WTO-SPECIAL: More Aid-for-Trade Carrots Offered Poor Nations

By Emad Mekay Reprint | | Print |

Emad Mekay

HONG KONG, Dec 13 2005 (IPS) - Rich nations are talking about a fresh trade package for the world’s poorest countries as a way out of the shaky World Trade Organisation (WTO) talks, now underway here.

The details and scope of the package are sketchy but officials from industrialised nations, seeking to deflect attention from their failure in bridging a gap with developing nations, have been trickling out nuggets of information about their new plan.

Japan, for instance, has said it will pledge 10 billion dollars to help train and build export capacity for the Least Developed Countries (LDCs), the world’s poorest 50 countries as defined by international organisations.

The European Union said that it will increase its spending on trade- related aid to LDCs to 1.2 billion dollars a year.

EU Trade Commissioner Peter Mandelson proposed, on Tuesday, to allow duty free exports from 32 countries, including small economy nations.

– We need this down payment for developing countries here in Hong Kong because this is a development round and because it would pave the way for serious development gains … which will come from the core market access negotiations,” said Mandelson.

The U. S. has signalled its backing for the proposal but said that competitive products in the global market, such as textiles from Bangladesh, should remain out of any new offers.

The Europeans, upset at the critical tone of U.S. trade diplomats who point fingers at the EU for blocking a trade deal, are now challenging the U.S. side to come up with similar offers.

ôOur ‘Everything But Arms’ agreement gives the LDCs completely duty and quota free access to our markets. I call on all other developed economies and advanced developing economies to match this initiative,” said Mariann Fischer Boel, member of the European Commission responsible for agriculture and rural development.

U.S. trade representative Rob Portman said, his country was prepared plans to make similar increases in trade aid and in widening its duty- free imports from the LDCs. Portman clarified that the U.S. offer would expand on current trade promotion programmes like the African Growth and Opportunity Act (AGOA), and General Systems and Preferences (GSP). Begin anew.

AGOA is a plan that allows duty free imports from sub-saharan Africa when African nations meet certain criteria while GSP gives exemptions from the more general rules of the WTO.

ôThis is the way that we are going to implement development packages through our legislative process. It’s how we would have to do it under our laws,” Portman insisted.

The new parts in the U.S. proposal would revolve around extending exemptions to include more products and ôsome flexibility over time”.

The aid package talk from rich nations follows a WTO announcement, last week, that eased rules on drugs for poor nations to give them better access to essential drugs. Two weeks ago, the WTO also gave poor nations until 2013 to start implementing intellectual property rules.

Civil society groups attending the meetings here were quick to question the motives behind the new ôaid for trade” package.

The international advocacy group ActionAid warned in a statement here, Tuesday, that all too often such offers come with conditions attached.

The group noted that the money from Japan’s 10 billion dollar offer to the world’s poorest countries will come in the form of loans- not exactly a development tool.

Non-governmental organisations (NGOs) are concerned that the final offer, when and if it materialises, could sedate poor nations to drop some of their demands that have counter-balanced rich nations’ claims.

Industrialised countries want developing countries to open their markets more dramatically for farm products, goods and services while developing nations would like to see an end to the dumping of agricultural products through export subsidies and other export support. They say farm support in rich nations has had a disastrous impact on millions of farm workers, who constitute the majority in developing countries.

“Trade-related development assistance is certainly desirable, but it must not become a pretext for arm-twisting by industrialised countries that obliges developing countries to mortgage their future industrial development and public services in exchange,” said Guy Ryder, general secretary of the International Confederation of Free Trade Unions (ICFTU), a coalition of labor unions.

An analysis of the new aid package to the LDCs, Tuesday, said the offers will do little to improve the current situation of the poorest nations. Those countries have been accorded similar exceptions and extended time periods to implement some trade agreements in the past.

ôIt has been a practice of the WTO to offer the poorest members one or two carrots to broker a deal,” said Tanim Ahmed, an activist who monitors the LDCs.

The package may not be as promising as portrayed by trade officials either, they say, since there are no clear pointers as to how it would enhance the production capacity of the LDCs and help them diversify their exports.

Poor nations prefer that market access could be addressed more substantially and that aid for production capacity building more forthcoming. LDCs are also worried that the multilateral trade rules under the WTO dismantles the commercial preference they used to enjoy individually.

Ahmed said the package only sidestepped central issues at stake, such as enhancement of production capacity, market access and trade preference”.