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AFTER HONG KONG — Some Key Trade Issues for Developing Countries: Ivan Mbirimi — Editor; Commonwealth Secretariat, U.K. and Academic Foundation, 4772-73/23, Bharat Ram Road (23 Ansari Road), Daryaganj, New Delhi-110002. Rs. 595.

Emphasising the need for AFT, Joseph Stiglitz and Andrew Charlton discuss “the insincerity” of many developed countries in their reluctance to open their markets to poor countries. They visualise AFT as a necessary complement to the core market issues in the Round expanded trade-related development assistance to enhance the export capacity of developing countries, and AFT to involve additional resources not in lieu of aid for development. They then stress on predictability, for a degree of certainty about funding, on country ownership as the only way to respond to the needs and priorities of a country, and on coherence, essential in making trade a part of the broader development agenda. Capacity building and export promotion rely on the ability of donors to identify and remove roadblocks to promote private sector development. Adjustment to a post-Doha trading regime will be disproportionately costly and difficult for developing countries because of the loss of preference margins, the loss of revenue from trade taxes, absence of adequate safety nets, lack of finance required to restructure the economy, and the limited ability of poor populations to manage short-term unemployment.

Jane Kennan and Christopher Stevens in chapter three provide an analysis of the potential implications of the statement in the Hong Kong Ministerial Declaration to offer DFQF market access to LDCs. The U.S. and Japan have been reluctant to provide for 100 per cent coverage for fear that countries like Bangladesh and Cambodia would adversely affect their own textile industry. Moreover, 100 per cent product coverage would undermine African preferential market access under the AGOA (African Growth and Opportunity Act). The main concern of the authors is of the Quad markets (Canada, EU, Japan and the U.S.). In the case of the EU and Canada, the LDC package will make no major impact, currently, there are very few barriers. Any new package must tackle other barriers like rules of origin, health and sanitary standards, or other NTBs (non-tariff barriers). Full implementation of the DFQF package would lead to a significant removal of barriers to imports from LDCs to Japan and the U.S. If the U.S. concentrated its exclusion on the highest value items facing tariff peaks, a substantial proportion of imports would be excluded from Bangladesh, Cambodia, Nepal and Haiti. The three per cent exclusion is unlikely to affect substantially the LDC package impact on the current imports into Japan inasmuch as it imports only a narrow range of goods from LDCs.

Kennan and Stevens recommend against the LDC package implementation being linked to the start of the Doha Round implementation period, and the need for action to clarify and extend the Hong Kong Declaration, particularly in respect of how it be enforced.

The last, chapter four by David Primac, deals with international trade in cotton that “exemplifies the way in which the playing field is tilted against developing countries in agriculture. This issue gained prominence in the WTO during the period leading up to the Cancun Ministerial Meeting at the instance of four West African cotton producers (Benin, Burkina Faso, Chad and Mali). The ‘Cotton Initiative’ in the July Framework package, 2004 agreement envisaged the cotton issue to be addressed “ambitiously, expeditiously and specifically.” Two-thirds of global cotton production takes place in developing countries. Some of the poorest developing countries (in West and Central Africa) and some of the largest (Brazil, China and India) hold a competitive advantage in the production of raw cotton, while the U.S. and the EU extend billions of dollars of subsidies annually for this otherwise inefficient and high-cost sector. The Hong Kong Declaration provided for the elimination of export subsidies in 2006 and DFQF for LDC cotton exporters at the start of the implementation period. Progress achieved so far on cotton reforms has been “very limited”, the author laments. Recognising “the political difficulties in the immediate elimination of all cotton support measures in the U.S. and the EU”, “other avenues to address the distortions resulting from these measures is probably the most appropriate initial approach.” Besides the need for a firm schedule for reforms, the aggregate amount of annual compensation need to be in the range of 150-300 million U.S. dollars for it to effectively redress the injury that continued subsidies cause to the cotton exporting LDCs. To act as an effective additional incentive for reform, the amount would have to be at least three to four times that amount. Other concomitant aspects too need to be addressed: low productivity and poor access to technology and finance for poor cotton producers and exporters to improve their competitiveness, and stimulate their export diversification.

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