World Bank Announces Trade Assistance Initiative

22. Juni 2010
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The World Bank announced a new multi-million dollar initiative in Cancun to loan funds to poor countries implementing trade accords and to support investment in roads, ports and customs facilities to speed the flow of imports and exports, Agence France Presse reports.

“The program is designed to support progress on the Doha
Development Agenda and will increase assistance to countries that
take on development-promoting trade reforms,” World Bank
Managing Director Shengman Zhang said. Bank officials said the
initiative was drafted in the realization that poor countries can
be disrupted when far-reaching trade reforms are put into effect
and will need additional funds to make new investments to improve
competitiveness.

Developing countries might lose preferential access for their
exports to industrialized markets while reduced subsidies in rich
countries could raise prices for nations that are net food
importers. “For most countries this will mean new
investments to improve competitiveness and expand exports,”
the Bank said in a statement.

A second component of the initiative could increase lending by
as much as $800 million annually to help developing countries
improve trade-related infrastructure such as ports, roads and
customs facilities. Uri Dadush, head of the Bank’s
international traded department, said the project was designed to
transport costs. “Whether these are costs in getting goods
to ports, getting them through customs, or getting them through
the harbor, reducing these overheads by 10 percent has the same
effect as reducing a tariff by 10 percent,” he said.

Xinhua adds that the World Bank also urged all countries to
recognize the importance of assuming responsibilities under the
development agenda, and stressed that rich countries should take
appropriate action, such as reducing agriculture tariffs and
trade-distorting subsidies, to make the world trading system more
supportive for poor people’s effort to escape poverty.

“The outcome of the meeting, and those that follow in
pursuit of the Doha Development Agenda, will determine whether
the international community, working together, can take
collective actions that will stimulate global growth and lift as
many as an additional 140 million people above the two-US dollar
daily poverty line,” Zhang said. According to the World
Bank, the additional loan program will support projects for
protecting workers and vulnerable groups, assist countries to
implement development-related trade reforms, and finance
infrastructure projects.

Meanwhile, the IHT reports that a group of 21 countries,
including Brazil, India, Thailand, Mexico, Argentina, the
Philippines, Chile, Pakistan and South Africa, demanded that
their proposal for deep, specific changes in agriculture be
debated at the five-day World Trade Organization talks this week
and not be shunted aside through a parliamentary procedure.
Flexing their collective muscle for the first time in a setting
normally dominated by the United States and Europe, the group
said it would not be silenced. At least 8,000 protesters, many of
them Mexican farmers, but including delegations from Italy and
Africa, marched toward the convention center Wednesday, saying
they were encouraged by the proposal from the developing
nations.

The Indian Express notes that what is being seen as heartening
for India is the fact that as G-20 became G-21, the group also
got support from the Cairns group of 18 countries. The two groups
have zeroed in on common points to push for joining forces for
faster reforms by the US and the EU. The Cairns groups and the
Group of 20 want the Cancun meeting to set a firm date for
eliminating all forms of export subsidy and big reductions in
trade-distorting domestic support. However, they differ over how
far poorer countries should have to open their markets.

AFX notes that the EU said an agricultural proposal put
forward by 21 developing countries at key WTO talks here is
unbalanced, leaving wealthier countries to shoulder the greater
burden.

The US sees the demands of the Group of 21 as an emerging
threat to the success of the Cancun talks. In remarks to
delegates, U.S. Trade Representative Robert Zoellick repeated his
insistence that the talks had to be a “two-way street”
and that the U.S. could not further open its own market without
other countries dropping their tariffs, the Wall Street Journal
report.

Dow Jones reports that the US and other major industrialized
countries can be convinced to reduce farm subsidies and open
markets to developing countries through talks at the WTO, but the
process will be gradual, Brazilian Vice-president Jose Alencar
said Wednesday. “The US government, for example, is under
strong pressure from farm lobbies and we understand that,”
Alencar said. “It’s not going to happen overnight, but
we think they’ll come around eventually as soon as they see
it is in their interest.” Alencar Wednesday said that
investment opportunities in developing economies would far make
up for losses incurred by opening markets in fully developed
industrial economies.

Meanwhile, the Guardian (UK) reports that the European
commission was last night secretly preparing to sabotage plans to
help poor countries trade their way out of poverty, as backstairs
wrangling dominated the opening day of the WTO’s talks in
Cancun. A confidential paper not shown even to member
governments, including the UK, revealed that the commission was
planning to water down the already modest concessions on offer to
the world’s poorest countries in the talks. In an attempt to
safeguard the interests of its six million farmers, the
commission is seeking to remove all mention of eliminating export
subsidies from the WTO meeting’s final declaration. The move
has enraged developing countries, who won a pledge from the west
two years ago that phasing out payments which allow subsidized
western produce to be dumped on world markets would form a
centerpiece of the so-called Doha development round.

