NEW UNCTAD REPORT BACKS CALLS FOR A ‘MARSHALL PLAN’ FOR AFRICA
The UN Conference on Trade and Development (UNCTAD) has endorsed calls for a Marshall Plan for Africa, in a report that also cautions that an improved framework for dealing with foreign assistance will be necessary if large increases in aid are to actually help the continent meet its development objectives.
The Trade and Development Board, UNCTAD’s governing body, released the 2006 Economic Development in Africa report, "Doubling Aid: Making the ‘Big Push’ Work," on 20 September. It addresses the issues of aid effectiveness, the absorptive capacities of aid recipients, and whether aid can increase growth and help to reduce poverty.
From analyses of earlier aid policies and their effectiveness — more precisely, their lack thereof — the report concludes the current aid system is fraught with unpredictability, politicisation, lack of transparency, and high transaction costs. These flaws, compounded by unrealistic demands on recipient institutions, prevent countries from optimising assistance funds and promote further chaos in the aid system. Even with the current proposals to double aid to Africa by 2010, the continent is already behind on meeting the UN’s Millennium Development Goals (MDGs). Economic growth rates there have increased due to high energy and mineral prices, but little has been done to reduce poverty and inequality, or boost employment.
British Prime Minister Tony Blair and Gordon Brown, his finance minister, have both called for a Marshall Plan for Africa. Like the US-funded reconstruction of Western Europe after the Second World War, this proposes to direct large amounts of aid at specific objectives.
UNCTAD says the new aid framework must ensure that aid is used to encourage and supplement national resource mobilisation so as to meet development goals. It would require potential aid recipients to produce clear development plans indicating how and where aid would be used in a given amount of time. Aid would be released dependent on targets’ being met, but over a longer time period and in a more flexible manner than possible under the rules of the International Monetary Fund. Trade liberalisation would also be gradual and asymmetric.
"Economic Development in Africa. Doubling Aid: Making the ‘Big Push’ Work" is available online at http://www.unctad.org/Templates/WebFlyer.asp?intItemID=3937&lang=1.
CHINA-CHILE FREE TRADE AGREEMENT ENTERS INTO FORCE
The goods-only free trade agreement (FTA) between China and Chile went into effect on 1 October 2006. The deal is expected to remove tariffs on 97 percent of bilateral goods trade within ten years.
With the entry into force of the agreement, China will eliminate tariffs on 2834 categories of Chilean goods exports, including copper. Chile has agreed to give duty free access to 5891 types of commodities from China, including fruits and vegetables as well as medical and electrical equipment. This amounts to 92 percent of Chilean exports and 50 percent of Chinese exports, reports Dow Jones.
However, the high percentages of trade covered by the deal — which reflect the fact that the accord has liberalised tariffs on the most heavily traded commodities — mask the fact that both countries will maintain tariffs on over 7000 categories of goods, according to Xinhua. These are thought likely to be the subject of future negotiations.
The FTA, which was signed in November 2005, marked the first such agreement between China and a Latin American country. Negotiations on the pact began in November 2004.
According to the Chinese Ministry of Commerce, bilateral trade between the two countries has been growing at an average annual rate of 20 percent since 2000. Trade volumes reached USD 7.13 billion in 2005, with China’s imports standing USD 2.15 billion and Chile’s at almost USD 5 billion. China sources 50 percent of its imported copper from Chile, making it the South American country’s second-largest trading partner.
The two countries are expected to soon start negotiations on liberalising bilateral investment flows and services trade.
"China, Chile put free trade agreement into effect," PEOPLE’S DAILY ONLINE, 1 October 2006; "Chile-China Free Trade Agreement promulgated by President Michelle Bachelet," EMBASSY OF CHILE IN THE UNITED STATES - ECONOMIC DEPARTMENT, 4 October 2006; "China, Chile To Start Services Free Trade Talks Next Month," 10 September 2006; "China/Chile free trade agreement becomes effective," MERCOPRESS, 1 October 2006; "China, Chile put free trade agreement into effect," XINHUA, 1 October 2006.