Friday, August 31, 2007

Gainesville poverty up -- or is it?

from The Gainesville Sun


College students driving luxury cars down W. University Avenue may not seem impoverished, but they likely are being counted as part of Gainesville's poverty rate, which is more than triple the national average, according to U.S. Census Bureau figures released Tuesday.

Though statistics show that 32.3 percent of Gainesville residents were below the poverty line in 2006, an increase of more than 5 percentage points since the 2000 census, economists and even officials with the Census Bureau caution that the figures may only reflect part of the story.

The 66,000 students at the University of Florida and Santa Fe Community College - many of whom report little or no income because they are full-time students - may skew poverty figures for Alachua County, with a population of about 215,700 people. In addition, the relatively small population of the county may add to uncertainty about the actual rate.

According to the statistics released Tuesday - based on the American Community Survey, a yearly study conducted by the Census Bureau designed to eventually replace the traditional Census - Alachua County had a poverty rate of about 22.4 percent in 2006, compared to Gainesville's 32.3 rate.

Statewide, the poverty rate is about 12.6 percent and the official poverty rate for the United States, which is determined using a different study, is about 12.3 percent.

But the statistics show that those living in poverty in Alachua County are disproportionately college-aged, likely reflecting the large number of students with little income of their own at UF and SFCC.

About 64.3 percent of those living in poverty in Gainesville are between 18 and 24 years old and about 52 percent of those living in poverty countywide are in that age range.

If the statistics are adjusted to bring Gainesville's college-aged population into line with the rest of the state, both the city and county's poverty rates come into line as well, said David Denslow, an economist with the University of Florida's Bureau of Economic and Business Research.

"I think, then, that Alachua County's official poverty rate exceeds Florida's only because we have so many college and university students, most of whom are going to do quite well financially from a lifetime perspective," Denslow wrote in an e-mail. "That doesn't mean that Alachua County does not have a poverty problem. It means that the state and the nation have a poverty problem, and Alachua County is part of that broader picture, neither better nor worse."

In determining whether someone is below the poverty line for the American Community Survey, the Census Bureau uses a formula based on the size of a family and the number of minors it contains. For example, a family of three with one child less than 18 years old would be considered to be in poverty if the family's income was less than $16,000.

To some extent, the Census Bureau strives to take into account the impact specific populations can have on the results. The poverty figures, for example, don't take into account people living in dorms, military barracks or prisons, said Sharon Stern, chief of poverty and health statistics for the Census Bureau.

Even without the influence of students, Census officials urge caution when drawing conclusions from the poverty statistics. Gainesville's relatively small population yields survey results that often have a wide margin of error, Stern said.

For example, according to the survey, the number of people living below the poverty line in Gainesville was between 27,064 and 34,134 in 2006. Because it is unclear exactly where the actual number falls within that range, it is difficult to say how significant the new results are, Stern said.

Still, such statistics can be useful for spotting trends even if they cannot be used to pin down an exact number, she said.

"(The change) might look to be very big and yes it might be statistically significant and indicate direction, but it might not be the magnitude it appears," Stern said.

Nailing down the area's actual poverty rate has been an exercise that has frustrated local officials in recent years.

In 2005, the Alachua County Commission paid the Census Bureau to recalculate the poverty rate by excluding students. The report presented to county commissioners indicated that without students - 26,085 of whom met federal poverty guidelines - the poverty rate dropped from 22.8 percent to 13.9 percent.

Such discrepancies need to be taken into account when developing policies based on statistics that may be impacted by the area's student population, Denslow said. This includes areas like poverty and unemployment, which is traditionally lower in college towns because students are more likely to not be seeking work, he said.

"Numbers like this are interesting, in a sense it's a way of keeping score, but in this case this particular number is biased against us," Denslow said. "Just like for unemployment, they're probably biased in our favor."

Jeff Adelson can be reached at 352-374-5095 or

Thursday, August 30, 2007

Low unemployment means less poverty - PM

from Perth Today

THE low unemployment rate is evidence that poverty is not rising, Prime Minister John Howard says, despite a welfare report which suggests otherwise.

The Australian Council of Social Service (ACOSS) report compared Australia to the rest of the developed world, on issues including education, health and housing.

Using an international measure that defines the poverty line as 50 per cent of median income, the report found the number of Australians living in poverty rose from 7.6 per cent to 9.9 per cent of the population between 1994 and 2004.

But Mr Howard said he could not accept everything in the report.

"I have difficulty with their measurements of poverty," he said.

"It is logic that if there are fewer people out of work there must be less poverty - the greatest driver of poverty is people without jobs."

And with such a low unemployment rate, poverty could not be rising, he said.

"If we now have an unemployment rate that is 4.3 per cent compared with a rate of 8.5 per cent 11-½ years ago, the logic of that compels you to the view that there is at least some lesser incidence of poverty in our community."

But Mr Howard said he knew there were still people struggling and living below the poverty line.

"I don't pretend for a moment that there isn't more that can be done but it's just altogether too glib for people to say, `oh well, poverty keeps rising despite the prosperity of the country'."

Families Minister Mal Brough questioned the way poverty was measured in the report, saying it does not accurately represent reality.

"I think that you can categorically say that the number of Australians that are in work, that are earning more money and paying less tax, has increased, therefore people have a better chance of being independent" Mr Brough said on ABC radio.

Mr Brough said there were still people living below the poverty line, but that had not increased during the Howard Government's reign.

"There is no doubt whatsoever that there are far fewer Australians struggling today," he said.

"I look at my own electorate and I can see families today who are doing much better than they were in 1996 - that is without a shadow of a doubt.

"But that's not to say there aren't people still struggling and the way to do that is to keep the economy strong."

Nearly 10 pc of Australians in poverty: Study

from Express India

Nearly 10 per cent of Australians are living in poverty despite a booming economy, a major new study published on Thursday said, but its findings were disputed by Prime Minister John Howard.

The report by the Australian Council of Social Service (ACOSS) found that Australia lagged behind most other Western countries, and said authorities at federal and state level should do more to spread economic prosperity.

But Howard, whose government could be replaced in a general election later this year, said Australia's low unemployment rate was evidence poverty was not rising.

"I have difficulty with their measurements of poverty. It is logic that if there are fewer people out of work there must be less poverty -- the greatest driver of poverty is people without jobs," he said.

The report compared Australia to other developed countries in 10 key areas such as education, health and housing.

Using an international standard, it said the proportion of Australians who live in poverty rose from 7.6 per cent of the population in 1994 to 9.9 per cent -- equivalent to nearly two million people -- in 2004.

It noted that on a UN human poverty scale, Australia is ranked 14th out of 18 for countries in the Organisation for Economic Co-operation and Development (OECD).

"There are too many areas where Australia is falling behind other OECD nations," ACOSS president Lin Hatfield Dobbs said. "Governments need to ensure the benefits of the economic prosperity are shared with all Australians."

Howard, who has been in power for more than 11 years, acknowledged there were still people struggling below the poverty line.

Nation's poverty rate drops

from Casper Star Tribune

The nation's poverty rate dropped last year, the first significant decline since President Bush took office.

But not in Wyoming, despite the state's robust economy from energy development.

Wyoming's poverty rate was essentially unchanged from 2005 to 2006, said Wenlin Liu, senior economist with the state's economic analysis division.

He said Wyoming's poverty rate has declined since 2000, however. And the state's 10 percent rate for 2006 is lower than the national rate of 12.3 percent.

"Anyone who seriously wants a job can find work in the state," Liu said.

He added that there always are a certain number of residents whose earnings do not change or who may not work full time.

The sampling for the survey was small -- 6,000 households in Wyoming.

Liu said he was surprised that the state's median household income after inflation did not change between 2005 and 2006.

"I thought we would have an income gain," he said.

In 2005, he said, Wyoming had the highest increase in wages -- 6.5 percent -- of any state in the country.

The 2006 wage figures, which account for 80 percent of total household income, are not yet available.

The Census Bureau, meanwhile, reported Tuesday that 36.5 million Americans, or 12.3 percent, were living in poverty last year. That's down from 12.6 percent in 2005.

The median household income was $48,200, a slight increase from the previous year. But the number of people without health insurance also increased, to 47 million.

The last significant decline in the poverty rate came in 2000, during the Clinton administration. In 2005, the poverty rate dipped from 12.7 percent to 12.6 percent, but Census officials said that change was statistically insignificant.

The poverty numbers are good economic news at a time when the nation's financial markets have been rattled by a slumping housing market. However, the numbers released Tuesday represent economic conditions from a year ago.

The poverty level is the official measure used to decide eligibility for federal health, housing, nutrition and child care benefits. It differs by family size and makeup. For a family of four with two children, for example, the poverty level is $20,444. The poverty rate -- the percentage of people living below poverty -- helps shape the debate on the health of the nation's economy.

The figures were released at a news conference by David Johnson, chief of the Census Bureau's Housing and Household Economic Statistics Division. The poverty report comes five years into an uneven economic recovery, and well into a presidential campaign that still has 14 months to go.

Poverty has not been a big issue in the campaign, and political scientists said they doubted the new numbers would change that.

Poverty rate in Kendall skyrockets

from Suburban Chicago News

Census Bureau confirms what social workers already knew


The poverty rate in Kendall County more than quadrupled between 2005 and 2006, finally reaching a number experts have long said better reflects the growing number of poor in the area.

According to U.S. Census Bureau numbers released this week, 5.4 percent of people in Kendall County are living in poverty, up from 1.2 percent in 2005.

