 15 million Swiss francs. Norway recently allocated 6 million kroner to the fund, and it is encouraging to see that so many other countries have also contributed to it. The fund will provide resources to assist developing countries to promote their interests in the WTO process. Even the smallest and least-developed member state should have access to WTO facilities and expertise in preparing its position.

Furthermore, the special concerns of the least developed countries were explicitly recognized in the ministerial declaration. These countries need technical assistance as well as improved market access if they are to fulfil, for example, the industrial countries’ product requirements regarding health, environment, labelling and food safety. I will revert to the issue of market access, but first, a few words about the need to set clear priorities for trade-related technical assistance.

Technical assistance must be demand-driven. The developing countries should be in the driver’s seat and have ownership of the assistance. Second, the LDCs must be given priority. LDCs still account for only 0.5 per cent of world trade and many have experienced negative growth over the past few years. Third, coordination with other providers of technical assistance is important. The objective is to secure the best possible assistance, whether it is provided by the WTO Secretariat or by other organizations with or without the participation of the WTO. Priority must be given to the issues covered by the Doha Declaration. The WTO’s assistance should be directly relevant to the negotiations and the implementation of commitments.

International trade has been questioned

In spite of an unprecedented volume of trade, economic growth, advances in technology and food surpluses in many countries, current progress in reducing hunger and poverty appears to be slow. I know that the Fund for Development has been questioning the benefits of globalization and especially trade for poor people in poor countries.

Again, trade is not the solution to all problems. Poverty alleviation and a more just distribution of wealth in developing countries cannot be achieved in the absence of basic values like peace, democracy and human rights. Good governance is not possible without proper health care, education, or a well functioning public administration and a just and fair legal system.

History reminds us that isolationism and less trade is not the solution for the world’s poor. In the World Trade Organization, we meet representatives of governments from many developing countries. Some of the Development Fund’s own cooperation partners like Costa Rica, India, the Philippines, and Brazil are among them. They do not agree with each other on everything in the WTO – and we do not always agree with them – but they are all telling us to open our markets to their products.

It has been argued that government representatives do not necessarily reflect the interests of the poor and hungry in their own countries. That is an interesting point. However, in the WTO and other international negotiations it would be inappropriate and counter-productive for us as government representatives to bypass the government representatives of developing countries. I agree that we have a responsibility to try and improve the accountability of governments towards their masters in principle – the citizens. But this must be a task alongside what we do on trade.

Sometimes we hear the argument that through trade, we buy the food that would otherwise go into the mouths of the poor and starving. Again, an interesting point of view that unfortunately reflects a very paternalistic attitude. We are not a colonial power. We like to think of the developing countries as partners. The decision to sell food products is the decision of the country itself. The greatest resource of the developing world is agriculture. Every country needs income, and export earnings from agricultural products are no different or worse than earnings from commodity exports. The wheat farmer in Ethiopia or Sudan needs income to buy clothes, school books and other food he does not farm himself. Sound income tax policies and good governance should ensure that the whole society benefits from such exports.

Even in a country where the soil is rich and plentiful, a government that is not committed to good governance can be quite capable of ruining the economy and hampering agricultural production, with or without exports. We all remember the Soviet Union. On the other hand, countries of South East Asia, that for so long were plagued by frequent famines, have achieved food stability through reforms that include export of agricultural surplus. Some of the countries continue to have serious malnutrition problems. But that problem is not due to food trade but to a lack of functioning social safety nets. We do believe that farmers in the South – particularly smallholders – can be an engine of development and that they deserve much more support. I will get back to that shortly.

It has been pointed out that the elimination of export subsidies in the food sector could lead to higher world market prices, especially for grain. This could make food more expensive, and could have a negative effect for net food-importing developing countries and least developed countries. The WTO Committee on Agriculture has recently formed an expert panel with participation from other international institutions to look into the possible negative effects of food sector liberalization for these countries. It will also consider the relationship between food aid and higher world prices.

Initiatives by the Norwegian Government

We believe that trade and trade-related investment are necessary to create economic growth in poor countries. How can Norway contribute to this end?

First, we want to give products from developing countries better access to our markets. As part of this objective, Norway will grant duty- and quota-free access to all products from LDCs as from 1 July this year. We know that Norwegian importers already see new possibilities in these countries, and I hope the measure will lead to more products from LDCs being imported to Norway.

Second, we support the development profile of the new round of trade negotiations in the World Trade Organization. Norway supports the efforts to extend technical assistance to developing countries to help them take advantage of the negotiations. Norway was the first member to make a voluntary contribution in support of the WTO’s technical assistance activities.

Third, my government has recently launched an Action Plan for Combating Poverty. In the plan we pledge to promote policy coherence, increase ODA, forgive debt, improve market access, stimulate investment and intensify efforts in areas such as governance and peace building. The plan also emphasizes the need for private sector involvement in order to promote trade and economic growth, which will reduce poverty.

Last but not least, I would like to mention one important trade-related objective in the Action Plan for Combating Poverty, namely to strengthen the primary industries and particularly agriculture. Agriculture forms the backbone of the economy in most poor countries. Here lies the potential for the further development of the business sector, including both agrobusiness and foodprocessing. Agriculture and fisheries are critical for food security, and provide large groups of poor people with the economic means of improving their living conditions. We are therefore committed to stopping the trend away from agriculture, fisheries and forestry and to search for new ways to help develop these sectors.

In this context, I would like to emphasize the need to improve the physical infrastructure in rural areas, to include agriculture in programmes for business development, to support the processing of agricultural products and to promote the export of these products to Norway and other industrialized countries. We would also like to see improvements in the plant and veterinary control systems, in order for products from poor countries to meet the strict health and hygiene criteria for food imports to the industrialized world. In addition to granting duty and quota-free market access to LDCs, we have recently initiated a project to identify agricultural products in developing countries that could be particularly successful as exports and to identify the bottlenecks which might impede successful growth of such exports. This may not only help poor farmers in expanding their productive capacity and raise incomes – it can also improve the chances that export-led growth can be compatible with their interests – particularly in countries with extremely skewed distribution of land.

Las but not least – we believe it necessary to build an strengthen property rights systems through land titling, cadastres and other means.

Conclusion

We believe that trade matters. Cut flowers from Kenya, rice from Thailand, beef from Botswana, textiles from Laos, toys from China. The spread of ideas, technology and capital are boosting trade and bringing wealth to many people. Yet more than a billion people still live in extreme poverty, without adequate food, water, sanitation or health care. Increased trade is part of the international strategy to eliminate poverty. Take out trade, and poverty will be forever a curse among us.

Thank you.