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TRADE: Istanbul Conference “a Setback” for Poor Countries

Isolda Agazzi

GENEVA, May 24 2011 (IPS) - Some of the decisions taken on trade in the Istanbul Plan of Action are likely to disadvantage poor countries while others are so vague as to be meaningless, says Abdoulaye Sanoko, counsellor at the mission of Mali to the World Trade Organisation (WTO) in Geneva.

The plan of action was adopted at the recent fourth meeting of the United Nations Conference on Least Developed Countries (LDCs) held in Istanbul, Turkey, on May 9-13.

“LDCs negotiated, but they had no choice. There had to be a result, so this is a compromise text which is not necessarily good,” Sanoko told IPS upon his return from Istanbul.

The International Centre for Trade and Sustainable Development (ICTSD), a Geneva-based think tank that also had representatives in Istanbul, concurs that “trade proved to be the most controversial issue at the negotiations” for the plan of action.

Sanoko says, “when I see the chapter on trade, I have a feeling of setback when comparing it to what the WTO has already cast in stone regarding special and differential treatment.

“In the Doha Round, it is clearly said that LDCs will not have to cut any tariffs. They would do so only on a voluntary basis, while they are encouraged to consolidate their applied tariffs.”

ICTSD underlines that the final version of the plan of action only calls for a timely implementation of the duty-free and quota-free market access on a lasting basis for all LDCs, in line with the Hong Kong ministerial declaration of 2005, and the abolition or reduction of arbitrary or unjustified trade barriers.

However, for Sanoko, this language is “full of ambiguities”. “It is a contradiction and a setback from the Hong Kong commitment of duty-free and quota-free access, since it includes the possibility of ‘reduction’ alongside ‘abolition’ of unjustified trade barriers”, he notes.

While he welcomes the call to strengthen regional integration, he regrets the absence of innovative means to do so, particularly concerning the amendment of article XXIV of the General Agreement on Tariffs and Trade (GATT), one of the issues currently discussed in Geneva.

This article stipulates that in regional so-called free trade agreements (FTAs) the parties have to liberalise most of the exchanges, without specifying how much. LDCs and developing countries are asking for it to be amended to include a good dose of special and differential treatment so that poor countries would not be asked to reduce their tariffs too much.

“We understand that such a conference cannot resolve problems related to trade rules, but we would have liked a reference to it,” Sanoko comments. “The UN Conference on LDCs is a common effort by the international community to encourage the development of our countries and one cannot talk about general concepts that are largely accepted without deepening them.”

Concerning trade agreements like the economic partnership agreements (EPAs) between the EU and the Africa, Caribbean and Pacific (ACP) countries, he argues that, “they are supposed to be a partnership, but they are an FTA like any other one.

“How can you imagine a partnership between some hyper-developed countries and others that can barely stand on their feet? This is another missed opportunity to innovate.”

Sanya Reid Smith, legal advisor and senior researcher at Third World Network (TWN) points out that in the high-level debate in Istanbul a strong message was sent that LDCs should not be pressured or advised to liberalise their imports since, when they did that in the past, it had very damaging effects. TWN is an international nongovernmental organisation headquartered in Malaysia.

“Fears were also expressed about the free trade agreements and economic partnership agreements, which can cause similar kinds of damage and can prevent the use of export taxes to industrialise on the basis of natural products,” she told IPS.

“Due to the WTO impasse, there should be an early harvest package for LDCs which includes issues such as duty-free and quota-free market access and the elimination of trade-distorting subsidies for cotton,” Reid Smith concludes.

Another fuzzy point, according to Sanoko, is the request to LDCs to broaden their export bases so as to be able to double their share of international trade within 10 years. “But on what basis? Today they represent only one percent of world trade. You could even take it to three percent but, concretely, how?” he wonders.

He considers it is a “great pressure on LDCs” to ask them to avoid protectionists tendencies and to correct trade-distorting measures while agriculture in Northern countries is being distorted.

“For African LDCs, agriculture is a vital issue,” he stresses. “Take Malawi: it had a chronic food deficit, but within three years only it has become self-sufficient and today it even exports.

“Their solution was to put in place a new agricultural policy that gives some support to small producers, like seeds and fertilizers. At a time when the food crisis may erupt again, supporting small farmers can make a crucial difference and help a population to feed itself.”

“In 30 years, only three LDCs have shed that status. This shows little progress, particularly since the number of African LDCs is going to increase with the partition of Sudan,” Sanoko concluded.

Martin Khor, director of the South Centre, an intergovernmental organisation of developing countries based in Geneva, argues that it is untrue that LDCs are not integrated into the world economy. In fact, many LDCs have higher export ratios than some developed countries.

The way in which the LDCs are integrated disadvantages them as they are too dependent on raw materials export and, with prices of commodities being in long-term decline, they are suffering great revenue losses, he concludes.