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About the Book This paper describes two of the world’s most urgent (and interconnected) problems – the global commodities crisis and the distorting nature of global agriculture trade. The decline in commodity prices and the falling share of developing countries in the commodities trade have been responsible for massive transfers of financial resources from poor to rich countries. The high level of agriculture subsidies of rich countries has also adversely affected the developing countries’ agricultural sector. This paper outlines recent developments regarding these two issues, including at the United Nations and the World Trade Organisation (WTO). Suggestions are also made to resolve the two problems of commodities and agriculture trade. They include, once again placing high global priority on seeking solutions to the commodities crisis; reviewing the global framework which influences agricultural trade as well as developing countries’ agriculture; addressing the issues of Northern subsidies and import liberalisation in the South in WTO negotiations; and reviewing the trade conditionalities linked to the loans of the international financial institutions. About the Author Martin Khor is the Director of the Third World Network. He is an economist trained in Cambridge University and has authored several books and articles on trade, development and environment issues. Contents1 General Background and Rationale for Dealing with the IssuesCommodities crisis Global agriculture trade 2 The Developing Countries’ Commodities ProblemIllustration: The case of coffee 3 Global Agriculture Trade and Continued Protection in Developed CountriesContinuation of protection in developed countries Effects of Northern subsidies and protection The case of cotton subsidies Lack of capacity of developing countries 4 Effects of Import Liberalisation on Developing Countries5 The Global Framework Regulating Agriculture Trade 6 Previous and Recent Efforts to Improve the Commodities Situation Previous attempts to deal with commodities UN Eminent Persons’ Report on Commodities (October 2003) Establishment of international task force on commodities at UNCTAD XI (June 2004) 7 Suggestions for Measures and ActionPlacing high global priority on seeking solutions to the commodities crisis Reviewing the global framework which influences agricultural trade as well as developing countries’ agriculture Addressing the issues of Northern subsidies and import liberalization in the South in WTO negotiations Reviewing the trade conditionalities linked to the loans of the international financial institutions Improving supply capacity in developing countries References
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