Aid emerges as trade talks sweetener

GENEVA – Negotiators trying to clinch a long-fought World Trade Organisation (WTO) pact to lower global trade barriers are debating a development aid boost to help sweeten the deal for poor countries.

Geneva diplomats say consensus has emerged that developing countries need financial assistance to cope with freer trade under a Doha round accord, which the WTO hopes to reach this year after five years of talks. Still unclear, though, is how much money is required, who should be eligible and where the funds will come from.”It’s still an empty shell,” Mauritius’ WTO ambassador Shree Baboo Chekitan Servansing said of the proposed assistance.He said developing nations would seek substantial funds to mitigate what he called “a heavy adjustment burden” from tariff cuts and other measures expected in a Doha deal.”Many countries will come with a sort of shopping list,” he told Reuters in an interview.”It is important that we define our priorities.”While the WTO has dubbed its negotiations “the development round”, many poor countries fear they will lose out from any removal of special treatment for their goods sold in the United States, the European Union and other rich markets.Even poorer states set to enjoy bigger markets for their exports under a Doha deal would need to invest heavily in ports, roads and other infrastructure to be globally competitive, said Columbia University professor Joseph Stiglitz.In a paper co-written with Andrew Charlton of the London School of Economics, Stiglitz said many countries would also struggle to meet new certification standards for their exports.”Whereas it may take decades for multilateral trade reform to deliver gains to developing countries, the adjustment costs are automatic and usually upfront,” said the report, commissioned by the United Nations.”The aid-for-trade agenda reflects the realisation that, for developing countries, the necessary investments are particularly large and the capacity to meet them is particularly small.”‘WOEFULLY INADEQUATE’ Oxfam, a British-based international aid agency, said trade assistance – which it estimated at US$2,7 billion (about N$16,7 billion) in 2003 – needed to rise significantly to blunt expected disruptions from a Doha deal.”Current levels of aid for trade are woefully inadequate,” Oxfam policy adviser Liz Stuart told Reuters.”While there are no firm estimates on how much it might cost to overcome the obstacles to trade, US$2 billion (about N$12,4 billion) annually spread across more than 100 developing and least-developed countries is clearly not enough.”Total needs could be in the “tens of billions”, developing country diplomats say, although few expect Doha commitments to approach this figure.A new WTO Aid for Trade Task Force – agreed at last December’s trade ministers’ meeting in Hong Kong – spent most of its first session this month debating what types of assistance should be counted as trade aid.NAMIBIA COULD BE HURT Several task force members said the group, when it reports to WTO chief Pascal Lamy and the General Council in July, will not recommend a specific sum of trade aid to be folded into the Doha deal.Instead, the panel is expected to outline broad principles for the assistance, such as who can draw on the funds and whether they can be earmarked from previous aid pledges or must represent new money.Mauritius’s Servansing, who represents a group of African, Caribbean and Pacific countries on the task force, said the end of so-called “trade preferences” for products such as bananas, sugar and manufactured goods in wealthy markets could hurt emerging economies such as Jamaica, Barbados, Namibia and Senegal.Lower global tariffs would cut into the advantage now enjoyed by these producers, exposing them to greater competition from more efficient developing countries in Latin American and elsewhere.Another key issue is who will manage the committed funds.The aid could be distributed by the World Bank, the WTO, UN agencies and other groups in an existing committee called the Integrated Framework for Trade-Related Assistance.The World Bank could also be made solely responsible for handling the assistance, or a brand new fund could be created, diplomats involved in the talks said.Although some suggested the WTO itself could run the aid-for-trade venture, others called this an untenable option.”The WTO should never be an aid agency,” said Hilde Johnson, Norway’s former minister for international development.In remarks to a UN session on aid for trade, Johnson said the new funds could prove not only a carrot to coax developing countries into a trade pact, but a way for poor countries to exact more benefits from the deal.BIG STICK FACTOR Addressing delegates from developing countries at the session, she said it could be possible for them to say “we won’t liberalise unless you put money on the table”.”You can make this a big stick, also, from your side of the negotiations,” she told the session in Geneva this week.Oxfam’s Stuart said it was critical that poor and vulnerable countries not be sidetracked by money promised in trade talks.”Developing countries should not alter their negotiating position in the round just because they are being promised some money that may or may not be delivered,” she said.