The increase comes as state and nationwide numbers show dips in overall poverty rates. The percentage of people living in poverty in Kane County also fell slightly from 8.9 percent in 2005 to 8.3 percent last year, while the rate was stagnant in DuPage County at 4.9 percent.

But the striking increase in Kendall County comes as no shock to those who have long contested that 2005's reported 1.2 percent figure far underestimated the actual poverty rate.

"I don't really think the increase was that large," said Cheryl Johnson, director of the Kendall County Health Department. "The 1.2 percent was nowhere near accurate. By our data, the poverty level was at least 4.2 or 4.3 percent in 2005. The increase was only about a percent."

Many social-service providers said they're hoping the new Census numbers will draw attention to the poor who have come almost unnoticed into the growing area, and the need for jobs and public transportation to help raise them out of poverty.

"The numbers speak for themselves," said Jeaness Medin, who runs Kendall County Food Pantry where more than a dozen new families have showed up each week for the last several months. "I think it's just in proportion with the way Kendall County is growing. It's not all the big, fancy houses. It's all these other people who don't have a place to go."

Other findings from the U.S. Census Bureau's American Community Survey:

• People in Kane, Kendall and DuPage counties continue to earn more than the state's median income of $52,006 and the national median income of $48,201. But while the state and nation's median incomes showed little change from 2005 to 2006, the median income in Kane County dropped $1,652, to $63,741. In Kendall, the median income rose $1,253, to $73,069; in DuPage, it rose $804, to $73,677.

• The percentage of people living in extreme poverty in Illinois and nationwide dipped 0.2 percent from 2005 to 2006. In the same time period, the rate climbed slightly in local counties. In Kane County, 4.1 percent of people live in extreme poverty, up from 3.6 in 2005. In Kendall, the percentage climbed from 1.2 to 1.9. In DuPage, the percentage rose slightly from 1.9 to 2.

• Deep racial disparities continue to exist among Aurora's poor. In 2006, 46.6 percent of black men and 30 percent of black women were in poverty, compared to just 2.6 percent of white men and 2.8 percent of white women. Fourteen percent of Hispanic males and 22.7 percent of Hispanic females also live below the poverty line in Aurora.

• In the East Aurora School District, 29.5 percent of children live in poverty; 17.6 percent do so in the West Aurora School District. By comparison, 2.8 percent of children in the St. Charles School District and 3.9 percent in Indian Prairie live in poverty.

• The gap between how much working men and women earn in Kane, Kendall and DuPage counties has widened by thousands of dollars, even as state and national disparities narrowed. And last year, gender inequalities in local wages remained far more pronounced than the differences across the U.S. and Illinois.

In Kendall and DuPage, men's salaries surpassed women's by more than $19,000. In Kane, the difference was more than $15,000. By comparison, the statewide gap was $11,434, and the national difference $9,561.

TCCIA: Tanzania not exploiting trade chances offered by AGOA

from IPP Media

By Perege Gumbo

Tanzania`s exploitation of business opportunities offered by the American African Growth Opportunity Act (AGOA) has been minimal for what the business community cited as infrastructural problems, calling for the government in collaboration with the private sector, to address the hitches.

AGOA is a programme designed by the United States government to help African countries access US markets duty free with a view to increasing the poor nations� exports to build capacity in the countries� poverty reduction efforts.

Retired Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) vice-president Basil Saprapasen said in an interview recently that the AGOA arrangement, which ends in 2015, had not been successful because of a number of reasons including poor infrastructure.

He said the US market was highly specialised and needed higher technology that many Tanzanian producers and manufacturers lacked.

``Our county lacks many essential supportive infrastructures required to perform better in AGOA, such as reliable communication and transport infrastructure to make timely delivery of consignments,`` he said.

On the other hand, he said monetary support from banking and other financial institutions for exports was not easily available to allow local exporters transact smoothly as they produced for export to the US under the AGOA programme.

Instead he urged local producers to first of all concentrate on improving the quality of their products as well as build competitive capacity within the region before thinking of exporting to the US.

Mr Saprasasen said even the political will was low since very few politicians were engaged in commercial farming, which could spur Tanzania�s export performance.

``Unlike our politicians, those in neighbouring countries are fully engaged in commercial farming while Tanzanian politicians seem to prefer investing in real estate to agriculture,`` he said.

The objective of producing for AGOA was to generate foreign currency which, in Saprapasen�s view, was no longer an issue since there was cheap and readily available foreign currency locally, which discouraged exports.

He cited an example of Tanzania Revenue Authority (TRA)`s Import Declaration Forms (IDF) which were being bought at USD 10 as an indication of how the government itself was transacting using dollars, thereby setting a bad precedent.

However, the government, through Finance minister Zakhia Meghji recently prohibited transactions in foreign currency, saying conversion using appropriate prevailing exchange rates should be used to allow the value of the Tanzania shilling to rise.

Stiglitz: FTAs advantageous to US

from the Edge Daily

by Maryann Tan & Yong Yen Nie

KUALA LUMPUR: Nobel laureate and former World Bank chief economist Joseph Stiglitz believes that no country should enter into free trade agreements with the US, as none of the developing countries has benefited greatly from them.

Stiglitz, who is currently in town as a guest speaker for Khazanah Nasional Bhd’s Global Lectures, called free trade agreements “advantaged agreements in essence” and “a disaster for developing countries and the global trading system”.

“Countries do not need free trade agreements. People will come and invest in your country if you provide good infrastructure and human resources.

“The good news is, the tariffs now are so low, that they no longer serve as an impediment to trade. They are not going to make any difference to the friendly business atmosphere, which Malaysia has,” he said in an interview with The Edge Financial Daily.

The sharp critic of US trade policies also applauded Malaysia for making the right move by rejecting aid from the International Monetary Fund (IMF) during the 1997 Asian financial crisis, but added that the country should improve the quality of its universities towards riding the next phase of development.

Citing IMF’s incompetence in handling the Asian financial crisis a decade ago, Stiglitz said Indonesia had to suffer the consequences which resulted in the slow recovery of the country and affected its ability to take advantage of the opportunities to rebound, through the Sept 11 terrorist attacks as well as China’s and India’s emergence as the new economic giants.

Below are the excerpts of the interview:

Q: The world by now is familiar with your criticisms of IMF-prescribed remedies for the Asian Financial Crisis. Countries like Thailand and Indonesia took the IMF route, unlike Malaysia. Although restructuring was painful, the economies of these countries have been doing well ever since. Do you see any irreversible damage in these economies that adopted IMF policies?

A: Firstly, they were very slow to recover. They were just getting back to where they were a decade ago. So, in a way, you can see that they have lost almost a decade, say, eight years. (However),
Malaysia caught up very quickly to where it was.

The major thing is, its (Indonesia’s) economy today is much poorer than it has been had they not gone into the crisis. That meant, of course, they were not as able to take advantage of some of the new changing global landscape that was going on.

There were two very big changes in the global economy in the last 10 years. Firstly, the emergence of China and India (in which they) developed new trading patterns to reflect the changing global economic landscape. Countries like Korea also recovered very quickly, due to change in their trade relations, which has much more to do with China than the United States.

The second thing was Sept 11. It had a very big effect on the global economy in several ways. Much of the money in the Middle East decided they didn’t feel comfortable staying in the United States (and) Singapore was able to take advantage of that money coming in.

People in the Middle East ... Malaysia took advantage because they (Middle-Eastern investors) wanted a place where they can do tourism, business, finance. There are many opportunities that the changing economic structure that Sept 11 brought about that Indonesia was slower in taking advantage of.

Q: Largely because of?

A: They were still trying to recover from the crisis. So, the bottom line was, their growth was set back a great deal, particularly when it came to poverty reduction. Indonesia’s (number of) poor people went up, and they were always behind Malaysia.

Today, for instance, if you measure the number of the poor in the country using the two-dollar-per-day standard that the World Bank uses, 49% of the people are still in poverty. There are other standards, for example, the one-dollar-a-day standard. They made progress in that standard. They were down by 16%. But, in the broader standard, there is still a long way to go.

Q: This may be the case for Indonesia, but what about Korea? It had to resort to IMF for help, but the outcome for the country today is different.

A: Well, what IMF did in each of the countries was a little different (from each other). For Indonesia, it was probably the absolute worst. For instance, one of the things they did for Korea in March 2008 was organising the rollover of loans. (But), they never did that for Indonesia. So, in some sense, they helped other countries more than they helped Indonesia, but they were also much worse when it came to making policies for Indonesia.

One of the things that Malaysia did very well was ensuring that the banking system did not collapse. They restructured the banks, but made sure that there was a continuous flow of credit.

What the IMF did for Indonesian banking system was worse than you could ever imagine. Because what they did was shut down 16 banks, and then said: “We are going to shut down 16 more banks, but we are not going to tell you which ones.”

So, they induced a run on the banks. So if someone were trying to kill the banking system, you could not have done a better job than what IMF was trying to do. If you tried to kill an economy, you could not have done worse than what the IMF did.

Q: And the [best] example was Indonesia’s case?

A: Yes. During December 1997, I was in KL for a meeting with all finance ministers and central bank governors from Southeast Asia, Korea and other countries in the region, and G10.

And I said, reflecting the view of the World Bank, that if they (IMF) keep up the tight monitor of fiscal policies, and their misguided economic policies for Indonesia, within six months, we forecast there will be political turmoil in the country.

