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Manual on trade for Community Based Organisations

Organisation Development and Community Management Trust (ODCMT)

November 2004

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Why a Manual on Trade for Community Based Organizations?

This Manual on Trade for Community Based Organisations joins two others we have developed under this series. These Manuals are important because they attempt to tell the story of each topic simply and in a readable manner for the ordinary person.

The Organisation Development and Community Management Trust (ODCMT) has embarked on developing and producing manuals on various issues as advocacy tools in disseminating information to poor farmers in rural areas. Other manuals already developed include the Manual on Investment and the Manual on Pesticides.

Zambia, like the rest of the world is experiencing dramatic changes in economic organization and management. Trade in goods and services are one of the areas where the changes are very dramatic. The changes involve the creation of new trading organizations, new trading rules and even new trade channels such as the Internet. Such changes affect our lives whether we live in villages or in towns, in developed or under developed countries. It is, therefore, important that we all try to understand and come to terms with these changes. The main purpose for writing this trade manual is therefore as follows:

  1. To offer community based organizations space to debate and understand what is taking place in the world and how these changes affect communities and families.
  2. To assess and explore opportunities for communities not only to understand but also to influence events taking place in the area of trade and development.
  3. To identify opportunities offered by changes in trade that could be harnessed by the poor to improve their situation and reduce poverty in their communities.
The reader is encouraged to explore the issues raised here by asking neighbours, community based organizations and your elected representatives. We have a list of organizations trying to assist small-scale farmers. This is meant to assist in discovering and understanding trade, development and poverty.

Where are we coming from in terms of Trade?

Third World producers of commodities such as Zambia have relied mainly on industrialized countries to provide markets for their goods. This has been the case for the last five hundred years and remains true today. About 70 per cent exports of third world countries are destined for markets in developed countries – mostly in the United States of America (USA), the European Union (EU) and Japan. These industrial superpowers are willing recipients of exports from the third world when market conditions are right.

Third world countries are also known as developing countries; less developed countries; least developed countries; countries in the south; developing world; exporters in the south; producers of primary commodities or raw materials and so on. Similarly industrialized countries are sometimes known as developed countries; importing countries in the north and so on.

What is Trade?

Trade is essentially about meeting demand in the importing country. But not only the consumer determines this demand, but by the companies who help shape in through advertising campaigns. Imports from developing countries are thus tailored around the needs of importing companies such as Nestle and Unilever. This has advantages and disadvantages for exporters in the south. On the one hand, it provides them with markets for their produce and the foreign exchange they need to import goods. On the other hand, however, the commercial interests of these companies are not usually in the interests of the developing world. One example is the conflict in processing of primary commodities. The real value added in commodity trading lies in their processing. Developing countries would gain far more from their exports if they were able to process them. They would develop a manufacturing base, which would encourage investment, create employment, and increase foreign exchange earnings. But Northern-based companies in importing countries would stand to lose if exporting countries made more through value added by processing their primary commodities. One of the ways importing companies protect their interests is through the use of escalating tariffs. Tariffs that escalate are tariffs that increase at each stage of processing.

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