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DB, RELIGIOUS LEADERS HOLD CONFERENCE ON GLOBAL TRADE AND POVERTY REDUCTION

United States of AmericaSept. 9 2005

Press Release - Inter-American Development Bank

Catholic, Protestant and Jewish religious leaders from the United States and Latin America and representatives of non-governmental organizations, academic institutions and multilateral agencies with contrasting views on development took part in a conference on the economic impact, moral implications and social consequences of global trade.

The meeting, which took place on Thursday at the Pope John Paul II Cultural Center in Washington, D.C. was organized by the Inter-American Development Bank, the Latin American Council of Catholic Bishops (CELAM) and the U.S. Conference of Catholic Bishops (USCCB).

The conference’s workshops covered topics such as the effects of trade liberalization and economic integration on the rural poor, indigenous communities and the environment; intellectual property rights and access to essential medicines; assistance to people and sectors affected by free trade; and the lessons of the North American Free Trade Agreement (NAFTA).

In his opening remarks IDB President Enrique V. Iglesias stressed that the impact of free trade agreements on economic growth, poverty reduction and social equity depend decisively on how each country sets up its national policies and institutions to implement such pacts, take advantage of the opportunities and compensate disadvantaged groups.

Even optimally designed pacts are not a panacea, Iglesias said: “Without a coherent national agenda of policies underpinned by broad consensus, a country will find it very difficult to tap the full potential of its human and natural resources to compete internationally.�

Iglesias added that, like all public policies, trade agreements involve moral challenges. The task of identifying problems and finding ways to deal with them effectively is a collective responsibility, he said, especially of religious leaders, business leaders and public officials.

In a plenary session, Chilean senator and former finance minister Alejandro Foxley, whose country is often held up as Latin America’s most successful case of integration to the global economy, described Chile’s experience after it decided unilaterally to open its economy nearly three decades ago.

Foxley, a widely respected economist, argued that while at the time trade liberalization was a highly controversial choice, its results speak eloquently. Chile’s growth has averaged six percent a year, and poverty levels have dropped from around 50 percent of the population to 18 percent.

Under democratic rule Chile has implemented social policies to redistribute wealth generated by its strong economic growth. The government has also encouraged small businesses and rural producers to become exporters by pooling their efforts.

“What we have witnessed in Chile is a revolution in small-scale agriculture,� Foxley said. “Farmers now are thinking about how they can grow berries instead of wheat and get them to supermarkets abroad.�

In a luncheon address Cardinal Oscar RodrÃÂ*guez Madariaga of Honduras, chairman of CELAM’s committee on economic solidarity, said that Latin America would not be able to move forward with its development agenda if it fails to address the extreme inequality between the rich and the poor.

Cardinal RodrÃÂ*guez questioned whether free trade was truly free, noting that the Doha Round of negotiations of the World Trade Organization, which was intended to benefit developing countries, has long been deadlocked over disagreements on issues such as agricultural subsidies and barriers to trade.

The cardinal cautioned that if globalization does not improve the lot of the poor, the world would not achieve lasting peace.

At a breakfast hosted by Catholic Relief Services, Cardinal Francis George of Chicago, vice president of the USCCB, commented on the acrimony of the recent political debate over the ratification of the DR-CAFTA free trade agreement between the United States and Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

According to Cardinal George, when discussing free trade agreements political leaders should focus on who could be harmed by their decisions rather than simply counting who is in favor and who is against. “We need to expand our current horizon of development,� he advised.

IDB, trade and integration

Since its founding in 1959, the IDB has had two principal mandates: the acceleration of economic and social development and the promotion of regional integration, which strengthens trust and cooperation among neighbors, offers opportunities to diversify trade and lowers the risks of depending on a few exports.

The IDB supports borrowing member countries’ integration efforts at the subregional, hemispheric and global levels, helping them prepare for negotiations, implement agreements and adapt to the challenges of opening their markets.

In recent years the IDB assisted Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua in trade capacity building as part of their preparations for negotiations with the United States to create the DR-CAFTA. It is currently providing similar assistance to the Andean nations and has supported member countries involved in the Free Trade Area of the Americas project and the Doha round.

At the same time the IDB is financing programs to help borrowing countries increase their competitiveness and prepare for the transition to free trade, addressing issues such as fiscal and customs reforms, export development, investment promotion, infrastructure improvement, rural development, assistance for small and medium-size enterprises and labor market adjustments.