TWN Info Service on WTO and Trade Issues (Dec05/20)

16 Dec 2005

US and EU can't implement their proposed 'development package'

By Chee Yoke Ling (TWN), Hong Kong, 15 Dec 2005

Some key elements of the "development package" that has been floated at the Hong Kong Ministerial cannot be taken at face value because neither the EU nor the US can guarantee that they can implement what they have promised, according to a US fair-trade advocate and a European parliamentarian.

Ms. Lori Wallach of US-based Public Citizen has criticised the US offer. She said that the US Trade Representative (USTR) cannot deliver on zero tariff-quota for least developed countries' goods without Congressional approval, and Congress opposes any such move.

"Neither the USTR nor even the US President has authority to deliver such tariff cuts regarding any import sensitive agriculture goods," said Wallach.

The USTR lost his tariff proclamation authority (a right to declare certain tariff cuts without Congressional approval that had been in place since 1974) for a list of 500-plus such items in the 2002 Fast Track bill. Now, delivering tariff cuts on these items requires a vote of Congress, she explained.

According to Wallach, key members of the US Congress have said explicitly that they oppose the "zero tariff" or 'everything but arms' proposal.

She said that the USTR cannot deliver on 'aid for trade' promises made on 14 December which, according to the USTR's own briefing papers, are "subject to the President's budget request being approved" and developing countries agreeing to liberalize their trade.

"The claim that the US will double its aid for trade funding is 'subject to the President's budget request being approved'. Yet, the US Congress is in a deep budget crisis and the likelihood that this will be approved is uncertain".

The US has already announced this same pledge once this year - to move funding levels to $2.7 billion by 2010.

This apparent recycling of pledges seems to apply to the European Union too. Dr. Caroline Lucas, a member of the European Parliament Trade Committee for the Green Party, warned that the EC offer is a massive diversion and a sweetener pill to soften the severe impact of the concessions that are being extracted from developing countries.

She said that it is "incredibly arrogant to think that developing countries will be taken in by that offer".

Dr. Lucas also said that the majority of the commitments, such as duty-free and quota-free products, have already been provided, so there is nothing new. She stressed that "The biggest lie is that the European Commissioner will be able to conjure up $1 billion because the EU budget is already under major attack".

She added that the EU cannot even guarantee the pledged "paltry sum of $40 million for cotton, and if the EU diverts from existing budgets to deliver the $1 billion for development, it would be totally unacceptable".

Meanwhile, ten European NGOs also sharply criticised the EU's "development package" proposal. In a joint statement Thursday, they called the proposal "nothing more than a deceptive smokescreen."

The package hides how the negotiations are not about development but about the offensive interests of rich countries, especially the EU, they said.

The NGOs include the World Development Movement (UK), BothEnds (Netherlands), WEED (Germany), War on Want (UK), Women in Development Europe, ROBA (Italy), World Bank Reform Campaign, Friends of the Earth Europe, Attack Denmark and 11.11.11 (Belgium).

The groups said that the "development package" is diverting attention from the real issues at stake in Hong Kong: the drastic change in the approach to the GATS negotiations, the removal of flexibilities, and the introduction of new ways to pressure developing countries to liberalise against their own interests. The package also does not entail new real EU commitments.

The NGOs said the development package has six deceptive elements:

* LDCs already get duty- and quota-free market access to the EU, thus it does not have to put anything new on the table.

* Developing countries placed over 170 proposals on Special and Differential Treatment and implementation on the table but after 4 years, these have been neglected and currently only 5 (concerning LDCs) have made it to Hong Kong.

* The final arrangement for access to medicines binds a bad and temporary arrangement that should have been properly assessed and improved.

* Aid for trade is not a new commitment. If implemented, it would simply shift funds from other existing EU development budgets. Most of the money would be available conditional to opening up developing countries' markets. It would not pay attention to the real trade needs of developing countries.

* Cotton is an easy topic for the EU since this issue concerns primarily US subsidies and diverts attention from the EU's banana and sugar embarrassment.