Australia's trade agenda balances the developed and developing worlds

• First, if more countries are trading, more wealth is generated and it is more evenly distributed, contributing significantly to global security and stability.
• Second, Australia shares strategic interests in the global trade negotiations with many countries. And of course Australian business has strong commercial interests in many of these countries.

Aid vs trade

Today, developing countries recognise that it is trade and investment, and not just aid, that drive development.

They recognise that aid, in itself, is no solution to the economic problems of the developing world.

Indeed, aid alone only perpetuates dependence on others for economic, social and, ultimately, political stability and growth.

Open economies are the fastest and most sustainable means of achieving improved living standards and greater wealth.

Those economies that have most actively engaged in the world economy have lifted their people out of poverty and improved their wellbeing – on almost any key social measure.

In East Asia, for example, absolute poverty has halved over the past 20 years – a persuasive, and still enduring, case for the benefits of liberalisation, over and above what can be delivered by aid.

The fact is that aid – valuable as it can be when properly conceived and targeted – can never be more than a mere fraction of what can be earned by developing countries through trade and investment.

• Each year, developed countries provide $90 billion to developing countries in official development assistance, or aid.
• By contrast, each year developing countries earn 40 times that amount ($3.6 trillion) from exports.
• And, each year, developing countries receive 4 times that amount ($360 billion) in foreign direct investment.

Moreover, foreign trade and direct investment delivers market results and flow-on benefits to developing country economies.

• It provides access to a broader range of goods, services and technologies.
• It accelerates the flow of private capital and foreign exchange reserves.
• And it acts to multiply employment, providing the basis for local work forces to develop an entrepreneurial skill base.

A recent study by Oxfam concluded that increasing the share of world trade by developing countries by just five percent would generate an extra $640 billion in revenue for them.