We were off, but only by two weeks. In May 1998, the riots (in Indonesia) broke out, but no one could have imagined that in the midst of recession (and) depression, where unemployment was soaring, the IMF recommended that they eliminate their subsidies for cooking oil.

And they said: “Don’t worry about it, people are so happy.” Because they smiled, but people didn’t understand that smiling doesn’t mean that you are happy.

Q: Why do you think that there is this discriminatory treatment between Indonesia and South Korea, for instance?

A: The major reason was incompetence. I don’t think that it was any conspiracy involved. It was sheer incompetence. Secondly, I think that the economic problems were different in each of the situations, and their abilities to deal with them (the problems) differed.

Thirdly, the political and economic strength of the countries differed. Remember the problems created because of Suharto in Indonesia? He gave the IMF greater opportunity to push their own policies, whereas in Malaysia, which is the other extreme, they had no luck at all. Nobody paid any attention to them. There was greater resistance because people here understood much more deeply the problems caused.

When I talked to the government officials of different countries, it was very clear that the people here, (though) not everybody, but some of the people here really understood what needed to be done. That’s why the World Bank, (during the time I was chief economist), was very supportive of those capital controls. I supported them because I thought it was the right policy.

In other countries where people did not have the depth of understanding (of what ought to be the right policies), it was easier for IMF to push (for) their bad policies.

Q: IMF also set some rules that required countries to comply with certain regulations imposed by them. There was this debate about these countries losing their sovereignty, especially over their assets and resources. Now that most of the economies have paid back their debts, does IMF’s dominance over these assets still linger?

A: It lingers on in a couple of ways. In South Korea, they were told by the IMF: “Sell your assets to foreigners (because) they know how to manage them better. But the foreigners obviously didn’t know anything about the country.

All they did was hold on to the asset for a couple of years, until the economy recovered, and then they sold it back. They bought it at a very low price, and then they sold it back at a very high price. The result of it was that it actually gave the American financiers literally billions of dollars.

So, it was a foreign aid programme for rich Americans and people in other Western countries, but it didn’t help the country. They actually became worse than before, because the IMF never advised them about taxes.

For instance, in South Korea, the American firm bought some of their assets, and one of them was actually incorporated in Malaysia, I think. When they made a profit of a billion dollars, no money was paid to the Korean government. So, it was a tax-free profit.

They (IMF) really gave bad advice. This has become a very political issue in Korea, because they said: “You didn’t help us restructure, you didn’t give us advice when you were supposed to be professionals. You knew about tax evasion, and you were supposed to be experts. Did you make a mistake, or were you working for the Western companies?”

Q: But it’s all done now, isn’t it?

A: There’s nothing they can do about it, but there is a lingering resentment among many people in the country. There was theft in a way, of billions of dollars worth of assets, sponsored by the IMF. In terms of national sovereignty, the issue is now resolved and people are calmer now, but the issue of advising people to transfer their money to foreign companies was the source of resentment.

Q: Coming back to Malaysia, it is a country whereby development has largely been guided by the hand of government. Despite the many success stories behind it, we seem to lack creativity, entrepreneurial spirit and intellectual property. What then, should a middle-income country like ours, do to make the next development leap?

A: Actually, we may have underestimated the amount of entrepreneurial spirit in Malaysia. But, there are several things that one needs to do (to address mediocrity). Firstly, would-be entrepreneurs should be given easy access to small and medium-sized enterprises financing, and in a way, some of the new technologies that Malaysia is very strong for, like IT, should be made easier for small enterprises to start.

In some ways, new technologies facilitate the creation of new enterprises and Malaysia has been very good at developing the infrastructure and education that make this possible.

The second thing, which is important for the next phase of development, is improving the quality of universities. What draws some of the bright people abroad, is not so much because of the money, but the opportunities to do research and to teach.
It’s the intellectual climate, and you need strong universities to do that.

Countries that are going to be in the next phase of development have seen this as a major point of discussion. For instance, China has their 11th five-year plan. They talk about an independent and innovative system. They want to have 10 global, first-grade universities. Obviously, Malaysia is smaller and not on the same scale, but many of the top universities in the United States are in small parts of the country. Singapore is trying to strengthen their universities as well.

Q: An effective way to eradicate poverty is by the government redistributing income. However, is this sustainable in the long run? Once the government has achieved its target, how does it keep the people out of poverty, without creating a culture of perpetual dependence?

A: The most important long-run strategy, is try to improve the before-tax profit distribution income. It can reduce poverty by reducing the number of people with low wages, or you can subsidise the income of people with low wages. So, most importantly, you reduce the number of people with low wages. How do you do that? You improve education and create job opportunities for people at the bottom.

Next, you try to study where the source of poverty is. For instance, in the United States, what we discovered about the people living in poverty is that, they also have health problems. But, we have a very bad health system.

If you have a health problem and your income is low, you lose your job, you can’t afford a doctor, you health gets worse, it’s just a vicious cycle. So, if you asked me about how to reduce poverty in America, one of the things that I would say is to improve the health system. That’s one of the main defects in our system.

Another aspect about poor people is that, they often have an episode where something happens. If you don’t have a good safety net, they get into a downward, vicious spiral. They cannot afford a car, so they cannot go to work. The number of jobs available to them is very limited.

They often have a very weak support system, so if their children get sick, they miss a day of work. You need to provide a good support system for their children as well. You need to try to analyse the sources of poverty and intervene structurally. Most of the people do not want dependency, but they get caught in this vicious, downward spiral.

Q: What about free trade agreements (FTAs)? We are concerned about being less attractive to foreign direct investment, and now we seem to be moving along the path of signing bilateral agreements with other countries, especially the United States. What are your views of bilateral agreements between developed countries and developing countries? Are we better off without them?

A: Overall, bilateral agreements have been a disaster, for the developing countries and for the global trading system. The global trading system is based on principle of non-discrimination, which is called the most favourite nation principle. These FTAs are creating a world in which there are two groups — the first consist of “my friends who can get in free” and the other, consist of countries that have to pay tariffs. So, it is a disaster.

Secondly, bargaining between the United States and developing countries is not bargaining. Especially under the Bush (administration), it has been a take-it-or-leave-it situation. The provisions, the way I see them, have not benefited most of the countries in significant ways. In fact, these countries lost a great deal, especially access to intellectual property.

They have more difficulty accessing to knowledge and particularly, generic medicine. So, there are thousands of people dying in developing countries because of the trade agreements with the United States. They don’t want to talk about it that way, but that is what is happening.

Q: Should we walk away from these agreements?

A: Yes. The good news is, the tariffs now are so low, that they no longer serve as an impediment to trade. If you have good infrastructure and educated people, they will come to Malaysia (to invest). The tariff of 3%-5% is not going to make any difference to the friendly business atmosphere, which Malaysia has.

Q: So, that means FTAs are not about trading goods?

A: It’s not about trading goods; it’s about losing sovereignty. And it’s about helping American drug companies. It’s about America pushing for a particular agenda. It has not benefited any country. In fact, the free trade agreement with Mexico was the strongest, but the gap between Mexico and the United States increased in the first decade.

They are not free trade agreements. They are not about free trade, but they are advantaged trade agreements. And they managed to advantage the United States at the cost of the developing countries.

Strategic Commodity Value - Chains - Private Sector Investment to Transform Agribusiness

from All Africa

Africa Journal (Washington, DC)

By Josué Dioné
Washington, DC

The central importance of agricultural development for broad-based economic growth, poverty reduction, food security, and sustainable development in Africa cannot be overemphasized.

With some 46% of its people living on less than a dollar a day, the continent is among the poorest regions of the world. About 70% of these poor people live in rural areas, and their income and livelihoods depend primarily on agriculture and agriculture-related non-farm activities.

To a large extent, the overall economy of the majority of African countries is determined by agriculture, not only because agriculture employs nearly 60% of the total African labor force, but also because of the strong backward and forward linkages between agriculture and other sectors. As depicted in Table 1, a significant part of non-farm rural and urban employment is linked to agricultural commodity value chains, through many formal and informal enterprises engaging in activities such as agricultural input, equipment manufacturing and distribution, agricultural commodity processing, transport, trade and marketing, as well as food preparation and retailing.

A Neglected Sector

Despite the strong evidence of the central role of agriculture for overall economic growth and poverty reduction in Africa, the sector has been considerably neglected over the last four decades, suffering from a lack of consistency in the degree of priority and the course of policy for its development, both from African governments and development partners. This neglect resulted from the shift in donor priorities mainly to macroeconomic stabilization and structural adjustment programs. The programs contributed to the erosion of investment in basic infrastructure and productive sectors. For instance, against the 25-30% contribution of agriculture to total Gross Domestic Product (GDP), the proportion of public spending on the sector decreased from a low 6.4% in 1980 to 4.5% in 2002, while global development assistance to agriculture in the late 1990s also fell to only 35% of its level in the late 1980s.

As a result, African agriculture is one of the most under-capitalized in the world, on technological, infrastructural, and institutional grounds.

Only 6% of arable land on the Continent is irrigated, compared to 40% in Asia. Road densities are more than six times higher in Asia than in Africa, a major handicap to effective transportation of various commodities and equipment to rural communities. Likewise, access to other basic infrastructure such as electricity and telephone lines in rural areas is limited. With regard to innovations, African agricultural institutions of higher education, research, and extension are poorly staffed, ill equipped, and under-funded. Adequate financial structures, and enabling policy and institutional environments that meet the needs for private investment in farming, agribusiness, and market chains, are yet to be developed.

