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TRADE: Poorest of Poor Countries Ask for Help

Mario Osava

SAO PAULO, Jun 16 2004 (IPS) - The most vulnerable countries need to be given specific attention in all global forums because they are not receiving the official development assistance (ODA) that wealthy countries promised and are finding it difficult to take advantage of the expansion of international trade.

Such was the appeal made by Anwarul Chowdhury, U.N. undersecretary general and high representative of for what are known as the least developed countries (LDCs), landlocked developing countries and small island states, in his address to the eleventh sessions of the United Nations Conference on Trade and Development (UNCTAD XI).

The ODA goal for the 50 poorest countries is 0.2 percent of gross domestic product of the rich countries, but today reaches just 0.11 percent GDP.

Cotton is among the main exports of at least 20 of the LDCs, most of which are in Africa. As a result of the subsidies the United States grants its cotton growers, international prices for this commodity stand at 25 percent below what experts estimate they should be.

A consequence of this imbalance is that Africa lost an estimated 300 million dollars in revenues, Chowdhury told IPS.

That is a crucial sum of money for countries where the vast majority live on less than a dollar a day, and life expectancy is no more than 50 years.

In Benin, Burkina Faso and Mali, some 11 million people depend on income from cotton, and suffer the direct effects of U.S. cotton subsidies, which were recently condemned by the World Trade Organisation in a complaint filed by Brazil.

The LDCs are home to 736 million people – more than 11 percent of the global population – but their participation in global trade is just 0.4 percent, said the U.N. undersecretary general. Most are among the 39 countries that rely on one single commodity, like cotton, and left without alternatives when international prices plummet.

As such, in addition to a price recovery, these countries need the international community to establish a ”consistent policy for stabilising those prices,” said Idris Waziri, trade minister for Nigeria, which is also a ”victim” of the U.S. cotton subsidies, although it is not on the list of LDCs.

Unless they receive twice the current amount of development aid, their foreign debts are cancelled and conditions established to diversify their economies – such as more favourable terms of trade – the LDCs will not achieve the Millennium Development Goals (MDGs), agreed in 2000 to cut poverty and hunger in half by 2015, said Chowdhury.

Trade liberalisation amongst other developing countries is essential for the LDCs, because more than half of their international exchange occurs within the developing world, while 42 percent is with industrialised countries, he said.

The mechanisms for boosting South-South trade in discussion at UNCTAD XI, like the Global System of Trade Preferences (GSTP), a scheme exclusive to developing countries, are a priority for the group.

But they also need measures to help them gain greater and better access to the markets of the industrialised North, where the bulk of world trade is concentrated.

Another 31 countries – of which 16 are LDCs – are in a very vulnerable situation because they lack an outlet to the sea, such as Bolivia and Paraguay in South America. This poses a serious obstacle because it increases shipping costs for their foreign sales an average of 30 percent, said Chowdhury.

These countries need the solidarity and cooperation of their neighbours, like Argentina, Brazil and Chile in the South American case, he said.

Small island developing states face their own set of problems. The nations of the Caribbean are highly dependent on the tourism industry, and those of the Pacific struggle with the enormous distance that separates them from the major markets.

Furthermore, they are too small to attract significant investment. That is why an economic integration process is recommended, said the U.N. official.

These three groups of developing countries require differentiated treatment if they are to benefit from international trade liberalisation, and that is what is hoped will materialise with support from UNCTAD and from other multilateral agreements.