Xinhua reports that WTO Director-General Supachai Panitchpakdi
signed an agreement with the United Nations Industrial
Development Organization (UNIDO) on Wednesday, in an effort to
help developing countries participate in international trade. The
agreement, in the form of a memorandum of understanding, will
provide a framework for the two organizations to work more
closely. UNIDO’s Director-General Carlos Magarinos said,
“Until Doha, trade related technical assistance was almost
synonymous with WTO-related technical assistance. “Now it is
increasingly understood that to be effective, trade-related
technical assistance has to attend to the whole “product to
market” chain,” he added.

In another piece, Xinhua notes that United Nations
Secretary-General Kofi Annan said Wednesday that the
liberalization of trade is not the cure-all for the developing
countries because, in fact, it causes considerable adjustments
and social expenditure. Developing nations need help to establish
institutions and infrastructure, acquire technology and knowledge
and create legal regimes that allow them to move on this path,
according to the text read at the opening of the five-day event
in Cancun. Annan said that the less-advanced countries tend to
need a truly special and differentiated treatment, and not only
more time to fulfill new rules.

AFP notes that African cotton growing countries on Wednesday
demanded at a key WTO meeting here an end to subsidies paid by
wealthier countries to their own farmers, as well as compensation
for losses resulting from those subsidies. West and Central
African countries lose an estimated 250 million dollars a year in
export revenue, they said, adding that the figure increases to a
billion dollars if one takes into account losses suffered by
people whose income is indirectly linked to cotton production and
exports.

AP adds that EU Trade Commissioner Pascal Lamy said he had
“sympathy” for the problem of African cotton farmers,
but stressed that the bloc produces less than 3 percent of world
cotton and is the world’s largest importer of cotton. The US
stresses that subsidies are not the only problem. The cotton
trade is also affected by import tariffs that are sometimes as
high as 100 percent, lengthy customs procedures, complicated
labeling requirements and policies that promote the development
of manmade fibers.

Meanwhile, Lamy writes in an op-ed in The Guardian (UK) that
the [WTO] rules are far from perfect. But I do not agree that
they are intrinsically unfair to poor countries, he writes. The
Uruguay round was not a bum deal for the developing world: since
its conclusion, EU imports from developing countries have
doubled, for instance. In agriculture they have grown by 5
percent annually, and we are already the world’s largest
importer of agricultural products from developing countries. In
textiles EU imports from developing countries have soared by 60
percent since 1995. But more needs to be done. This is the big
prize of the Doha agenda: the World Bank estimates that an
additional 300 million people could be lifted out of poverty by
2015 if the WTO secures a comprehensive deal. The EU is ready to
accept that challenge, whether in market access or rules. Lamy
further writes a true development round will require both
developed and developing countries to open up.

World Bank President James Wolfensohn writes in anotehr op-ed
in the Manila Times that reducing trade barriers alone will not
fulfill the development promise of Doha. Trade must be part of a
larger strategy for each country that includes attention to
macroeconomic policy, infrastructure, education, health and
governance. One small example is reforming customs procedures.
Reducing port and customs transit times by one day has nearly the
same value as reducing tariffs by one percent. The World Bank is
committed to helping developing countries take advantage of any
new market access that emerges from the multilateral
negotiations, Wolfensohn writes. We are adapting existing tools
and designing new programs that will provide resources for
countries reforming their trade regimes, improving their
trade-related institutions, and investing in the infrastructure
needed to get the products of the poor and others to markets.
This op-ed also appeared in the Der Tages-Anzeiger (Switzerland),
Irish Times (Ireland), BusinessWorld (Philippines) and the
Philippine Star.

In another op-ed in The Guardian, Joseph Stiglitz, Columbia
University’s Novel prize laureate, writes that the African
farmer may not have a college education, but he may well know as
much about the meeting that is happening in Cancun as the average
American or European-because his life is far more dependent on
the outcomes. While something should be done about existing
problems such as the proliferation of non-tariff barriers,
America is also making new demands on developing countries-that
they open up to destabilizing speculative capital flows. Just as
the IMF has recognized that such flows do not promote growth, but
actually result in greater instability, and have accordingly
scaled back pressure on developing countries for capital market
liberalization, America is trying a new forum, the WTO, to push
this agenda, which may be good for Wall Street but is bad for
developing countries.

John Vidal of The Guardian writes in a commentary that the
reform of Trips will be at the heart of the Cancun talks.
African, Asian and Latin American countries propose that all
patenting of life forms should be banned worldwide, but because
this would mean a complete reversal of the present Trips rules it
will be unacceptable to the US and a non-starter. The best that
developing countries can hope for is reform of the rules so
anyone wanting to patent a life form would have to disclose where
the genetic material was gathered, or where they came by the
knowledge to use the plant.

The Bangkok Post writes in an editorial that Thailand, as one
of the world’s largest agricultural producers, has a very
real interest in seeing farm liberalization move forward. Thai
farmers produce much more each year than is needed locally, with
the surplus going to export markets. Without exports, the net
effect would be a virtual collapse of market prices as excess
rice, sugar, fisheries and other farm commodities go to waste,
unused and unwanted. There will always be winners and losers
involved in any liberalization policy. But in this case, it
remains in the country’s best interest to hope that the goals
of Cancun and Doha are ultimately met.

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