The combined effects of these drawbacks include stagnating agricultural productivity, weak backward and forward linkages between agriculture and other sectors, a widening gap between domestic supply and demand, loss of competitiveness in world markets, increased food insecurity, and natural resource and environmental degradation. Today, Africa faces a paradox: most of its countries' economies are still predominantly agrarian, yet, despite average annual food and agricultural imports of $25 billion and food aid upwards of $2 billion, nearly one-third of the total population suffer from hunger and poverty.

Increasing Public Sector Investment

In response to this challenge, the New Partnership for Africa's Development (NEPAD) has conceived and is striving to implement the Comprehensive Africa Agriculture Development Program (CAADP), with the goal to achieve a 6% sustained annual growth of agricultural GDP, developing dynamic domestic and regional agricultural markets and making Africa a key player and net exporter in global agricultural markets.

With an estimated investment portfolio of $251 billion for 2002-2015, the CAADP priorities are articulated around four pillars (described on p.14 &15).

Since its official adoption in 2003 by African heads of state and government at their Summit in Maputo, the CAADP has received repeated top-level political commitments from subsequent Summits on agriculture and water, fertilizers, and food security. Chief among these is the allocation of at least 10% of national budgets to agriculture and rural development by 2008. Obviously, delivering on commitments to increase public-sector investment is crucial for removing impediments of poor infrastructure and support services, and to unleash Africa's agricultural potential for growth and competitiveness.

The Need for Increased Private Sector Investment

In addition to the need for considerable public investment, is the equally important challenge to mobilize private investment to develop the agribusiness sector of the Continent. No doubt, difficulties in this regard are in part associated with major external factors such as commodity price trends and market volatility, as well as protectionist measures, domestic agricultural support, and export subsidies given to Africa's trading partners. However, these external constraints are compounded by domestic policy and institutional factors, which must be addressed by transforming the current $25 billion agricultural import talley of the Continent into an investment endowment for agricultural transformation.

First, African food and agricultural systems are characterized by extreme fragmentation along national and sub-regional borders. While being largely closed to each other, these fragmented markets are increasingly open to trade with the world outside the Continent. Within the context of an increasingly global economy, this landscape does not provide economies of scale (to maximize efficiency at the different stages of commodity value chains), economies of vertical coordination (to minimize transaction costs among the different stages of the value chains), and economies of complementary diversification and specialization (among countries and sub-regional groupings) that would allow the realization of full competitive gains for intra-regional and global trade. As a result, the gap between aggregate domestic production and increasing regional demand tends to be filled by imports from non-African countries, while the fragmented national agricultural systems strive to compete in exports aimed primarily at international markets outside the Continent.

Second, in this fragmented regional market landscape, African farmers are increasingly disconnected, both from input markets (backward) and product markets (forward), primarily because of failure to develop stages of food and agricultural value chains - namely the agribusiness industry and service stages - that are critical in linking them to the market. To risk investing in productivity-increasing technologies, not only should the information and inputs be accessible and affordable to farmers, but reliable and accessible markets should exist for any surplus output resulting from technology-based productivity gains. In terms of inputs, industrial production of seeds, fertilizers, and other chemical inputs, machinery and other equipment are negligible. Moreover, the demise of public-sector enterprises that previously carried out agricultural input and credit delivery functions, has resulted in a vacuum yet to be filled by the private sector. This is in part due to a lack of adequate capacity, conducive policy, and the inability of the institutional environment to help the private business community operate in such knowledge/skill-intensive and risky fields of business. On the output side, only 10-15% of total agricultural production is marketed in processed products. This contrasts with the increasing effective demand for imported processed food and agricultural products from outside of the Continent, which is fuelled by rapid urbanization and the related urban consumption patterns.

The Development of Regional Value Chains

A strategic approach to building regional value chains of strategic food and agricultural commodities would help address the double challenge of creating an optimal regional space for private agribusiness development, and bridging farmers' disconnection from the market. Such an integrated strategy must include a coherent and integrated regional approach to the development of the value chains of selected food and agricultural commodities. These commodities must be strategic in terms of their unexploited production potential with regard to their relative weight in the African food basket and domestic economies, and/or their importance in the interface (trade relations) between African economies and the global economy.

For such strategic commodities, building a common African market that transcends national and sub-regional borders would offer an appropriate economic space for profitable private investments with regional-level economies of scale. Public-private partnerships to create an environment that is conducive to ensuring both profitability and security of regional private investment would further facilitate the development of vertically coordinated regional value chains for such commodities. For instance, the creation of such an environment could proceed from the opening of Preferential Regional Investment Zones in those areas where the greatest unexploited production potential for selected commodities lies. In such zones, the creation of a favorable investment climate through appropriate policy, institutional, and legal frameworks for the development and management of land and water resources, and the provision of the necessary infrastructure and support services, would grant adequate incentives and security to stimulate regional-scale private investment in agribusiness. It would allow for the emergence of trans-national agribusiness joint ventures capable of mobilizing pooled investment with a view to developing, in a vertically coordinated manner, the different stages of the strategic commodity value chains within legal (contractual) frameworks to safeguard the interests of smallholder farmers.

Some elements of such a strategy are reflected in the CAADP implementation process and related commitments. Chief among these are the commitments to create a common African food market and to accelerate the development of an explicit a list of strategic commodities: rice, maize, legumes, cotton, oil palm, beef, dairy, poultry, and fisheries products at the continental level, and cassava, sorghum, and millet at sub-regional level. However, there is still a need to articulate these elements in an integrated and comprehensive strategy. As suggested above, such a strategy calls for an understanding of agricultural development that goes beyond the narrow confines of farming to encompass the vital agribusiness industries and services required for an integrated development of all stages of the value chains of the selected strategic commodities.

Josué Dioné, Ph.D. is the Director of the Food Security and Sustainable Development Division at the United Nations Economic Commission for Africa (UNECA). Dioné has extensive experience in development policies, strategies, programs, and projects, with a special focus on agricultural and rural development and food security in Africa. He has held several senior professional positions, including Principal Policy Economist at the African Development Bank, Senior Research Specialist and Associate Professor of Agricultural Economics at Michigan State University; and Regional Program Coordinator for Institutional Capacity Building in policy research on agricultural development and food security at the Institute of the Sahel of the Interstate Committee of the Sahelian Countries (CILSS).

Countries Bring Trade into Development Projects

from All Africa

International Trade Centre (Geneva)


By Maureen Harrington

Countries are putting priority on trade-related assistance in this new model for financing development projects, by the Millennium Challenge Corporation.

Benin: rehabilitating the port of Cotonou. Ghana: building packing and storage facilities for export crops. Madagascar: identifying international market opportunities for small businesses.

Each of these foreign aid projects was conceived and planned by the country itself to maximize economic development through trade. Each was made possible through an innovative approach to assistance now being pursued by the Millennium Challenge Corporation, or MCC, an agency of the United States Government.

Set up three years ago to help poor countries that take responsibility for their own development, the assistance is selective. Sizeable, multi-year, untied grants are awarded to poor countries that perform better than their peers on 16 indicators of good governance, social sector investment and economic policy. Developing countries take the lead, identifying their priorities for “reducing poverty through growth” and developing a programme for funding in consultation with business and civil society. The focus is on results with mutually agreed objectives and benchmarks recorded in a “compact”. The country implements the compact with MCC funds.

The early evidence is that countries are putting priority on trade-related assistance. In the 11 country programmes that MCC has agreed to finance, over half of the $3 billion of aid is for projects that will improve the countries’ ability to engage in international trade.

Of the 25 countries worldwide currently eligible, 12 are in Africa. Madagascar was the first to sign a compact in April 2005. Since then, there have been ten more, including Benin, Cape Verde, Ghana and Mali. Five-year compacts have ranged in size from $110 million in Cape Verde to $547 million in Ghana. In Africa, Burkina Faso, Lesotho, Mozambique, Morocco, Namibia, Senegal and Tanzania are developing proposals and investment programmes for assistance.

Trade indicators

Among the 16 selection criteria are trade-friendly policies. One trade indicator, developed by the Heritage Foundation, measures a country’s openness to international trade based on average tariff rates and non-tariff barriers to trade. Other indicators, such as the International Finance Corporation’s “days and cost to start a business” and the World Bank Institute’s “regulatory quality”, also give countries an incentive to improve weak investment climates to the benefit of domestic and foreign investors.

Another, smaller programme helps countries that come close to eligibility but fall short on one or two indicators with “threshold assistance” to address specific areas of policy weakness. To date, MCC has approved 13 such programmes, including six in Africa (Burkina Faso, Kenya, Malawi, Tanzania, Uganda and Zambia). Several of these address customs and border management policies. Zambia is using assistance to strengthen sanitary and phytosanitary services, build capacity in modern customs techniques and improve monitoring, standardization and certification of import and export quality. Finally, many programmes focus on fighting corruption, which is a key impediment to business and trade.

Eligible countries have requested grants for a range of trade-related projects. For instance, Benin will receive $169 million to improve operations and infrastructure at the port of Cotonou, resulting in fewer delays, lower operational costs and a 50% increase in the volume of merchandise traffic through the port.

The Government of Ghana identified post-harvest handling facilities for fruit and vegetables as a priority for funding.

Cape Verde will increase port capacity and remove obstacles to global competitiveness in priority sectors. In Mali, better irrigation and an industrial park within Bamako airport are designed to boost agricultural exports.

