US, EU press aid plan to open up new markets; Capital pool would help developing countries revamp their economies
Struggling to win support from developing countries for global free-trade talks, the US and Europe are pushing a new aid program in return for market-opening concessions, reports the World Bank press review Monday.
The proposal – being drafted with the World Bank and the International Monetary Fund – calls for the creation of a pool of capital, seeded with as much as 400 million US dollar (2,5 milliarder DKR).
It would be used to help countries begin restructuring their economies to better take advantage of lowered trade barriers. Their restructuring plans would then be used to guide and leverage bigger donations from some 20 deep-pocketed government donors and the multilateral agencies.
While it is unclear how much money ultimately will be raised, Uri Dadush, the World Banks director of trade policy, said the goal is billions of dollars. – The needs in these countries are clearly large, he said.
The proposal is under construction as negotiators make a final push for a breakthrough on a new multilateral trade framework in Hong Kong in December.
While Washington and Brussels spar over agriculture, they are joining hands on the aid program. The aid-for-trade initiative would overhaul an obscure investment vehicle known as the Integrated Framework.
Created in 1997 to help with trade adjustment, the entity is managed by a cross section of multilateral institutions, including the IMF and the World Bank. Under a proposal endorsed this fall by leaders of the Bretton Woods institutions, the entitys trust fund would be pushed up to as much as 400 million dollar from the current 32 million.
The idea is to help countries, mainly in Africa, make basic investments in roads and bridges. Another goal is to support less obvious initiatives, such as modernizing customs programs to help harness opportunities created by trade liberalization.
Such investments could ease the pain caused by trade liberalization; any deal that reduces tariffs world-wide – on farm products as well as manufactured goods – likely will erode some comparative advantages that poor countries now enjoy.
The aid-for-trade idea has rippled through the WTO talks since this round began in 2001 in Doha, Qatar. The current talks, for example, envision largely insulating poor countries from the tariff cuts under consideration, allowing them to continue protections for their fragile markets.
Still, the push for closer links between trade and aid also reflect a growing unease with globalization – and not just in the developing world, notes the business daily.
The New York Times meanwhile reports that trade ministers from around the world have agreed to hold meetings in London and Geneva through the week in an effort to rescue plans for a global trade pact that is at an impasse over agriculture issues.
Top trade officials from the United States, European Union, India, Brazil and Australia met late Monday afternoon in London to bargain over agricultural issues.
The ministers and their aides will then fly to Geneva Tuesday morning, where they will be joined by more trade ministers – the exact number has not yet been decided – for further negotiations, said Keith Rockwell, chief spokesman for the WTO.
Kilde: www.worldbank.org
