The International Herald Tribune | By Mike Moore | March 14, 2002
In a precarious world, development is a key security issue. The UN Conference on Financing for Development, to be held in Monterrey, Mexico next week, is the most important opportunity for addressing global inequities in years.
UN Secretary-General Kofi Annan's vision in assembling dozens of leaders, ministers and the international agencies provides a historic opportunity to turn noble sentiments into pragmatic programs to reduce poverty and send a message of hope to millions.
My message to the conference willbe blunt: Trade is a major factor in development. The Doha development agenda, agreed upon last November, saw developing countries put conditionality on rich countries. And they will consider moving forward on the trade round if capacity-building promises are kept and market access is improved. Elimination of all tariff and non-tariff barriers could result in gains for developing countries on the order of $182 billion in the services sector, $162 billion in manufactures and $32 billion in agriculture.
The scope for least developed country (LDC) trade expansion is there. U.S. imports from selected African countries benefiting from the African Growth Opportunity Act expanded sharply last year, despite the U.S. slowdown, totaling $8.4 billion in the first 11 months, a 1,100 percent increase over the same period in 2000. The European Union's "anything but arms" initiative is also an important step forward.
But to successfully address the problems of the poorest nations, the Doha development round must tackle some difficult issues.
Agriculture. Nearly 50 developing economies depend on agriculture for more than one-third of export earnings, and almost 40 rely on it for more than half. Yet massive agricultural support in the OECD countries, totaling a billion dollars a day, undercuts them.
Textiles and clothing. The Multi fiber Agreement has been described as "the biggest piece of protectionist cholesterol blocking the arteries of free trade today." This sector is the greatest export earner for many developing countries, and it must be "integrated" as planned for Jan. 1, 2005. Given the backloading of this agreement, which leaves the bulk of the changes improving developing countries' export prospects to the final year, thereis serious unease.
Tariffs. Despite low average nonagricultural tariffs, the products in which developing countries are competitive continue to attract relatively high tariffs. It is imperative that these be beaten down to provide the needed boost to resources for development. Even more insidious is tariff escalation, which tilts the tables against the development of indigenous processing/transformation, and thus movement up the value-added chain.
These restrictions are also highly damaging to the countries that maintain them. Protection costs the European Union approximately 6 to 7 percent of its GDP -- about the same as Spain's total economic output. The net cost of trade protection to Japan was reported in the mid-1990s to be anywhere from $8 billion to $17 billion annually. Net losses to the United States associated with textile and clothing import restrictions have been estimated at more than $10 billion annually
There is potential for further expansion of South-South trade, which in the 1990s grew much faster than world trade and today accounts for more than one-third of developing countries' exports, or about $650 billion. The World Bank estimates that some 70 percent of the burden on developing countries' manufactured exports results from the trade barriers of other developing countries.
Boosting trade in services is also important. For 21 developing countries, travel services alone accounted for one-third or more of total export earnings from 1998 to 2000.
The so-called new trade Issues -- investment, transparent government procurement, trade competition and trade facilitation -- are all development issues and good governance issues. The Asia-Pacific Economic Cooperation Forum estimates that trade facilitation programs alone could generate additional GDP growth of 0.25 percent in their region. At Monterrey, the international community has an opportunity to seize the development initiative. Trade has a key role.
In Geneva, our progress has been very encouraging. Donor governments have kept their word, and the WTO's budget has been substantially increased. Recently they pledged more than 30 million Swiss francs for additional technical assistance to ensure that developing countries can participate fully in the new trade round.
The Doha development round is under way. Everything, from negotiating structure and time-tabling of meetings to consensus on chair-people for all committees is on schedule.
We must all re-commit to the basic building blocks of development and increased market access -- help create workable customs regimes, ensure that tax systems are not porous, see that technical barriers to trade are tackled and that developing country nationals are trained to negotiate.
The sterile debate about trade or aid enrages poorer countries, many of which get neither. We need both. The writer is director-general of the World Trade Organization. He contributed this comment to the International Herald Tribune. [Not to be reproduced without the permission of the author.]The International Herald Tribune:
