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TWN Info Service on WTO and Trade Issues (Jul05/8)

15 July 2005
 

G8 moves a bit on aid and debt, but fails on trade and climate

The recent G8 Summit in Gleneagles has been proclaimed to be proof of the G8's new commitment to development.

However the outcome was mixed, with some progress in aid and debt (though much less than than what the G8 projected). Moreover the conditionalities appear to remain, which would continue to lock the countries onto damaging policies.

On trade, the G8 maintained its old positions, and the detrimental effects on developing countries could more than offset any positive effects on aid or debt. On climate change, there was failure to get the US involved, and no commitments to a concrete action plan.

Below is a brief report on the outcome of the G8 meeting.

with best wishes
Martin Khor
TWN

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G8 moves a bit on aid and debt, but fails on trade and climate

By Martin Khor (TWN), 11 July 2005

The outcome of the summit of the Group of 8 (G8) in Gleneagles last week has been disappointing from both the development and environment viewpoints.

The Make Poverty History campaign of citizens had put a challenge to the G8: double aid, eliminate poor countries' debts and establish just trade rules. The British premier Tony Blair put African development and climate change at the top of his own agenda.

The G8 communique and related documents showed some steps forward on aid and debt, but failure on trade and climate change.

On aid, the G8 announced an increase of $48 billion in additional annual aid (as compared to the 2004 level), starting in 2010. Bob Geldof, the pop star in the forefront of Live Eight concerts, was euphoric, giving the G8 "ten marks out of ten" for aid.

However, experts in development groups analysed the figures and found that the real increase was only $20 billion, with the rest being the "repackaging and recycling" of aid already committed. It will also arrive only after a five year delay.

"While this aid increase is a step forward, it is far from the historic deal that millions around the world have been demanding," said the Make Poverty History (MPH) campaign in a statement. "This aid will still arrive five years too late and falls far short of the scale needed to end poverty in the world's poorest countries.

"In real terms, much of the pledged funds are a restatement of recent aid announcements. For most of the 50 million children who will die of poverty over the next five years, the G8 leaders have offered too little, too late. By 2010, we will still see the awful inequity whereby a child dies every 3.5 seconds, just because they are poor.

"The G8's promise of US$48 billion boost to aid in five years is mostly made up of money already pledged. MPH calculates that only around US$20 billion is new money. Some of this money is also likely to be raised through borrowing from future aid budgets, rather than new contributions."

On debt, the G8 leaders confirmed what their Finance Ministers had agreed to last month. The debts of 18 countries (which have completed their HIPC process) to the World Bank and IMF (and the African Development Bank) would be cancelled. Several other countries (up to 17) may also become eligible in the next year or two, provided they also complete the HIPC process.

As most debt campaign groups have concluded, this is a good start, but not enough. First, there are over 70 countries that require debt cancellation if they are to meet development goals, including the Millennium Development Goals targets. The 17 countries announced by the G8 are thus an inadequate number.

Second, the debts cancelled are only partial, as commercial debts, for example, are not covered. Third, for the other 17 countries to become eligible for debt relief, they are obliged to follow policy conditions (including privatization and trade and investment liberalization), many of which are detrimental to their own development and have contributed to their poverty in the first place.

Debt campaign groups have correctly called on the G8 to improve on all the above points: to expand the extent of debt relief, allow more countries to be eligible, and to do away with the conditions.

On trade, the G8 did very poorly. They did not come up with any new commitments to end their own protection, or indicate any change in their policy of pressurizing developing countries to open up their markets.

The operational part of the G8 Summit's "Trade Statement" pledged to increase momentum towards an ambitious and balanced outcome in the negotiations, called on WTO Members to end negotiations by the end of 2006, and expressed commitment to improve developing countries' participation.

"We recognise that, in particular, least developed countries face specific problems in integrating into the international trading system and will continue to work to ensure that there is appropriate flexibility in the DDA negotiations. This flexibility will help least developed countries to decide, plan and sequence their overall economic reforms in line with their country-led development programmes and their international obligations.

"We must focus on the core issues to create new market opportunities. In agriculture, we are committed to substantially reducing trade-distorting domestic support and substantially improving market access. We are also committed to eliminating all forms of export subsidies and establishing disciplines on all export measures with equivalent effect by a credible end date.

"We are also committed to opening markets more widely to trade in non-agricultural products, expanding opportunities for trade in services, improving trade rules and improving customs and other relevant procedures to facilitate trade.

"In this spirit, we also reiterate our commitment to the objective of duty-free and quota-free market access for products originating from LDCs. We will pursue a high and consistent level of ambition in all areas. We also recognise the importance of addressing products of interest to LDCs as part of the single undertaking of the DDA."

The summit merely repeated the G8's known positions, for example, by agreeing to eliminate agriculture export subsidies but not giving an end date, which is what was already stated a year ago in the WTO's July 2004 package.

The G8, in stating their goal of an "ambitious and balanced outcome in negotiations" also indicate no change in their intention of opening up developing countries' markets, despite the UK government's recent statements that liberalization should not be imposed on poor countries.

The G8 statement did mention that least developed countries should have "appropriate flexibility" in the negotiations, so that they can decide on their economic reforms. But the term "least developed countries" only covers the poorest countries, thus excluding a majority of developing countries, which also have many poor people.

This is consistent with the European Commission's position in the WTO negotiations that special consideration can be given to LDCs, but that it would be difficult to give concessions to other developing countries, while the big countries like India and Brazil should be treated almost without concession.

At the WTO, the EC, US and other developed countries have been making use of this concept of "differentiation" in an attempt to split the ranks of developing countries. The G8 statement on trade appears to be doing the same.

The G8 summit did not indicate any change of heart from the aggressive campaign their negotiators are pursuing at the WTO talks to rapidly open up the developing countries' agricultural, industrial and services sectors. Many analysts have pointed out that such a move will cause even more dislocation and damage to the local economies that have already been done by previous liberalization.

Unless the G8 changes course on trade, the gains to some developing countries in aid and debt relief will be more than offset by the G8's damaging trade policies.

Climate change was the other area of greatest disappointment. With the US adamant against joining any targets to cut emissions of greenhouse gases, there was an attempt to get it to at least admit that there is a climate crisis and that human activity is at least partly responsible.

In the end, President Bush agreed to having vague language to that effect. The new action is that meetings will be held that would include G8 countries as well as "major emerging economies" such as India and China to discuss issues such as the exchange of technology for clean energy and emission reduction.

Blair claimed that this was a step forward, as it would involve the US as well as key energy-using developing countries, which is needed if a new international agreement is to be eventually obtained.

However, climate scientists and environmental groups saw the G8 as failing, since the meeting could not even agree on the parameters of the problem (such as that a 2 degree Celsius increase in temperature is the crisis point, and that carbon dioxide content in the atmosphere beyond 400 parts per million would trigger that temperature rise), let alone agree on concrete action.

As the crisis is imminent, and the time to begin tackling it is long past, the G8 failure to agree on emission-reduction targets and timetables is a great opportunity lost.

The communique only says that the G8 will act to stop and reverse the growth of greenhouse gases as "science justifies." This allows the US to refuse to act until it decides that the science is conclusive.

Even establishment scientists acknowledged the G8's failure. "It's a disappointing failure," said Lord May, president of the Royal Society. "Make no mistake, the science already justifies reversing, not merely slowing, the global growth of greenhouse gas emissions."

 


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