Links between trade, aid and strategies to help the economy grow and thus reduce poverty are best illustrated by those who benefit directly from these programmes. In Madagascar, a programme identified geraniums as a high value-added market, formed a cooperative, doubled production capacity by training farmers, assisted the cooperative in accessing credit and negotiated a contract with a buyer, who is using the geraniums to produce essential oils for sale to the European market. When asked if the farmers enjoyed the smell of geraniums, the head of the cooperative replied, “We like the smell of money better.” The farmers’ income had increased by two-thirds thanks to MCC assistance.

If experience is any guide, developing countries will continue to put a high priority on trade as a way to reduce poverty and increase economic growth. For the moment, most trade-related projects concentrate on infrastructure — the need for which is clear. Unless they also invest in export-quality goods and services, however, the new roads, ports and warehouses will not be put to use properly. ITC, for one, serves as a partner in helping countries balance out their “aid for trade” projects, so that they address business skills as well as infrastructure.

MCC, working with other donors, the private sector and governments themselves, can be a major partner in helping developing countries participate effectively in global trade.

* Maureen Harrington is Vice President for Policy and International Relations at the Millennium Challenge Corporation.

Sweden aims to offer aid to fewer countries

from the Gulf Times

STOCKHOLM: The Swedish centre-right government that took office a year ago said yesterday that it aims to halve the number of countries that receive bilateral aid to increase efforts to combat poverty, phasing out aid to Vietnam and China.

International Development Co-operation Minister Gunilla Carlsson cited “better efficiency” as one of the arguments for reducing the number of bilateral aid recipients from the current 70 to 33.

Future bilateral recipients were grouped according to three categories.

One category included 12 countries – mainly in Africa – that Sweden has had long-term development co-operation with and included Tanzania, Ethiopia and Bangladesh, she said when presenting the proposal.

Another group of 12 countries or regions were those impacted by conflict – recent or ongoing – and included Liberia, Somalia, Sudan, Afghanistan, East Timor, Iraq, the West Bank and Gaza, while nine countries mainly in Eastern Europe would receive support to shore up democratic reforms, Carlsson said.

About a third of Sweden’s annual aid budget, worth some 30bn kronor ($4.3bn), is earmarked for bilateral aid.

Along with its Nordic neighbours Norway and Denmark, Sweden is one of five countries that has committed more than 0.7% of its gross national income to aid, according to the OECD (Organisation for Economic Co-operation and Development) Development Assistance Committee.

On Africa, the minister said “the needs to combat poverty were the greatest on that continent”, citing challenges like conflicts, HIV/Aids and the risk of famine.
Countries that would be dropped from bilateral aid programmes such as Sri Lanka, Nicaragua, South Africa or Namibia would receive Swedish funding via the UN, the European Union or other multilateral agencies, Carlsson said, adding that the transition period would likely take up to five years.

Anders Forsse, former head of the government aid agency SIDA, welcomed the initiative, saying “development aid is not just a matter of sending money to poor countries with incomplete administrations and quite extensive corruption”.
Forsse said he even favoured reducing the number of bilateral aid recipients to some 20 countries to ensure a proper overview.

Reactions from non-governmental aid agencies were cooler.
Birgitta Silen of the Olof Palme International Centre that has close ties with the country’s opposition Social Democrats said the reductions could weaken support for generous development aid among the Swedish public.

U.K., Germany Announce International Partnership To Increase Aid To Fight HIV/AIDS, Other Diseases In Developing Countries

from Medical News Today

British Prime Minister Gordon Brown and German Chancellor Angela Merkel on Wednesday announced a global health campaign aimed at increasing aid to fight HIV/AIDS and other diseases in developing countries, Reuters reports. The campaign, titled the International Health Partnership, will bring together donor nations -- such as Britain, Canada, Germany and Norway -- as well as the World Health Organization and the World Bank. The partnership, which also aims to reduce child and maternal mortality in developing countries, officially will be launched on Sept. 5. Under the partnership, donor nations will submit long-term health plans, and international groups will pledge to better coordinate funding and on-the-ground efforts (Reuters, 8/22).

Fighting diseases such as HIV/AIDS and reducing child and maternal mortality are included in the U.N. Millennium Development Goals, Brown and Merkel said, adding that the health-related MDGs are least likely to be met by 2015. They added that international aid to address health is "over-complex" and "fragmented" and that a lack of infrastructure in developing countries is hindering efforts to fight HIV/AIDS and other diseases, AFP/Yahoo! News reports. The partnership will link donor support with existing health plans to coordinate health care activities, according to Brown and Merkel.

The leaders hope to create "sustainable health systems" that "deliver improved outcomes," according to a joint statement. They added that the partnership is a "critical step" in meeting the MDGs by 2015. "Our efforts must bring together the private sectors, [nongovernmental organizations], faith groups, international agencies and governments" to "reduce poverty, improve health and provide opportunities for the poor across the world," Brown and Merkel said in the statement (AFP/Yahoo! News, 8/22).

The announcement comes after the Group of Eight industrialized nations in June pledged to increase aid to developing countries. Alison Woodhead, head of health and education for Oxfam, said the partnership could "save lives by coordinating investment in health care that is free, public and well-staffed." Woodhead added that Brown and Merkel should be "congratulated for following through on their G8 promises to improve health care. The challenge for them now is to make sure other countries get on board to ensure maximum impact" (Reuters, 8/22).

"Reprinted with permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at The Kaiser Daily Health Policy Report is published for, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Education of the Girl-Child, Key to Development - Baiden-Amissah

from All Africa

Ghanaian Chronicle (Accra)


By Augustina Akwei & Jill Patterson

The Deputy Minister for Education Youth and Sports, Mrs. Baiden Amissah has emphasized the need for Action Aid International Ghana (AAIG) students to play an active role in seeking and acquiring knowledge in education to enable them take leadership roles towards the development of the nation.

"Education, it is believed, is empowerment therefore educating girls is a step towards eliminating poverty, advancing human development and stopping the spread of HIV/AIDS and more negative human development behavior," she stressed.

She noted that as the country makes her 50th milestone, it is important that women take their positions in society seriously to exhibit leadership qualities in the county.

She said focusing on girls' education is working towards a fully nurtured woman for the family, community and nation at large.

The Deputy minister said this during the opening ceremony of an eight-day camp organized by the Girls Education Unit (GEU) in collaboration with AAIG on the theme "Empowering girls through Education for National Development: enhancing women in leadership.

She said the objective of the camp was to create the platform for girls to meet and share experiences, learn from each other to contribute greatly to the development of the child as well as creating avenues for the child to acquire leadership qualities.

"My dear girls, this is to draw your attention to the fact that, as you go through your education, you are being provided with the basic knowledge and skills that would help you improve your health and livelihood and also empower you to take your rightful place in society and the national development process," she noted

She urged the students to participate actively and to learn from various resource persons that they might encounter during their study

The Country Director of Plan Ghana, an international NGO Douglas Titiabi added that the camp would enhance their capacity to assist each other during the learning process.

According to her, Plan Ghana has instituted many programms that focused on girls and one of such programm is a scholarship scheme for girls to continue their basic education to tertiary level and said organization is currently supporting 860 girls at secondary schools and 54 at vocational schools.

"The tertiary scheme begins this September and selection of beneficiaries is in progress and we are convinced that the camp would serve as a platform for girls to get right exposure to enhance their self esteem and expand their horizons beyond their immediate environment," she added.

On her part, Adwoa Kwateng-Kluvitse Country Director, Action Aid Ghana said educating the girl-child was of major concern to all those who were interested in developing the total human resource of the nation and added that the strategy of AAIG has been to work in partnership with such stakeholders in government, other non-governmental institutions and corporate bodies to ensure that girls avail themselves of the education.

"This year there is a greater realization of this collaboration as the Camp with GEU and Action Aid Ghana has taken on a wider scope in addition to participants from AAIG, there are a number of girls from Plan Ghana programme in the Central Region. with others from our sister-AANigeria programme participating," she mentioned

"The camp is aimed at bringing together girls from deprived and distressed communities and to expose them to greater opportunities,"she added She called on government and relevant Ministries to ensure the implementation of existing policies in order to provide girls with the necessary conducive atmosphere to be able to stay in school and study

"It is towards this end that we can work consciously towards attaining the Millennium Development Goals of gender parity in education", she urged

Wednesday, August 29, 2007

For many, poverty has gravity

from The Journal and Courier Online

Assistance available for those trying to escape its clutches


Although LaVeta Franze has a job, she considers herself among the poor.

The money she makes working as a teacher's aide at the Lafayette Adult Resource Academy doesn't pay for the expenses that come with being the mother of the three children and a student attending classes at Ivy Tech Community College, she said Tuesday.

To pay her bills, she gets food stamps, has her children on Medicaid and pays subsidized rent.

"I still wouldn't trade the job for anything because they do work around my school schedule," said Franze, who had also taken classes at the resource academy.

Several directors of local charities said the bulk of Tippecanoe County residents living in poverty are similar to Franze.

Like the national poverty rate, the rate for Tippecanoe County appears to have dipped slightly between 2005 and 2006. But considered over the past six years, it's a different story.

In 2000, 20,567 Tippecanoe County residents, or 15.4 percent of the population, lived in poverty, according to the U.S. Census bureau. In 2006, the number was 24,272, or 17.3 percent of the population.

The poverty level is the official measure used to decide eligibility for federal health, housing, nutrition and child care benefits. It differs by family size and makeup. For a family of four with two children, for example, the poverty level is $20,444.

