EU, US Urge Poor Nations To Help Themselves

by Mike Godfrey, Tax-News.com, Washington

11 September 2003

Poor nations should be doing more to help themselves is the message being put forward by the United States and the European Union at Cancun this week, as trade delegations from 146 countries in the WTO gather to debate at the mid-point of the Doha round of discussions.

What this all boils down to is the issue of market access and tariffs, principally in the agricultural sector rather than the industrial. Developing nations have long complained that they could be developing a lot faster if they weren't prevented from selling their products in large parts of the developed world by tariffs and other trade barriers.

However, representatives from the EU and the US have been seeking to shift the onus of responsibility on the industrialised world to give developing nations a leg up the economic ladder onto the poorer nations themselves.

The EU Commissioner for Agriculture, Franz Fischler is keen to change the culture of 'rich countries bashing'.

"It is not about black and white, about North against South. If we seriously want to give developing countries a better deal, especially the poorest countries in the world, then it is not enough to play on the old stereotypes," Fischler announced in a press conference prior to the start of the main summit.

"Of course, the rich countries have to do more, have to substantially reduce their trade distorting farm subsides," he continued. "But the farm policies of rich nations are not the only reason why developing countries have not reaped enough benefits from trade liberalisation."

"The World Bank says that 80% of the benefits from farm liberalisation would come from reductions in the barriers between poor countries themselves. Europe has an avarage farm tariff of only 10%, Brazil has 30% and the average tariff of all developing countries amounts to 60%," the Commissioner explained, adding that developing countries have to reduce trade barriers "for their own good".

Chief trade negotiator for the Bush administration, Robert Zoellick, has expressed a similar argument in the past, frequently observing that 70% of all of the developing world's tariffs are paid between the poor countries themselves.

However, Frank Vargo, of the U.S. National Association of Manufacturers has argued that many third world nations lack an incentive to reduce tariffs, as the tax base and collection systems in these countries is often woefully inadequate. Therefore, tariffs represent an easy source of revenue for governments in the developing world. According to the WSJ, Mr Vargo intends to devote much of his energy at the Cancun summit suggesting ways in which the poorer nations can develop tax revenue from alternative sources, which will enable them to reduce tariffs.

The developing world, however, is more than a little sceptical of the North's motives, and some observers have pointed out that lower tariffs means not only better market access for them, but also for the rich nations. "With their own economies growing slowly, they are looking for a way to expand overseas," Tarun Das, director general of the Confederation of Indian Industry told the WSJ.

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