The World's Poor Need More Than Aid
The largest reduction in global poverty to take place in the past 30 years has occurred in Asia. This fact should temper the jubilation Europeans are expressing over President George W. Bush's decision in Monterrey, Mexico, to sharply raise U.S. spending on foreign aid in the years ahead. Trade, not aid, reduced Asian poverty. And on this score, neither Europe nor the U.S. has done nearly enough to help the world's poor. In fact, when it comes to opening markets and importing goods from Third World countries, the U.S. is ahead of Europe.
That is why Bush's recent performance on trade is so disappointing. He has just started what may become a serious trade war by announcing high tariffs on some steel products. He is also backing efforts to curb the import of Canadian lumber. Bush continues to protect textiles and agriculture, which together account for nearly 70% of the exports of the poorest countries.
To make matters worse, Congress will soon pass an enormous farm bill that gives a record amount of government money to America farmers, encouraging them to produce much of what could be imported from poor countries. Europe does the same. Its current farm subsidies already exceed the proposed record sum of U.S. farm subsidies.
Foreign aid, when properly focused, can alleviate disease, educate children, and provide emergency food for people. But aid alone cannot generate the kind of economic growth required to end poverty. Only trade can do that, and on that score, both Europe and the U.S. should do much more.