Beth Davila, assistant director of the resource academy, said many people who come to the academy to learn new skills or obtain a general education diploma usually find a job easily.

But jobs they take tend to place them among the "working poor."

"People are going into entry-level positions," she said.

In the past school year, 172 unemployed people and 592 employed took classes at the resource academy, she said. Of those, most had or later got jobs in service industries, becoming day care workers, janitors, construction workers, employees at fast-food restaurants or members of a hotel staff.

The work seldom pays enough to support a family, Davila said.

"It is not often that people at (the resource academy) leave public assistance," she said.

Ann Miller, owner of Adecco, a placement service in Lafayette, said finding temporary jobs isn't more difficult now than in years past. The growth of poverty in Tippecanoe County shouldn't be attributed to a lack of opportunities.

"Anyone who wants to find work is finding work in Lafayette," she said.

According to the U.S. Bureau of Labor Statistics, the unemployment rate stood at 3.1 percent in July 2000. In July 2007, it was 4.1 percent.

Jennifer Layton, executive director of Lafayette Transitional Housing, said it's a common notion that the poor move to Tippecanoe County because the welfare services here are generous.

Yet in her dealings with those who stay with transitional housing -- which lodges homeless people until they gain a means of supporting themselves -- she finds that most came here to stay with friends or family.

"And something doesn't work out," she said. "Not very often do we see people who come here to live in a shelter."

Ed Eiler, superintendent of the Lafayette School Corp., attributed the rising rate of poverty in part to the abundance of inexpensive homes in Tippecanoe County.

"Whether they are moving in from bigger cities or from the rural communities, people are going to gravitate toward where there is housing that they can afford," he said.

Rising along with the rate of poverty in the county has been the number of subsidized meals served at Lafayette School Corp. schools.

In 2000, 27.9 percent of the 7,405 students at the schools ate free lunches. In 2006, it was 40.1 percent of the 7,469 Lafayette students.

Eiler said providing the free lunches costs the schools little, since they are paid for by the federal government. Yet he said that students who take them generally perform worse on standardized tests than others. And the schools pay for special services meant to improve those students' scores.

James Taylor, executive director of the United Way of Greater Lafayette, said the growth of the working poor is likely a result of the welfare reforms adopted under the Clinton administration, which seem to be succeeding at forcing more people off the dole and into work.

Yet, Taylor said, many now employed find themselves faced with a dilemma: Should they take a job that gives them more if their doing so makes them lose certain social services?

"It's a punishment for people doing what society wants people to do."

US, Korea fight over food

from Asia Times

By Christine Ahn

The Korea-US Free Trade Agreement (FTA), signed on June 30, awaits ratification by the US Congress through an up-or-down vote without amendment. So far, the Democratic leadership has said that FTA is dead in the water, but only on the unenlightened grounds that the FTA did not go far enough in prying open South Korea's automobile and beef markets.

If enacted, the FTA will become the most economically significant trade deal since the North American Free Trade Agreement

(NAFTA). Financial transactions between the United States and South Korea surpass US$74 billion annually. The US also intends to use it as a model to expand trade liberalization throughout Asia.

Like NAFTA, the FTA will forever change South Korea's agricultural economy. For this reason, the deal has been furiously opposed by Korean farmers who believe it will force thousands of their dwindling numbers into poverty, seriously inhibit South Koreans' right to buy local food, and undermine domestic food-safety laws.

"In 1990, South Korea had 10 million farmers. Today, there are 3.5 million," said Sin Moon-hee, of the Korean Women Peasants' Alliance. "This is what unfettered trade has done to us and to the Korean countryside."

In 2006, the United States exported $3.4 billion worth of agricultural, fish and forest products to South Korea, the sixth-largest US export market. US agribusinesses are salivating at the opportunity to reach more of South Korea's 49 million consumers and the $12 billion agricultural market through the FTA.

Pro-business interests in South Korea argue that the FTA will make Korean farmers more competitive, especially in cultivating rice, the country's most economically and culturally significant crop. But Korean farmers have already undergone severe competition through market-opening reforms over the past two decades. The costs? More than 6.5 million farmers have been displaced and many traditional Korean crops, such as barley, wheat, corn, fruits and cotton, have virtually faded from the Korean countryside.

Korean peasants, militant on the front lines against the FTA, view the agreement as the final straw in a string of domestic and international policies systematically designed for their demise. During the 1960s and 1970s, South Korean peasants in essence subsidized the country's export-led industrial development. Then-dictator Park Chung-hee intentionally depressed agricultural prices to acquire a steady flow of cheap labor for export factories.

But this export-industrialization policy, which drove millions of farmers off the land, was mitigated by South Korean trade policies that limited imports with high tariffs and quotas. Farmers' incomes diverged considerably from those of urban workers in 1995 when the South Korean government joined the World Trade Organization (WTO) and signed on to the Agreement on Agriculture (AOA).

Under the veil of making agriculture more competitive, the AOA forced developing countries to eliminate quotas and forced governments to import a minimum amount of agricultural commodities at a low tariff. While developing countries were shredding the safety net for their farmers, by the early 2000s, the US and the European Union were spending $9 billion to $10 billion more on subsidies than they had spent a decade earlier, with the bulk of subsidies going to large corporate farms.

Small-scale farmers in the global South were surviving on less than $400 a year, while US and EU farmers received on average $16,000-$21,000 a year in subsidies. In 2003, the US dumped on the global market five commodities at 10-47% below the cost of production.

In the US, the average rice farm is 160.7 hectares, compared with South Korea's average rice farm of 1.4 hectares. About 8,000 of the United States' 2 million farms grow rice, compared with South Korea, where more than 787,000 farms - or 57% - cultivate rice. From 1995 to 2005, the US rice industry received more than $10.5 billion in government subsidies, of which 25% went to the top 1%.

"It doesn't even matter that rice wasn't included in the text of the agreement," said Heo Young-keo, vice president of the Korean Confederation of Trade Unions. "By 2014, Korea's rice market will be opened," said Heo, referring to the AOA, "and that is the reason why rice does not have to be included in these negotiations."

Going the way of NAFTA
According to South Korea's National Policy Institute, when tariffs on 20 or more sensitive agricultural products are eliminated, within 10-15 years, the decline in production by Korean farms will mean the loss of $1 billion to $2 billion annually. South Korea's agriculture could disappear in 10-15 years.

For example, tangerines account for up to 70% of Jeju (also spelled Cheju) island's agricultural production. It is estimated that opening South Korea's citrus market to powerful US companies such as Dole and Sunkist will force a 59% drop in the price of tangerines and result in a loss to Korean farmers of more than $200 million.

Seeing how the FTA will seal their fate, thousands of peasant farmers swam 80 kilometers off the south coast to confront more than 10,000 Korean riot police to make clear that they weren't going down without a fight.

President Roh Moo-hyun has promised to set aside $119 billion to aid farmers hurt by the FTA, but according to Kim Chee-hyung of the Korean Alliance Against the FTA, this "is the 10-year sum of what the government already spends annually, and only a small portion of that amount translates into actual income". Current subsidies haven't offset the negative impacts of liberalizing Korean agriculture, so peasant farmers are highly skeptical of this promised arrangement.

Dismantling Korea's food safety laws
Not only will the FTA force the extinction of South Korean farmers, it is working to undermine, and already has, the country's food-safety laws. As a precondition even to begin talks, Seoul agreed to re-import US beef, which it banned in 2003 after the discovery of mad-cow disease in the United States. US boneless beef and beef from cattle under 30 months old - considered a lower risk of containing bovine spongiform encephalopathy (BSE) - can now enter South Korea.

But since the ban was lifted last December, US beef shipments have been routinely returned because they contained bone fragments. Last month, South Korea received a shipment from the US of a complete cattle spine, which has prompted Seoul to halt beef imports pending an explanation from the US Department of Agriculture. In response, Democrat Max Baucus, chairman of the US Senate Finance Committee, is threatening to block passage of the FTA unless South Korea changes its food-safety laws. To South Koreans, US beef is not just a matter of trade. It has become the measuring stick of public health and food safety in Korea.

US biotech companies, running out of places to which to export agricultural products containing genetically modified organisms because of worldwide opposition, have turned to the FTA as a way to undermine the Cartagena Protocol of the Convention on Biological Diversity, a multilateral treaty that imposes labeling rules on agricultural and food exports.

According to media reports, the US and South Korea signed a memorandum of understanding that stipulates that when Korea ratifies the Cartagena Protocol, it will not apply the labeling rules to agricultural and food imports from the US, which is not a party to the treaty.

Even an April 17 press release from the Biotechnology Industry Organization refers to a "separate understanding" on agricultural biotechnology. The US and Canada, also not a signatory, put this waiver into place with Mexico under NAFTA. According to the Korean Alliance against the Korus FTA, the side deal will drastically weaken South Korea's legislative authority to implement the Cartagena Protocol on Biosafety.

FTA's future
In 20 years, will Korean meals consist of rice from Arkansas, beef from Montana and fruit from California? If global food trends are any indication, this scenario has a high probability of coming true. But the costs will be enormous, not just for South Korea's diminishing agricultural biodiversity, but in terms of the people's general sense of security, as they will be beholden to US-dominated agribusinesses for food imports.

Millions of South Korean farmers - most of them in their 60s - will either die in poverty or seek work in an already saturated urban job market. More than 50% of South Korea's workforce consists of "irregular" workers, meaning they don't have the same rights as workers with benefits, including the right to unionize.

