[stop-imf] IMF Head Calls For Developing Countries Cut Protectionism; World Bank says WTO Membership hurts Chinese poor

[Robert Weissman]

1. IMF Head Calls For Developing Countries Cut Protectionism
2. WTO status hurts China's rural poor: World Bank

From: World Bank Press Review
Thursday, February 24, 2005

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IMF Head Calls For Developing Countries Cut Protectionism
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Developing countries would benefit substantially if they cut their own
trade barriers and farm subsidies, Agence France Presse reports IMF
Director General Rodrigo Rato said Wednesday.

"By some estimates, freeing up merchandise trade and removing all
agricultural subsidies could generate gains of up to $280 billion by 2015,
with a disproportionately high share of these gains going to developing
countries," said Rato, speaking at Columbia University in New York. While
most of the focus on trade barriers is on wealthy countries, Rato said
that developing states need to face up to their own protectionism. "There
is one aspect of the trade debate that is often overlooked, and that is
the trade barriers that developing countries impose on each other," Rato
said. "The costs of these barriers are far higher than those imposed on
developing countries by industrial ones. "Developing countries must
therefore also take steps to remove their own trade barriers," he said.
Rato also said that while there are benefits to the growth of regional
free-trade agreements, such as those in Southeast Asia and Latin America,
the greatest benefits arise from multi-lateral trade liberalization.

Reuters adds that the head of the IMF also urged donors to increase their
aid contributions to impoverished nations, but also said poor countries
need to find ways to use the aid more effectively. Rato said developing
countries had made progress over the past decade in growth and stability.
Growth in Sub-Saharan Africa last year is expected to be the highest in a
decade, he noted. Still, many of the world's poorest regions will fail to
reach global millennium targets to reduce poverty, Rato said. Rato said
donors should reduce the transaction costs of delivering aid to the
poorest countries and simplify the procedures for aid disbursements.

The IMF chief also raised the issue of more debt relief for impoverished
countries, one of the topics at the center of global economic discussions
in recent months. Rato said the IMF was studying all of the proposals,
including the revaluation or sale of the IMF's gold stocks, the
third-largest in the world. "For the moment, let me just say that debt
relief cannot be seen as an end in itself," Rato said. "It has to be
considered in the context of debt sustainability, lasting poverty
reduction and sustained growth."

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WTO status hurts China's rural poor: World Bank

Tuesday, February 22, 2005 Updated at 8:23 PM EST

Agence France-Presse

PARIS -- China's rural poor have suffered a "sharp 6-per-cent drop" in
living standards since Beijing's accession to the World Trade Organization
in 2001, according to a World Bank report released yesterday.

The study consequently urged Chinese authorities to take steps to correct
what it said has been an uneven distribution of benefits from WTO membership
between rural and urban areas.

It found that market-opening measures and other economic reforms that came
with WTO accession have been worth more than $40-billion (U.S.) a year to
the Chinese economy and have added about $75-billion a year to real incomes
worldwide.

"While China has experienced remarkable growth in its trade as a result of
its WTO accession, it now faces the challenge of adjusting labour policies
to improve productivity in the rural sector and to allow workers to move to
more competitive sectors," said Will Martin, an editor of the study.

Its findings were based on a survey of 84,000 Chinese households.

While nearly 90 per cent of urban households reported income and consumption
gains, rural households overall sustained an average income loss of 0.7 per
cent.

"The poorest rural households . . . suffered a sharp 6-per-cent drop in
their living standards, as measured by consumption, due to the combined
effect of a drop in real wages and an increase in the prices of consumer
goods," the World Bank said in a statement.

The report called for reforms to the system governing the movement of people
from rural to urban regions. It said proposed reforms could boost rural
wages 17 per cent and allow about 28 million people to leave the
agricultural sector.

The study also urged increased education and stepped-up delivery of
agricultural technology to help farmers increase productivity.