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TSUNAMI IMPACT: Trade Will Help More Than Aid

Stefania Bianchi

BRUSSELS, Jan 12 2005 (IPS) - EU proposals to offer some trade concessions to tsunami-hit countries do not go far enough, trade and development experts say.

Civil society groups want the European Union (EU) to remove all tariffs on textile and clothing imports from the affected countries.

The European Commission, the EU executive, says it wants now to speed up tariff reductions for four Asian countries – Sri Lanka, Indonesia, Thailand and India. The measures were due to come into effect in July this year under the Generalised System of Preferences (GSP). The GSP aims to stimulate exports from developing countries to industrialised countries by offering preferential tariff rates.

The commission says the new proposals will be simpler, target the most needy countries, and offer a "clearer, more transparent and more predictable" system for trading partners.

"Under the new system Sri Lanka for example, will receive duty free access to the EU for almost all its GSP exports including on its vital textile and clothing exports," said EU trade commissioner Peter Mandelson in a statement Tuesday. "India, Indonesia and Thailand will benefit from reduced duties and wider product coverage, especially on crucial seafood exports."

The commission says it is "actively considering" other changes in trade policy to provide relief.

"I want to find ways to assist people and businesses hit by the tsunami," Mandelson said. "The localised nature of the damage poses real challenges in ensuring that relief hits the target, but there are trade measures we can use to assist rebuilding in the countries affected by the disaster, notably by speeding up measures to improve their access to our markets."

The commission says its delegates in the affected countries are identifying businesses affected by EU trade defence measures such as anti-dumping. Such measures may be reviewed "with the possibility of suspending them," it says. Dumping is the export of goods at prices below production cost, taking advantage of subsidies.

"We are looking at the timing of this measure and where there is room to advance it," a commission spokesperson said Tuesday. "The difficult issue is finding concrete measures which do not lead to countries not affected by the tsunami taking advantage of the relaxation of existing rules."

Trade and development groups insist that further trade reform must accompany the EU aid pledge.

Oxfam figures that Sri Lanka paid 57 million euros (76 million dollars) last year in duties on import of textiles and clothing by the EU, and Indonesia 136 million euros (179 million dollars). Together these taxes add up to just under a third of the 628 million euros (822 million dollars) pledged by the EU in tsunami relief.

In Sri Lanka alone, clothing accounts for half of all export earnings. The industry employs 350,000 workers, 85 percent of them women.

"Both debt repayments and unjust trading rules take away with the one hand what is given with the other," Anja Osterhaus, coordinator at the Brussels office of the group Fair Trade Advocacy told IPS. The commission’s proposals do not go far enough and should not be limited to countries affected by the tsunami, she said.

"With his proposals commissioner Mandelson implicitly recognises that the European Commission is aware of the damaging effect of many European trade measures to third countries, such as the complicated and bureaucratic procedures of proving compliance with rules of origin or sanitary and food safety standards," she said..

"It can only be welcome to simplify and relax the rules of origin and to review the effects of anti-dumping duties for businesses and producers in poor countries," she added. A "general overhaul of European trade policy" is needed to ensure compliance with the objectives of sustainable development and poverty eradication, she said.

Fast-tracking the GSP system will not help countries most in need, she said. "Rather than speeding up the review process there needs to be a thorough assessment of the new proposal from a long-term development perspective."

The EU "could do as much again to help affected countries by changing its trade rules and offering debt relief as they have already with pledges of direct aid money," said Jo Leadbeater, head of Oxfam’s Brussels office.

"With the support of the member states, the EU trade commissioner could end these crippling trade taxes and allow these countries to maintain tens of thousands of jobs and earn foreign exchange earnings they desperately need to rebuild their countries," she added.