Poor Communities Can Trade Up

For producers in poor countries, tapping into international business can bring access to wider and wealthier markets.

Trade does provide benefits, but they may not "trickle down" automatically to the poorest people. It's important to find solutions to fill the gaps between trade-related economic growth and poverty reduction.

A business-driven approach

ITC's Export-led Poverty Reduction Programme takes a complementary approach to "macro" poverty reduction strategies by targeting poor communities directly and striving for a "bottom-up" effect. Its pilot projects focus on products and services that can benefit from short-term, high-impact export promotion activities.

Some examples of the programme's projects include:

• Gourmet coffee in El Salvador. In November 2002, ITC launched a project in the Cordillera de Apaneca, in south-western El Salvador, to improve living conditions for about 400 poor coffee-growing families. It started by identifying Japan as a target export market for the high-quality coffee they grew. In 2003, despite the general downward trend in coffee prices, the farmers delivered almost a tonne of gourmet coffee to Japan at premium prices. The coffee, sold as "Café Monte Sion", has received environmental and social certification from the Rainforest Alliance. It is also a member of the Association of Sustainable Coffees of El Salvador. The project has had valuable spillover effects, as the national authorities have improved road access in the area; built a primary school for the community; and assigned a teacher.
• Silk products in Cambodia. The silk weavers of Takeo Province in Cambodia make beautiful products such as scarves, handbags and cushion covers. However, these rural producers - mainly women - did not realize how valuable their products are nor how to enhance them with more marketable designs or higher-quality dyes. Lack of knowledge about market access conditions also left them dependent on middlemen. In July 2003, the Cambodian Craft Corporation and ITC helped restructure the work of about 40 families. A consultant is providing training and advice to:
   
• form production groups;
• improve production techniques;
• develop and adapt products to consumer tastes;
• understand costing and pricing;
• find markets; and
• coordinate with other Cambodian crafts associations.

There is already growing interest from overseas buyers. A European buyer recently organized a trade visit to build relations with the silk weavers. They have also been invited - free of cost - to a Japanese trade fair in June 2004, where they will present a new collection of silk products.

The aim is for 100 families to benefit eventually from the knowledge and structures in place and be able to respond effectively to market demand. ITC and the Cambodian Craft Corporation will also repeat the experience in communities of silversmiths and potters.

• Community-based tourism in Brazil. Tourism is flourishing in Brazil, especially in the state of Bahia. In October 2003, ITC launched a project to create jobs and improve the livelihoods of the 10,000 people who live in the area surrounding Bahia's Costa do Sauípe tourism resort. It is helping poor producers in the area integrate into the value chains generated by tourism, under the Costa do Sauípe Social Sustainable Programme - also known as Programa Berimbau, after a Brazilian musical instrument - that the resort launched. The resort includes hotel operators such as Marriott, Renaissance, Sofitel and SuperClubs Breezes.

The growth of tourism has spurred the development of family agriculture, artisanal products and services that can be offered at the resort. The pilot project will establish:

• an organic waste recycling unit connected to the agricultural productive chain;
• production of organic fruits and vegetables;
• a commercial warehouse and other logistical support for agricultural production; and
• a community centre with facilities for the development of artisanal products, training and the formation of cultural groups.

Building a network

ITC launched its Export-led Poverty Reduction Programme in July 2002, building on decades of experience in trade development in developing countries and economies in transition. The programme has attracted the interest of bilateral and international organizations such as the European Union, World Bank, International Labour Organization and World Wide Fund for Nature, as well as business and non-governmental organizations with an interest in sustainable development and trade. The latter include Carrefour, Max Havelaar, Walmart, Twin and the Centre for Applied Studies in International Negotiations.

Linking trade and poverty reduction

ITC is working to improve living standards for poor communities by promoting trade as a "fast track" to development with policy-makers, focusing on high-impact sectors and making links between poor producers and export networks.

• Integrate trade in development policy. Policy-makers do not often have experience in "mainstreaming" trade in their development strategies. ITC's strength is in raising awareness - showing that trade does generate new jobs in communities - and then, once policy-makers are convinced, in following up with training and information. ITC works through the Integrated Framework (a programme of six development agencies to coordinate technical assistance in the least developed countries) to encourage, for example, the inclusion of a trade dimension in national development strategies such as Poverty Reduction Strategy Papers.
• Develop trade in sectors with potential for impact. Many developing countries, and especially least developed countries, have a comparative trade advantage in natural resource and labour-intensive sectors. ITC provides technical assistance to help these sectors increase their exports, create jobs and raise incomes. Sectors in which poor communities usually predominate include agriculture, textiles and clothing, animal hides, leather and leather goods, light manufacturing and community-based tourism (i.e., poor communities in tourist areas selling products and services to foreign visitors).
• Link up the poorest producers with higher-value export chains. When it comes to doing business, poor people can suffer the disadvantages of little or no education or connections to those who can help them expand their business in the formal economy. ITC's Export-led Poverty Reduction Programme links up poor communities with the export chains of products and services they can supply. It works with the communities to help them organize themselves locally or regionally to receive business training and assistance. ITC also builds awareness of their business development needs with trade support institutions. Finally, it links poor producers with established exporters.

ITC at UNCTAD XI

• High-level Round Table on Trade and Poverty - 14 June. During this session in São Paolo, ITC will highlight its activities to reduce poverty through trade, with experiences from its Export-led Poverty Reduction Programme.