MEDIAGLOBAL NEWSWIRE SERVICE
HONG KONG: December 18, 2005 (MEDIAGLOBAL): The World Trade Organization (WTO) negotiations in Hong Kong ended on a slightly higher note than expected yesterday, as rich and poor nations finally came to an agreement concerning the eradication of farm subsidies. The agreement calls for a progressive end to agricultural subsidies by 2013, with future negotiations to be decided upon the timetable of these changes. With this deal, ministers have salvaged the Doha Round, pledging greater cooperation in future talks.
While developing nations have embraced the decision to end agricultural subsidies, the issues surrounding aid-for-trade continue to draw the ire of vulnerable countries. In the Aid-for-trade arrangement, developed countries donate millions of dollars to poor countries, in return for trade concessions for industrial goods. According to the WTO, this type of aid has increased by 50%
since the initiation of the Doha Round in November 2001.
To this end, Japan has announced a $10 billion loan to enable vulnerable nations to increase their productivity, and the European Union (EU) has echoed this with their own offering of $1.2 billion. The United States declared it would double its aid-for-trade budget to $2.7 billion a year by 2010. These funds are intended to assist vulnerable countries in reforming their laws and regulatory practices to facilitate integration into the global economy, assisting nations in identifying their strongest exports and industries, and strengthening the economic infrastructure necessary to reach high production levels.
Vulnerable nations are ambivalent about these large trade packages, however. While most developing nations are eager to receive more assistance, many are wary of the returns sought by donor nations, which may include accepting terms of trade that are disadvantageous to the developing world. “Aid for trade is needed to help poor countries but it must not be a substitute for fairer trade rules,” said Phil Bloomer, head of Oxfam’s Make Trade Fair campaign.
“We don’t want somebody to say what we have to negotiate on,” said Petrus Gompton, Foreign Affairs and Trade Minister for Saint Lucia, a country categorized as a part of the Small Island Developing States. “If there’s no deal on that, we’ll have to decide if there’s any deal at all.”
The Africa Trade Network mirrored Gompton’s statement. “We cannot allow this latest package of aid promises to be used once again as a device to ‘clinch’ another package of unbalanced agreements, on agriculture, services, industrial and other areas of liberalization in this so-called Doha Development Round.”
Critics of the aid-for-trade strategy argue that aid does little to incorporate vulnerable nations into trade partnerships, and only reinforces already existing obstacles to greater trade liberalization.
Caribbean nations dependent on the sugar trade, which was not resolved in the Hong Kong talks, feel particularly disadvantaged by the aid-for-trade offers. The EU will gradually impose a 35% price cut on sugar imports starting in 2006, an especially damaging development for Caribbean economies. Caribbean countries claim they will see losses of up to $100 million from the price cuts.
Stripping these economies of their primary export commodity will do inestimable damage to these economies, as an overwhelming percentage of their citizens depend on the sugar trade for their livelihood. Consequently, aid-for-trade packages designed to increase production and enhance trading capabilities will be of little consequence in the Caribbean, as their cash crop no longer faces favourable trading conditions.
Yet, the EU insists such measures are necessary to achieve the WTO’s long-term goal of trade liberalization. “Our intention…is first to focus on helping build a single economic and trading space in the Caribbean and then very gradually liberalize exchanges in the EU,” said Karl Friedrich Falkenberg, Deputy Director General for Trade at the European Commission.
The recent round of the Doha talks in Hong Kong have just concluded, having negotiated a tentative end to farm subsidies among member nations.