- Nampa-ReutersStill unclear, though, is how much money is required, who should be eligible and where the funds will come from.”It’s still an empty shell,” Mauritius’ WTO ambassador Shree Baboo Chekitan Servansing said of the proposed assistance.He said developing nations would seek substantial funds to mitigate what he called “a heavy adjustment burden” from tariff cuts and other measures expected in a Doha deal.”Many countries will come with a sort of shopping list,” he told Reuters in an interview.”It is important that we define our priorities.”While the WTO has dubbed its negotiations “the development round”, many poor countries fear they will lose out from any removal of special treatment for their goods sold in the United States, the European Union and other rich markets.Even poorer states set to enjoy bigger markets for their exports under a Doha deal would need to invest heavily in ports, roads and other infrastructure to be globally competitive, said Columbia University professor Joseph Stiglitz.In a paper co-written with Andrew Charlton of the London School of Economics, Stiglitz said many countries would also struggle to meet new certification standards for their exports.”Whereas it may take decades for multilateral trade reform to deliver gains to developing countries, the adjustment costs are automatic and usually upfront,” said the report, commissioned by the United Nations.”The aid-for-trade agenda reflects the realisation that, for developing countries, the necessary investments are particularly large and the capacity to meet them is particularly small.” ‘WOEFULLY INADEQUATE’ Oxfam, a British-based international aid agency, said trade assistance – which it estimated at US$2,7 billion (about N$16,7 billion) in 2003 – needed to rise significantly to blunt expected disruptions from a Doha deal.”Current levels of aid for trade are woefully inadequate,” Oxfam policy adviser Liz Stuart told Reuters.”While there are no firm estimates on how much it might cost to overcome the obstacles to trade, US$2 billion (about N$12,4 billion) annually spread across more than 100 developing and least-developed countries is clearly not enough.”Total needs could be in the “tens of billions”, developing country diplomats say, although few expect Doha commitments to approach this figure.A new WTO Aid for Trade Task Force – agreed at last December’s trade ministers’ meeting in Hong Kong – spent most of its first session this month debating what types of assistance should be counted as trade aid. NAMIBIA COULD BE HURT Several task force members said the group, when it reports to WTO chief Pascal Lamy and the General Council in July, will not recommend a specific sum of trade aid to be folded into the Doha deal.Instead, the panel is expected to outline broad principles for the assistance, such as who can draw on the funds and whether they can be earmarked from previous aid pledges or must represent new money.Mauritius’s Servansing, who represents a group of African, Caribbean and Pacific countries on the task force, said the end of so-called “trade preferences” for products such as bananas, sugar and manufactured goods in wealthy markets could hurt emerging economies such as Jamaica, Barbados, Namibia and Senegal.Lower global tariffs would cut into the advantage now enjoyed by these producers, exposing them to greater competition from more efficient developing countries in Latin American and elsewhere.Another key issue is who will manage the committed funds.The aid could be distributed by the World Bank, the WTO, UN agencies and other groups in an existing committee called the Integrated Framework for Trade-Related Assistance.The World Bank could also be made solely responsible for handling the assistance, or a brand new fund could be created, diplomats involved in the talks said.Although some suggested the WTO itself could run the aid-for-trade venture, others called this an untenable option.”The WTO should never be an aid agency,” said Hilde Johnson, Norway’s former minister for international development.In remarks to a UN session on aid for trade, Johnson said the new funds could prove not only a carrot to coax developing countries into a trade pact, but a way for poor countries to exact more benefits from the deal.BIG STICK FACTOR Addressing delegates from developing countries at the session, she said it could be possible for them to say “we won’t liberalise unless you put money on the table”.”You can make this a big stick, also, from your side of the negotiations,” she told the session in Geneva this week.Oxfam’s Stuart said it was critical that poor and vulnerable countries not be sidetracked by money promised in trade talks.”Developing countries should not alter their negotiating position in the round just because they are being promised some money that may or may not be delivered,” she said.- Nampa-Reuters