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DEBTS
Poor Nations in Doubt
Hobbs Gama
Published: 04-JUN-04

While assistance to developing countries was dwindling, amidst unheeded calls for rich nations to cancel the mounting debts of the poor countries, developing countries decry the lack of progress for free and fair trade with the European Union (EU), writes Hobbs Gama

At the 29th session of the ACP-EU Council of Ministers of State meeting held in May in Gaborone, capital of Botswana, developing countries complained bitterly about massive trade tariffs as well as EU and US agricultural subsidies worth over $1 a day to local farmers, saying that this was stifling the development of poor nations.

The EU expressed eagerness to see the reduction of agricultural subsidies to farmers in Europe and the United States, but warned that free trade, if introduced immediately, would expose the developing countries to stiff EU competition.

They reiterated their assertion on the need for the ACP countries to address issues of competitiveness for them to penetrate the EU.

There would be little incentives, therefore, for ACP producers to diversify into more value-added products or for investors to put money into developing new capacity, given the uncertainty of the market for products competing with EU imports from other developing countries, notably the Far East, EU ministers warned.

Another concern was the inherent adjustment costs to the 79-member ACP countries for opening their markets to EU exports and the implication of eliminating tariffs, as many of them rely heavily on import taxes for fiscal income.

On cotton subsidies, the ACP representatives said there was little dispute because its member states produced very small quantities of the crop. However, they pointed out that EU export subsidies for dairy and processed agricultural products disguised the real price of EU agricultural exports which had the effect of distorting the domestic agricultural market for the ACP partners.

Botswana president, Festus Mogae, said ACP countries feared liberalisation as prescribed by the World Trade Organisation (WTO) which could make them more vulnerable in the short term to the vagaries of globalisation, further marginalisng their economies.

"This is because - as the saying goes - the lemons always ripen first, the plums only later. The pain associated with structural reforms come immediately while the benefits come much later," he said

He stressed that numerous initiatives launched by the international community in the past few years to address the ills of trade inequalities had not brought the hoped-for relief.

He alluded to the Monterry Conference Financing for Development, which reaffirmed the commitment of donors to meet the agreed Official Development assistance (ODA) levels, and in addition promised an injection of development resources. The commitments were repeated at the 2003 Johannesburg World Summit on Sustainable Development.

The Botswana meeting coincided with a study released by the pro-poor lobby interest group, Oxfam, entitled "Dumping on the world: How EU sugar policies hurt poor countries."

The study singled out countries like Malawi, Mozambique, and Ethiopia as among those poor states that lost a total of $734. "The losers are the poor. For every $3 that EU gives Mozambique in aid, it takes back $1 through restrictions on access to its sugar market. The figures highlight a shameful lack of coherence between EU trade and aid policies," charged the Oxfam report.