"The fight against the FTA is a class struggle, and who wins in this fight will determine the outcome," said Seo Jun-sub of the Korean Alliance.

Roh is seeking ratification of the FTA before the end of his term this year. In the US, the Korea FTA may come up for a vote in Congress this year, but it all depends on how the Peru and Panama FTAs fare. So far, Democratic Party presidential candidates Hillary Clinton and John Edwards have come out against the Korea FTA, siding with the automobile bloc led by Democratic Senator Carl Levin. But the alliance of agribusinesses, biotech firms, pharmaceutical giants, and financial-services firms might be too powerful in the end.

It may all come down to the resistance of Korean peasants and trade unionists against the WTO and now the FTA. Whether leading the procession of thousands to tear down the metal barricades in Cancun, Mexico, or swimming across freezing waters at the WTO meeting in Hong Kong, South Koreans have been at the forefront of dismantling the perception that these global trade institutions are beyond the people's reach.

Christine Ahn is a policy analyst with the Korea Policy Institute and a contributor to Foreign Policy In Focus.

Trade talks to resume with agriculture

from The Gulf Times

Talks on forging a new world trade deal will resume in Geneva next week with a push on agriculture, where there is already widespread agreement, Indonesia’s trade minister said yesterday.

But disagreement among both developed and developing countries on proposals to boost trade in industrial goods means a draft deal there would need to be reworked before talks on that area can resume in earnest, Mari Pangestu said.

“We’re going to be negotiating agriculture first,” Pangestu, a respected economist and expert on trade and development, said.

The talks were launched in 2001 to stimulate the world economy through increased trade opportunities. But the complex negotiations have floundered because of unwillingness to cut subsidies and open up sensitive markets.

Diplomats and officials at the Geneva headquarters of the World Trade Organisation (WTO) will make another effort from next week to get the outlines of an agreement on the deal, known as the Doha Development Agenda because it aims to help developing countries export their way out of poverty.

Pangestu — who has led trade talks for the world’s fourth-most populous country, where two fifths of the workforce are employed in agriculture — said these talks would focus on farm goods for the first two weeks of September, industry in the second two, and other areas such as services the following month.

Trade ministers could then meet in Geneva in October to sign a deal if one is reached, she said.

Trade officials say the end of October is the deadline for a deal as negotiations would run into the heightened emotions of the US presidential election campaign after that.

Agriculture had been expected to be one of the most contentious areas of a deal, but the latest draft proposals avoid going into some specific details, allowing the WTO’s 151 members to agree on the principles.

Filling in these gaps would be left to officials after ministers agree a deal, and it could come into force in 2009.

The proposals on industry, by contrast, set out specific ranges for tariffs, prompting disquiet from developed countries and outright rejection from many developing ones.

The farm and industry talks are related, with developed countries seeking greater access for their manufactured goods in developing countries before they allow more access in their food markets to poorer countries.

Even in agriculture there are still some differences, Pangestu noted.
“The same issue is still there, which is the willingness of the US to come to the table with something more than they have already indicated,” she said.

Trade officials say Washington is waiting for more details on the sensitive and special products, where countries wish to continue to protect their markets, before making another move on its own farm policies.

In Indonesia’s case, the special products that it wants to control are rice, sugar, corn and soybeans, Pangestu said.

“We’re net importers of corn and soybeans so it’s more about managing the supply at home,” she said.

If a deal is struck, Pangestu said Indonesia would seek greater access for non-agricultural goods such as textiles, garments, footwear and wood products.
Southeast Asia’s biggest economy could also increase its markets for palm oil. But for other farm goods, a deal would be more about potential market access as Indonesia is not a net exporter of farm goods.

Indonesia has only one bilateral deal, with Japan. Otherwise it is working with its neighbours in the 10-member Association of South East Asian (Asean), which aims to have free trade agreements with all major countries in the region by 2012.

Failure to agree the Doha Round would force Indonesia to rely more on bilateral and regional trade deals, she said.

“For small countries and developing countries this would stretch our negotiation resources,” she said. – Reuters

Pilot Program Fights Poverty With Cash Incentives

from WNYC

NEW YORK, NY August 28, 2007 —New York City is about to embark on a new experiment in fighting poverty. Some 2500 low income families will be chosen for a pilot program that will pay them cash in exchange for completing certain activities. WNYC’s Beth Fertig has more on the program’s roll-out.

REPORTER: Some time in July, Harlem resident Sandra Killett got a large, colorful postcard in the mail.

KILLETT: Opportunity NYC offers cash payments of up to $4000 per year. You can receive payments for things like helping your kids stay in school, taking your kids to the doctor, and keeping a full time job.

REPORTER: It described a new program called Opportunity NYC aimed at low-income parents like herself. As a 45 year old single mother receiving welfare, Killett says she was curious.

KILLETT: Absolutely! I could tell you, you sit down and you hope you don’t have to go to the doctor because what about the car fare?

REPORTER: Killett called the number on the post card and met with recruiters. Then, this month she got a letter saying she was selected. She’ll receive 25 dollars for every month her son has good attendance in school, 50 dollars for getting a library card, and 100 dollars for taking him to a doctor. Killett says she’s grateful for the opportunity. But she says financial rewards won’t change her parenting style.

KILLETT: It doesn’t for me because my son already has a library card. It doesn’t for me because I already participate in my child’s schooling. It doesn’t for me because I keep up with his dental. It might for another family. I can’t say.

REPORTER: That’s the question the city hopes to answer by targeting families in six of the poorest communities in Harlem, the Bronx and Brooklyn. Linda Gibbs is the city’s Deputy Mayor for Health and Human Services.

GIBBS: Can a cash incentive change the outcomes in a dramatically different way than the outcomes we’re getting right now in these households in these communities.

REPORTER: By creating a checklist of factors, such as education and good healthcare, she says the city is rewarding behavior that can move families OUT of poverty. New York City modeled the program after similar cash rewards in about 20 countries including Mexico, South Africa and Chile. It’s aiming to get a total of 5100 families registered. Half of them will be chosen for a 2 year pilot program; the other half will form a control group. An outside research firm will track them all to see if cash incentives cause the families to make different choices.

When Mayor Bloomberg announced the $53 million dollar privately-funded this year, some critics called it a band aid solution to poverty. Others were rankled by the suggestion that poor families need a financial encouragement to be good parents. Commissioner Gibbs takes the opposite view:

GIBBS: It can be really tough to do the right thing when you’re living in a poor household in a poor community and every day a choice of one right thing compromises another right thing. And the family members that I talk to, I think, actually felt more respected and acknowledged for the difficulty of their situation rather than insulted.

RECRUITER: We’re gonna work with that, OK. Now, this program is designed to give families cash rewards, incentives for doing things for the children that they already do.

REPORTER: At Catholic Charities, recruiters are still signing up families before the program rolls out next month.

RECRUITER: And the workforce is for the adults whereas is you work full time over a 2 month period you can receive incentives for that

REPORTER: Catholic Charities is one of 6 community groups that have a contract to recruit the families. Each week, they get 500 names culled from the list of children who receive free school lunches. Enrollment officers use magic markers to check off who they’ve contacted and who’s come into the office. But after 2 months of phone calls and home visits, there are still a lot of unmarked names, acknowledges Eileen De La Cruz, the project director for Catholic Charities.

DE LA CRUZ: It’s challenging because even though that you’re offering literally free money as a gift, there is a process and people are a bit skeptical about scams, with identity theft and things like that. But I think once people hear the details of the program and actually give it a second they usually tend to come in and sign up.

REPORTER: The city says the pace has picked up in the past few weeks, as the word has spread, and it’s now almost half way toward its goal. At Groundwork in East New York, Youth and Family director Erica Ahdoot says door to door visits were more effective than phone calls. She hopes the Opportunity program will help families untangle some of the complicated issues of poverty – especially in areas like East New York, where local graduation rates are less than 50 percent.

AHDOOT: Maybe just historically there’s been some barriers between families and the schools, just really feeling comfortable to advocate effectively for students or to really understand what goes into testing. Or what is actually indicated on report cards or what does it mean to pass a Regents. And so this might be a way to really push not only parents but community organizations.

REPORTER: But first things first. In Harlem, Sandra Killett’s twelve-year old son Simeon had one thing in mind when he heard his mom will be getting extra money from the city.

SIMEON: I want to get a game called Pokemon Diamond. It’s really cool cause you can trade Pokemon from across the world.

REPORTER: Simeon is after all, a twelve year old boy, content to spend a summer afternoon playing video games. But when school starts, his mother says he’ll be hitting the books, as usual, and getting good grades - REGARDLESS of how much money she’s paid by the city. But since the city IS paying, Killett says she hopes the program will shine a light on a very important issue.

KILLETT: You know, people need a little bit more to help their families get by and maybe this will get some flags up, and will do something for people who are no-income low-income or living in poverty.

REPORTER: The first cash rewards will be paid in about a month. The city has recruited banks to help the families open no-fee accounts. The next phase of the program will also start in a few weeks. That part involves thousands of fourth and seventh graders who will be paid a small amount each time they pass a periodic assessment test, to see if these rewards have any effect on their big annual exams. For WNYC I’m Beth Fertig.

Youth poverty a ticking time-bomb

from Tribune de Geneve

Almost half the recipients of social benefits in Switzerland are under the age of 25, notes a youth commission that urges changes to remedy the situation.

