Trade and Aid

...This is necessary to provide more adequate financial reserves for cushioning national economies against the adjustments required...

...Otherwise the world may soon run into economic and political disasters to which all the fashionable argument about the internal organization of the Atlantic Community will appear as a futile irrelevance...

...If the developing countries are to raise their annual growth from 3.5 to 6 per cent by 1970, the rich countries will have to give them 1 per cent of their far greater national income every year...

...For free access to the richer markets is as important to the developing countries as the terms of trade...

...Detailed studies have been produced to show what is required...

...The danger is already real for much of Africa and Asia, as was clear from the meeting in Cairo last month of more than 30 developing nations who sought to concert their strategy in response to emerging economic super-blocs like the Common Market and the Soviet-sponsored Comecon...

...The poorer countries will have to expand their aggregate exports more than two-and-a-half times in the next 20 years if they are to achieve their minimum development targets...

...Multilateral aid through the United Nations better serves the interest of the West no less than the wishes of the developing peoples...

...For example, though no one doubts that the success of India's economic plan is vital to the survival of freedom in Southern Asia as a whole, the Western powers are threatening to cut their contributions because of pique at India's attempts to obtain Soviet MIGs or even because the Indian Defense Minister sometimes makes disagreeable remarks...

...only the Cuban delegate confined himself to polemics...

...But Western aid as a whole still falls far short of what is needed, and there are disturbing signs that even the current flow of aid may be drastically reduced through political shortsightedness...

...If so, the opportunity must be taken to consider also the long term development of economic relations between the West and the poorer nations...

...Dag Hammarskjold once pointed out that a drop of 5 per cent in the world price of raw materials would wipe out the value of all international and national investment in the developing countries...

...in the last 10 years, while the prices of manufactured goods have risen 6.8 per cent, commodity prices have fallen an average of 21 per cent...

...If this gulf is allowed to widen—as the rich countries grow richer while overpopulation keeps the poor countries stationary—political instability among the underdeveloped nations may drag the great powers into a fatal and unnecessary conflict...

...The proceedings were realistic and wellinformed...

...Thus, if we look at world economic problems as a whole, the stabilization of commodity prices assumes infinitely more importance than the formation of regional unions among the richer countries...

...Nevertheless, the developing countries will have to rely on trade far more than aid as the source of foreign capital—and of course they infinitely prefer earning their keep to relying on charity...

...On the other hand, a world economic conference has little chance of success unless the richer countries first reach agreement with one another on how to meet the needs of the poorer nations...

...But the basic principle of the Rome Treaty is to create barriers against imports from outside Europe so that the European countries may expand their trade with one another...

...The catastrophic fall in their prices on world markets means that though Uganda doubled its exports in the eight years ending in 1960, it actually earned 8 per cent less than in 1952...

...Indeed, Russia has found out in Guinea—and America in Iran—that bilateral aid may set up dangerous strains between the donor and recipient...

...A whole range of economic problems has emerged from Britain's negotiations in Brussels which can only be solved by the West and the developing countries together, and whose solution increasingly appears as a necessary precondition, rather than a desirable consequence, of Britain's entry into Europe...

...Or, despair may drive the poor to Communism and shift the global balance decisively against the West...

...They need to increase their share of world trade only from 26 to 28 per cent, providing the terms of trade simultaneously move 10 per cent in their direction...

...Yet Britain is having the greatest difficulty persuading the Common Market countries to continue taking their exports, even at the current level, until 1970...

...It seems likely that the difficulties encountered by Britain in Brussels will compel the West to reconsider the pattern of its own economic relations in any case...

...All previous experience should teach us that the only practicable purpose of aid is to produce stability and not subservience...

...President Kennedy and Adlai Stevenson have both spoken eloquently about the danger that the Common Market might come to appear as a rich man's club in a disintegrating world...

...There is some justice in the Common Market argument that Europe alone cannot be expected to carry the whole burden of Afro-Asia's expanding exports...

...This is all the more reason why the West should take seriously their unanimous demand that the United Nations hold a world economic conference in 1963...

...In fact, regional unions like the Common Market are likely to render the global problem even more difficult to solve unless they adopt a far more liberal and outward looking policy than appears likely at present...

...Coffee and cotton accounts for nearly 90 per cent of its exports and one-third of its revenue...

...For unless all the rich countries accept their fair share of the sacrifices involved, attempts to reach partial solutions will only produce new strains in the international community...

...Here again the target is a modest one...

...Yet many countries have had to face a fall of 40 per cent in the world prices of their staple exports...

...Unfortunately, everything which has been happening recently in the richer countries makes this target seem unattainable...

...Until such a program is agreed upon however, it is difficult to justify the demand that Britain should raise new barriers against imports from Commonwealth countries which have no alternative market in prospect...

...It is not only a question of preventing Khrushchev from succeeding in his attempt to present Russia as the protector of Afro-Asia against neo-colonialism...

...The United Nations has already committed itself to treating the 1960s as the World Development Decade...

...HELPING THE UNDERDEVELOPED NATIONS Trade & Aid By Denis Healey London Europe and America together now face the formidable challenge of narrowing the yawning gulf which separates the rich white peoples of the Atlantic Community from the poor, mainly colored peoples of Asia, Africa and Latin America...

...Uganda, a small African country which becomes fully independent in October, offers a disturbing example of the general problem...

...This makes a depressing contrast to the wisdom which offered Marshall Plan aid not only to the neutrals of Western Europe, but to the Communist states as well...

...In particular, it is difficult to imagine any adequate program for the reorganization of world trade which does not include a reorganization of the international currency system...

...This 1 per cent would equal 10 per cent of the average income of the poorer countries, enabling them to double thennet capital formation...

...It seems a very modest target— and a few Western countries are already surpassing it...

...This, of course, is the central issue at stake in Britain's negotiations for entry into the Common Market...

...America and Japan should join Europe in framing a long-term program for world trade...