Vol. XXII, No. 26
Monday, September 1, 2008 | MANILA, PHILIPPINES
Today’s Headlines
GENEVA — As ministers from over 100 countries gather in Ghana to review how effective aid is in helping developing nations deal with poverty, many economists argue the answer is elsewhere — in freeing up trade.
The meeting in Accra this week comes just over a month after talks at the World Trade Organization (WTO) to secure a breakthrough in the long-running Doha round collapsed at the end of July.
Rich and poor countries alike have called for efforts to save the Doha round and build on the compromises that were reached in July’s talks. Senior negotiators are likely to meet in September to see whether the talks can be revived.
Economists of all persuasions agree now that growth is the key to lifting people out of poverty — a view reinforced by a major World Bank report in May on growth and development.
And the key to growth is trade, the WTO says. "Trade openness is believed to have been central to the remarkable growth of developed countries since the mid-20th century and an important factor behind the poverty alleviation experienced in most of the developing world since the early 1990s," it said in July.
Many developing-country leaders share the view that the solution to poverty lies in the increased economic capacity that trade can bring rather than in aid handouts.
The Doha round, launched in the Qatari capital in late 2001, was expressly intended to help developing countries export their way out of poverty, by tackling the unfinished business of previous trade rounds such as the distorted global food trading system.
Many advocacy groups argue that trade negotiations are still skewed against the interests of poor countries.
The Manila-based Focus on the Global South said the collapse of the Doha talks was a welcome respite for poor countries.
"The aggressive push by the rich countries led by the US and the EU for more trade liberalization at a time of global crises of food and fuel [became] too blatant for developing countries to stomach," it said.
But many changes sought by developing countries — such as cuts in US and EU farm subsidies — have been on hold since the Doha talks collapsed.
Developing countries also recognize that they benefit from the rules-based multilateral trading system the WTO represents, not least because of the power it gives small and weak members.
For developing countries, many of which are in unstable areas, the security aspects of trade are also important.
Trade and aid are closely linked.
The WTO coordinates the international Aid for Trade program, in which developing countries are helped to build trade capacity and infrastructure by ensuring that their trade projects are part of their aid and economic strategies.
And one of the trickiest parts of the Doha agenda covers food aid. The proposals would tighten rules on "monetization" where rich countries send food surpluses to developing countries to be sold locally and the funds distributed.
The aim is to prevent this being used as a disguised export subsidy which squeezes local farmers out of business. — Reuters
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