Modest Deal Offered to Poorest Nations


By Emad Mekay

Inter Press Service
December 18, 2005

The world's least developed countries were handed a modest development package out of the tough global trade talks winding down here, but the offer is heavily qualified and some doubt that it will even dent the countries' sweeping poverty levels.

"It's kind of giving people money to buy their coffins, really, once you have already done the damage," said David Waskow of Friends of the Earth, a non-governmental organisation monitoring the talks. There are concerns that the deal will soften those countries further to the idea that opening their markets will help them escape poverty, which some of the civil society campaigners here insist has failed development and benefited international corporations. "It has been a way to get countries to get into trade agreements and assisting them in implementing their trade agreements and calling it aid or development packages," Waskow said. "It's a way of moving forward the trade agenda that is about trade, not development."

The plan will benefit 50 Least Developed Countries (LDCs) in Africa, the Caribbean and Pacific regions. These countries mostly export agricultural products like bananas, sugar and tea. The world's 50 LDCs -- 34 of which are in Africa -- comprise about 12.5 percent of the world's population, but their contribution to world trade hovers at just half a percent. "Some elements in the offer are good, but because of the specificity needed, the LDCs cannot be very happy about this," Anwarul K. Chowdhury, U.N under-secretary-general for Least Developed Countries, told IPS.

The multi-pronged development package includes an overarching proposal of "quota-free, duty-free" access for all 50 LDCs to markets in rich nations by 2008. Some of the larger developing nations, like Brazil, China and India, said they will also sign on to the offer, but will implement it in a selective way. The package includes an increased infusion of funds for the "aid for trade" programme, designed to increase poor countries ability to trade. The third part of the package is technical assistance, helping train developing nations to deal with global trade regulations and mechanisms. While promoted by rich nations as evidence that they had focused on development, as promised, the many caveats in the offer make it a limited deal.

The United States and Japan, for example, insisted on excluding certain products from the duty-free, quota-free formula. Experts say the United States can implement this ban through a provision in the agreement that says that only 97 percent of LDCs' products will be part of the deal. Citing the interests of its textiles industry, Washington will bar textiles, a crucial export for two of the poorest nations from the LDCs -- Bangladesh and Cambodia. This could eliminate some of the benefits that are supposed to go to exporters. Japan has also objected to including rice and leather products in the deal. The "aid for trade" process, involving poor nations, rich nations and international financial institutions like the International Monetary Fund and World Bank, has been criticised for drawing on already pledged aid.

The LDCs and some of non-governmental organisations supporting them say that they want a commitment that rich nations will grant new money on top of the 13 billion dollars already earmarked under previous agreements. "The aid for trade package needs to identify that this is going to be additional money and that this is not the money already in the pipelines repackaged," said Chowdhury. Technical assistance is also not without its shortcomings. LDCs want the deal to mean that the technical assistance could be accessed more quickly, and say it should cover all poor nations, not just the 31 in the current programme. Statements from NGOs here also noted that the text did not bind rich nations to the deal, and offers an exit by saying that countries facing difficulties may not comply if they so wish.

Chowdhury, who has been close to the debate, says that the timeframe and further details will have to be worked out in Geneva at a proposed meeting for trade diplomats in April. Even if all these issues are resolved in the near future, some argue that the deal would still bring few benefits. In money terms, the offer will generate total gains of 14.4 billion dollars, according to the U.N. But that is only if the deal is extended to all 50 LDCs, and covers all of their exports with no exemptions. >From the total world merchandise trade of 8.9 trillion dollars in 2004, the share of the LDCs was a meager 0.64 percent. The situation is worse for trade in services -- 0.44 percent in 2004, down from 0.49 percent in 1990.

Some LDCs can expect benefits to trickle down to the poorest in their societies, especially farmers, since most of their exports are agricultural products. However, many of these countries are known for chronic inequalities and an internal economic system that has penalised farmers and rewarded middlemen in shipping, marketing and exporting. Unnaya Onneshan, a group in Bangladesh, said the LDCs should review this exaggerated focus on market access as a path toward economic development. The group called the final text from the meetings an "insult" to the LDCs.

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