Trade and Poverty

Speech by Sajjad Karim MEP delivered to European Parliament on Wed 31st May 2006

One of the most important achievements of the 20th Century was the lifting of millions out of poverty. The emergence of China and India on the global trading scene played a huge role in this feat and they continue to lead the developing world by example.

But the challenge is far from over. Today 49% of the population in LDCs still live on less that a dollar a day and by 2015, 471 million of them will be living in extreme poverty. Trade Liberalisation is vital if we are to lift these people out of devastating poverty.

But Trade is not a magic bullet. The critical challenge is how to promote poverty reduction in a newly liberalised open economy. And the majority of LDCs are still "galloping in the darkness."

Free Trade is not the same as laissez-faire.

The fundamental priority must be for Governments to implement macroeconomic strategies that integrate trade in a way that effectively supports poverty reduction. And we must help them do this: through increasing assistance and improving the effectiveness of that assistance.

This is not basic aid; plunging the developing world into further debt. This is investment. Investment in infrastructure, technology, in human capital, in the global trading system itself.

In return, we'll enjoy greater openness and competitiveness and the LDCs will benefit from greater capital accumulation and technological progress. These will form the engine of growth. International trade will be the fuel for that engine and together we can accelerate towards the Millennium Development Goals.