WTO Ministerial Section • Volume 5 • Number 4 • May 2001
Least-Developed Countries: No New Trade Concessions Before Doha
The third United Nations Conference on Least-developed Countries (LDCs) closed in Brussels on 20 May with no significant new concessions from industrialised countries in key areas. The political declaration and the 60-page programme of action adopted by 193 government representatives emphasise that the ‘primary responsibility for development in LDCs rests with LDCs themselves’. Financial commitments by ‘development partners’ ñ i.e. donor governments ñ remain largely the same as those adopted (and not yet reached) at last the last UN LDC conference a decade ago. Concrete goals, such as free and compulsory access to primary education for all children by 2015, are preceded by softening language, which specifies that ‘measures will be pursued in line with the following goals and targets’ (editor’s italics).
The Trade Aim
The conference debates highlighted both the importance and the limits of LDC goods’ duty-free access to industrialised country markets.1 Although a host of goods from least-developed countries ñ some 90 percent of tariff lines ñ enter duty-free into most developed countries, quotas and prohibitive tariffs continue to restrict access of their most competitive agricultural and textile products. Significant tariff escalation for manufactured goods hampers LDCs’ industrialisation and economic diversification efforts. And, more and more, all developing countries complain about ever-tightening sanitary standards and technical regulations, which they see as a deliberate strategy to keep out products that would pose a direct threat to competing domestic equivalents (see related article on page 3).
In their declaration, trade, finance and development co-operation ministers ringingly underscored their belief that increased trade was ‘essential for the growth and development of LDCs’, but they only committed themselves ‘to seizing the opportunity of the fourth WTO Ministerial meeting in Doha in November 2001, to advance the development dimension of trade, in particular for the development of LDCs’. The action plan prudently states that industrialised countries will ‘aim at’ (rather than ‘commit to’) enhancing least-developed countries’ participation in the multilateral trading system. For instance, they will ‘aim, including through actions within relevant multilateral fora at improving preferential market access for LDCs by working towards the objective of dutyfree and quota-free market access for all LDCs’ products’. This contrasts with earlier draft language that would have committed them to aiming a little higher, i.e. ‘removing all trade barriers facing LDCs exports in the markets of developed trade partners in the shortest possible time, and in any case no later than 2003.’ Similarly, the aim to make technical assistance for ‘the implementation of multilateral trade agreements mandatory and an integral part to be undertaken in future trade agreements’ emerged in the adopted action programme as ’strengthening, as required, technical assistance for the implementation of multilateral trade agreements and considering making such technical assistance an integral part of commitments to be taken in future trade agreements.’
In its earlier version, the draft programme of action had also proposed that development partners aim at ‘exempting all LDCs, including those acceding to the WTO, from undertaking commitments on domestic support and export subsidies in the area of agriculture, and expanding non-actionable categories of industrial subsidies to include those subsidies for development, diversification and upgrading of industries needed by LDCs’. The final text only proposes that industrialised countries examine ‘the possibility of strengthening the effectiveness of non-actionable categories of subsidies in order to take into account the needs of LDCs’, and aim at ‘increasing support to enhance agricultural production and productivity’.
According to the action plan, industrialised countries will aim to continue to support the effective participation of LDC in international standard-setting processes and to provide assistance for infrastructure needed for quality control. Other industrialised country goals are adhering to international standards in their application of the WTO’s Agreement on Sanitary and Phytosanitary Measures, and ‘taking measures, where appropriate, to compensate for trade losses incurred by LDCs as a result of unilateral measures found to be inconsistent with the SPS Agreement’. The action plan also confirms the aim to build LDC’s capacity, through the Integrated Framework for Technical Assistance and other channels, in trade negotiating, economic diversification, transport infrastructure, regional co-operation and enhancing women’s ability to exploit trading opportunities. One concrete trade capacity-building initiative did emerge from the meeting: the decision to establish a World Trade University with headquarters in Toronto, Canada, and campuses in Africa and Asia. The institution is to be funded by UN agencies and private contributions. Its backers hope to have the university up and running by 2003 with some 600 students from developing countries and countries in transition attending the first year. Courses will focus on ‘affordable and accessible’ instruction in trade law, international banking and the multilateral trading system.
Other Financial Resources
As in the trade area, ministers made no new commitments in other fields of development financing, including official development assistance (ODA) and debt relief. Instead, they committed themselves to ’seizing the opportunity of the Conference on Financing for Development in March 2002 in Monterrey, Mexico for the mobilisation of resources for development, in particular for the LDCs’ (see related article on page 10).
Industrialised countries reaffirmed their decade old-ODA goals: donor countries, which already provide more than 0.20 percent of their GNP as ODA to leastdeveloped countries ‘continue to do so and increase their efforts’; donors having met the 0.15 percent target ‘undertake to reach 0.2 per cent expeditiously’; and donors having committed themselves to the 0.15 percent target ‘reaffirm their commitment and undertake either to achieve the target within the next five years or to make their best efforts to accelerate their endeavours to reach the target’. In practice, OECD donors’ aid to LDCs dropped from 0.09 percent in 1990 to 0.05 percent in 1998. Only Denmark, Luxembourg, the Netherlands, Norway and Sweden have fulfilled their targets. The only mildly encouraging news on the ODA front was major donors’ commitment to ‘implement the OECD-DAC recommendation to untie aid to LDCs, which will significantly increase the value of aid in an expeditious manner as agreed in the OECD in May 2001.’
Ministers declared themselves ‘concerned with the external debt overhang that affects most LDCs and remains a main obstacle to their development’, and affirmed their ‘commitment to provide the full financing and the speedy and effective implementation of the enhanced HIPC (heavily indebted poor countries, ed.) Initiative, which is essential for freeing domestic budgetary resources for poverty reduction.’ These are not new commitments, however; neither are promises to make ‘expeditious progress towards full cancellation of outstanding official bilateral debt within the context of the enhanced HIPC Initiative Öin return for [HIPC countries] making demonstrable commitments to poverty eradication’.
As for foreign direct investment, the most concrete outcome was the signing of 29 bilateral investments by the trade and finance ministers of Benin, Burkina Faso, Burundi, Cambodia, Chad, Comoros, Guinea, Mali and Mauritania.
Health
While the ministerial declaration expressed concern over ‘the acute threat of the HIV/AIDS pandemic and emphasise[d] the need for the strongest possible measures to combat this or other communicable diseases’, a closer look at the accompanying action plan reveals only general, non-quantified, promises to enhance official development assistance for health, safe water and sanitation, and to ‘assist LDCs to set up effective health infrastructures and to increase access to necessary medicines and vaccines, including urging the pharmaceutical industry to make drugs related to communicable diseases, particularly HIV/AIDS, malaria and tuberculosis, more widely available and affordable, particularly for the LDCs, while reaffirming the need for strict compliance with safety and quality assurance and other relevant laws and regulations’.
There are no hard targets for ODA, nor deadlines for HIV/AIDS mortality reduction, and no word on multilateral co-operation to ensure that intellectual property rules such as the WTO’s TRIPs Agreement do not hinder governments’ ability to respond to health crises. The action plan’s language in fact closely reflects the European Union’s existing tropical communicable diseases initiative, which focuses on exploring the potential of differential pricing with the pharmaceutical industry, rather than a commitment to refrain from TRIPs-related disputes at the WTO.
While least-developed countries’ share of global trade declined from 0.48 percent in 1990 to 0.4 percent in 1999, exports nevertheless now represent 49 percent of their gross domestic product compared with 35.8 percent a decade ago.