United Nations: Doha Round must not affect policy space, says UN think-tank

Celine Tan

Geneva - Governments must ensure that the completion of the Doha Round does not compromise the policy space and autonomy of developing countries in pursuing their own development goals, according to the 2007 report of the United Nations' Committee for Development Policy (CDP).The report of the Committee, which is the main development policy expert group of the UN's Economic and Social Council, has been presented to the high- level segment of the ECOSOC, now meeting in Geneva.

The report warned that many developing countries have liberalised their trade due to loan conditionalities and trade rules, resulting in cheap imports displacing small farmers, and de-industrialisation, as reported in Africa, Latin America and the Caribbean.

It is important that the Doha Round of the WTO and the bilateral trade agreements do not result in a worsening of this trend, stated the Committee.

The report also dealt with the effects of intellectual property rights, the impact of the poverty reduction strategy papers (PRSP) on poverty reduction, climate change, and procedures for graduation of countries from LDC status.

The CDP comprises more than 20 development experts, including Tariq Banuri, Bina Agarwal, Suchitra Punyaratabandhu, Gui-Ying Cao and Martin Khor from Asia; Samuel Wangwe, Kwesi Botchwey and Fatima Sadiqi from Africa; Hans Opschoor, Frances Stewart and Patrick Guillaumont from Europe; Lourdes Arizpe and Ricardo French-Davis from Latin America, Willene Johnson from the USA and Hiroya Ichikawa from Japan.

The Committee recommended to ECOSOC that it should "urge its members to ensure all initiatives concerning developing countries (including the completion of the Doha Round) is consistent with the core objectives of the international development agenda, and do not compromise the policy space and autonomy of developing countries in pursuing their own development goals.

"The latter would comprise all economic and social policies aimed at strengthening developing countries' production, export and development capacities and enhancing well-being of their citizens."

In a section on "the trading environment and poverty reduction", the report said that the Millennium Development Goal 8 recognises the importance of an open and fair multilateral trading system, but reforms remain necessary "to reduce the existing asymmetries in the rules of the system".

It added: "Among the most significant problems are the distortions in global agricultural trade and production due to the fact that developed countries maintain high tariffs and non-tariff barriers on selected agricultural products of export interest to developing countries, while maintaining high export subsidies and domestic support for their own producers".

The Committee said that agricultural subsidies in developed countries lower farm income in developing countries and contribute to poverty in several ways, as they:

(a) reduce the prospects of developing countries gaining access to developed countries' markets;

(b) prevent developing countries from selling their products in third markets;

(c) affect producers in developing countries as these face competition from artificially cheapened imports of farm products.

As such, the report welcomed the decision at the WTO Hong Kong Ministerial Meeting in 2005 calling for the elimination of agricultural export subsidies and endorsed the adoption of a road map towards their elimination.

But it stressed that even more important is for agreement to be reached on "significant and effective reductions in domestic agricultural support in developed countries".

According to the report, many developing countries have liberalised their trade as a result of policy conditions linked to loans and aid, to WTO rules and bilateral trade agreements.

It contends that "when this is coupled with continued domestic support to producers in developed countries, the result for many developing countries is an influx of cheap imports that displace the products of small farmers and may lead to de-industrialization in developing countries, as has been reported in Africa, Latin America and the Caribbean. It is important that the Doha Round of WTO and the bilateral agreements do not result in a worsening of this trend."

The CDP also highlighted the social costs of implementing rules on intellectual property rights (IPRs) in WTO and some bilateral trade agreements, including the high costs of medicines in developing countries, its negative impact on farmers' rights to save and exchange seeds, and on the prices of agricultural inputs.

The Committee called for reforms at the international level "to deal with the increasingly recognized problem of bio-piracy, i.e. the misappropriation, through patenting, of the biological resources of developing countries and the traditional knowledge associated with these resources".

Recognising that trade revenue is a significant source of development finance, the Committee called on the international community to ensure that trade policy, at multilateral, regional or bilateral levels, does not conflict with development objectives and development cooperation priorities.

The report also called upon the ECOSOC to encourage the strengthening of countries' capacity to undertake their own poverty reduction policies and the removal of stringent conditionalities attached to official development assistance (ODA) which constrain the national policy space of developing countries.

The Committee concluded that the global partnership framework for poverty eradication enshrined in the Millennium Development Goals (MDGs) "needs to enhance national policy space by aligning the modality of the international partnership with truly national strategies".

International efforts should also be focused on examining possibilities for an alternative process to strengthen national initiatives for building and implementing effective national poverty reduction strategies and for enhancing true ownership of such strategies by aid recipient countries.

The report said that while the existing Poverty Reduction Strategy Paper (PRSP) framework has made some contribution towards improving aid effectiveness by harmonising donor aid flows in support of poverty eradication and accelerating the release of debt relief under the Heavily Indebted Poor Countries (HIPC) initiative, the approach remains limited as a mechanism to foster genuine national ownership of development strategies.

This is due to three inherent problems with the process. First is the heavy involvement of the donor community in the preparation of PRSP documents and in organising the PRSP consultation process at the national level.

Secondly, funds from donors under the PRSP process remain tied to implicit conditionality and consequently, "recipient countries tend to anticipate and mould proposals to what the donors want to hear".

Finally, the IMF's involvement through the Poverty Reduction and Growth Facility (PRGF) involves strict macroeconomic policy conditions, as in the earlier structural adjustment programmes.

The CDP report added that the greatest improvements in poverty reduction "appear to have been achieved in countries with well-defined national development strategies, not with policies and processes closely related to poverty reduction strategy papers". The report cited examples of China, India, Malaysia and Vietnam in which "investment-driven economic growth has been responsible for substantial poverty reduction".

The Committee called for a "new international partnership to support poverty reduction needs to abandon restrictive conditionality and to expand the scope for policy choice". Consequently, the dialogue on alternative policies should also be broadened to include not only HIPC countries but also middle-income countries, "including those which have been successful in reducing poverty".

In this manner, the ECOSOC could facilitate the strengthening of recipient countries' capacity to undertake their own poverty reduction policies.

The report further welcomed the increasing diversification of sources of development financing. It said that "the emergence of new aid donors, resources from regional development banks, private investment and the effective use of remittances can provide substantial additional resources". It recognised that "effective global partnership should be the organizing principle for development assistance for achieving the Millennium Development Goals and other internationally agreed goals".

Aside from enhancing national policy space, this partnership framework "should not lead to the enforced sterilization of available aid and domestic resources, or bar the recipient's access to foreign borrowing for trade or productive investments on mechanically applied considerations of debt sustainability", said the report.

The report also said that national development strategies should also begin to systematically take into account the threat of global warming resulting from climate change, particularly given the overwhelming vulnerability of poor countries to this threat.

The report said that confronting climate change and sustainable development requires a new partnership between developed and developing countries.

"Thedeveloped countries cannot avoid disruptions caused by climate change thatwould result if the developing countries run full steam towards industrialized countrylevels of per capita carbon emissions. The developing countries, on the otherhand, cannot engage in a decarbonized or lesscarbonized growth process without adequate technological and financial supportfrom the developed countries".

The Committee saidthat the ECOSOC may contribute to the post-Kyoto Protocol process by moving upthe climate change issue in its agenda and "by providing within its newarchitecture a platform for an overarching and sustained policy dialoguebetween climate and development, bringing together representatives of differentUnited Nations agencies, national ministries (including those of economics,finance, trade and industry), the private sector and other stakeholders, includingthe poor, indigenous people and women, with a stake in the two policy domains,climate and development".