The Swiss federal commission for children and youth (CFEJ) has denounced the growing precarious financial situation faced by young people and called for action. Close to one in two recipients of government social aid in the country are under the age of 25. The poverty and social exclusion of children and young people remains a largely “taboo” subject, the commission said in a report this week.

But 45 percent of recipients dependent on social benefits are young people, compared to just 1.5 percent for seniors over the age of 65, the commission said. The social system has forgotten the under-25s who account for 100,000 of the country’s poor, said Pierre Maudet, a Geneva resident and president of CFEJ. The situation is a ticking “social time bomb” ready to detonate, according to the group.

Among the principal factors leading to the dire social conditions is difficult family situations brought about by unemployment and a large number of children. It is necessary to focus particular attention on children, with targeted measures, said Chantal Ostorero, an expert in social issues from Vaud. The CFEJ has proposed 55 recommendations, including making the government more responsible for assuring access to the workplace for young people. Seventy percent of young people receiving social aid have not received job training. The commission recommends establishing a national fund to finance such training.

Young people are also increasingly hobbled by debts. To address this issue, the commission suggests that credit companies devote one percent of their annual revenues (SFr5-6 million a year) to counseling young people about budgeting and avoiding debt.

Couture with a Conscience: New Fashion Line Supports Women Entrepreneurs Across the World

from PR Web

Shabby Apple Apparel launches fall line in partnership with Unitus

Salt Lake City, UT, and Redmond, WA (PRWEB) August 29, 2007 -- Shabby Apple, a socially responsible women's apparel company, announces the launch of their new fall line of fashions with a conscience in partnership with Unitus, a nonprofit organization dedicated to reducing global poverty by increasing access to microfinance. Through the partnership, Shabby Apple will donate 5 percent of its proceeds to support Unitus's work of empowering women entrepreneurs in India, where the company sources many of its textiles. This innovative partnership provides women an opportunity to connect with and support women's empowerment across the world through their purchase of Shabby Apple products.

"We at Shabby Apple are honored to support the fight against global poverty through our partnership with Unitus," said Emily McCormick, co-founder of Shabby Apple. "We feel that in today's world businesses can't exist simply to make profits. With more than 3 billion people living on less than two dollars per day, we all need to make a positive contribution. We chose to partner with Unitus because of their impressive track record in helping provide economic opportunity to more than 2 million women and their families worldwide, and because of their large presence in India, where we source our textiles. As entrepreneurs ourselves, we found Unitus to be the perfect partner to help empower other women entrepreneurs around the world."

Each Shabby Apple dress in the fall line will feature a unique hang tag that shares a story of strength and inspiration from the women in India who benefit from access to microcredit. Visitors to the Shabby Apple and Unitus websites can learn more about each featured entrepreneur and/or make a donation or purchase to support this effort. Every $100 donation provides at least 20 women with access to financial services and the chance to live a life without poverty.

"We're grateful to Shabby Apple for bringing more visibility and awareness around the pressing needs of global poverty and the promise of microfinance," said Diana Reid, Vice President of Unitus Donor & Investor Relations. "Simply by purchasing a dress online or at a trunk show, Shabby Apple customers will be helping to bring life-changing financial services to women in India and empower them to lift themselves out of poverty."

For many women in the developing world, life is a constant struggle against poverty and hardship. Limited economic opportunity can lead to a downward cycle of malnutrition, illiteracy and poor health -- a cycle that traps each new generation. Microfinance loans -- typically in amounts of $100 or less -- enable women entrepreneurs in developing countries to start or expand small businesses, such as weaving baskets, raising chickens, or running small retail shops and restaurants, and begin to break the cycle of poverty. Income from these businesses provides better food, housing, health care and education for entire families, and perhaps most importantly, hope for a better future.

Unitus is a leading social enterprise that works to eliminate barriers to growth for institutions delivering financial services to the world's poorest. Through its innovative business and technology solutions and links to capital markets Unitus helps its partners to grow rapidly and reach thousands more new microcredit loan recipients each year. Unitus and its portfolio of 16 microfinance partners are working together to change the lives of more than 2.2 million families in Argentina, India, Indonesia, Kenya, Mexico and the Philippines.

About Shabby Apple
Shabby Apple LLC is a dress company that offers figure-flattering, moderately-priced designer dresses. Shabby Apple is a return to what dresses were always meant to be -- a one-piece outfit with no need to add tank tops, no cardigans, nothing. The company teaches women how to accessorize in different ways to make the same dress appropriate for different occasions. Shabby Apple launches three lines of dresses a year and is a women-owned and women-operated, socially responsible company. By partnering with Unitus, a leading nonprofit organization in the microfinance industry, Shabby Apple donates time and money to help alleviate global poverty for millions of women and their families. Visit Shabby Apple online at

About Unitus
Unitus, Inc. is a worldwide leader at scaling proven solutions to global poverty. Unitus accelerates access to life-changing financial services for those living at the bottom of the economic pyramid - the 3 billion people who are living on less than $2 a day. Unitus partners with the world's most promising microfinance institutions and provide them with breakthrough business strategies, technology and access to capital that empower them to serve thousands more hardworking micro-entrepreneurs around the world. Unitus partners are adding new loan recipients eight times fasted than the industry average. Our portfolio reaches more than 2.2 million families in Argentina, India, Indonesia, Kenya, Mexico and the Philippines. Our goal is to reach more than 15 million of the world's working poor by 2015. Unitus has been featured in the New York Times, the Wall Street Journal and on NPR, and received Fast Company Magazine's Social Capitalist award in 2005 and 2006.

Unitus is a 501(c)3 nonprofit, with offices in Redmond, WA and Bangalore, India. For more information, please visit or contact us at info

Tuesday, August 28, 2007

Countries Stand Up to EU

from All Africa

Inter Press Service (Johannesburg)


By Michael Deibert

Concern over getting too little in return for what they are being asked to give up has led some African nations to say "no" to some proposals for new trade relations with Europe next year.

Several Eastern and Southern African nations have announced that they will only sign parts of the Economic Partnership Agreements (EPAs) that relate to market access and development. The EPAs have been put forth as successor to the Cotonou Agreement, which expires at the end of December.

The Cotonou Agreement gives 77 African, Caribbean and Pacific (ACP) countries preferential access to European Union (EU) markets. Signed in Benin capital Cotonou in June 2000, the agreement replaced the 25 year-old Lome Convention (signed in the Togo capital).

The Cotonou Agreement was broader in sweep than its predecessor, and set as its objectives "poverty eradication, sustainable development and the gradual integration of the ACP countries into the world economy."

At a regional negotiation forum Aug. 3 to 5 in Port Louis, Mauritius, 16 Common Market for Eastern and Southern Africa (COMESA) countries agreed a strategy to be presented at their next negotiating round in September.

The 16 COMESA nations, represented by no less than five separate overlapping and occasionally competing economic groups, have little choice but to sign on to the market aspects of the new pact in order to maintain preferential access to EU markets and remain compatible with World Trade Organisation (WTO) access rules.

At present ACP members enjoy non-reciprocal trade benefits with the EU -- such as access to EU markets which EU nations do not enjoy with ACP countries -- but these benefits are incompatible with WTO standards.

New trade terms are being renegotiated through creation of WTO-compliant Economic Partnership Agreements (EPAs) that are scheduled to enter into force by the end of 2007. But EPA negotiations have proved difficult, with some countries fearing that their economies will not be able to withstand competition from European goods for years to come.

At a meeting in Brussels in February this year, COMESA negotiators said that potential loss to revenue for many African states across the continent heavily dependant on tariffs could require the EU to provide an additional 2 billion euros in assistance by 2010 if they were to allow Europeans free access. The COMESA members also want the EU to commit more funds to development in exchange for lowering trade duties.

"What Africa lacks is a market for its goods, and there are many barriers amidst which our goods are produced and sold to the EU," says Tiberius Barasa, assistant research fellow at the governance and development programme at the Institute of Policy Analysis and Research (IPAR) in Nairobi, Kenya.

The EU has been accused by some food and trade policy analysts in the developing world of applying "zero tolerance" policies on food import that they say have more to do with protecting Europe's heavily subsidised agricultural and fishing industries than with public safety.

Another mistake, some observers in Africa say, is an insistence on the part of Brussels to make South Africa the standard for assessing the capacity of the whole continent to withstand loss of revenue foreseen through the EPAs.

"This appears to be a fundamental clash of paradigms, and it's very difficult to see how we're going to overcome that," says Brendan Vickers, senior researcher on multilateral trade at South Africa's Institute for Global Dialogue. "The (European) Commission just isn't seeing the bigger picture, and there's a failure to understand that it's not just the South African market, it's the markets of other countries and less developed countries."

South Africa, which has natural resources and a highly developed business and communications infrastructure, maintained per capita gross domestic product of 13,300 dollars last year, despite unemployment that still hovers around 25 percent. The Bureau for Economic Research in South Africa reported this month that South Africa's GDP growth holds steady at 5 percent.

By contrast, Mozambique maintained a GDP per capita of just 1,500 dollars over the same period. In Kenya it was 1,200 dollars, and in Tanzania 800 dollars.

Despite offer of a transitional period for lowering trade barriers, there are fears that any agreement that does not address issues such as production and supply within each individual economy could do more harm than good to bilateral trade.

"If you look at national impact studies that have been made, you find that these reciprocal free trade agreements are going to be devastating for industrial capacity, for tariff revenues," says Vickers. "There's a need for far greater development cooperation to address these issues."