Bridges Weekly Trade News Digest • Volume 6 • Number 11 • 26th March 2002
Mixed Reaction On Trade In Financing For Development Outcome
At the conclusion of the UN’s International Conference on Financing for Development in Monterrey, Mexico, 18-22 March, heads of state and government adopted the final document, called ‘the Monterrey Consensus’, in an effort to "eradicate poverty, achieve sustained economic growth and promote sustainable development". The text highlights, inter alia, the importance of trade "as an engine for development" and calls for greater coherence among multilateral institutions. Civil society groups strongly criticised the document, saying that it fell far short of what was needed to combat poverty.
Trade as an "engine for development"
The Consensus — which had already been agreed to in draft form on 28 January (see BRIDGES Weekly, 29 January 2002) and was approved by acclamation with "no statement or reservations of any kind", according to Oscar de Rojas, executive coordinator of the conference — states that meaningful trade liberalisation "can substantially stimulate development worldwide" and "is an important element in the sustainable development strategy of a country", recognising "the importance of enhanced and stable access to all markets for exports of developing countries" and calling on developed countries to grant duty-free and quota-free access to all least developed countries.
Reflecting one of the key themes of the conference regarding shared responsibilities of both developed and developing countries, governments stressed the importance of reducing trade barriers among developing countries, and committed themselves "to enhancing the role of regional and subregional agreements and free trade areas". The documents furthermore stressed the importance of "effective, secure and predictable financing" for trade-related technical assistance and capacity building, calling for strengthened coordination of the UN system and other multilateral financial, trade and development institutions, including the WTO.
Trade versus aid
The relative importance of free trade vis-a-vis official development assistance (ODA) was addressed in a number of speeches at the Conference. US President George W. Bush came down strongly in favour of trade liberalisation, arguing that "the vast majority of financing for development comes not from aid but from trade and domestic capital and foreign investment". Similarly, Iranian Finance Minister Tahmasb Mazaheri pointed to trade as "the most important vehicle for financing of development". World Bank President James Wolfensohn stressed that ultimately all nations would benefit from more open trade, urging wealthy nations to open their markets to developing countries’ products. Horst Koehler, managing director of the International Monetary Fund described trade as "the most import avenue for self- help", while WTO Director General Mike Moore pointed out that "poor countries need to grow their way out of poverty and trade can serve as a key engine of that growth", calling on developing countries to step up efforts to increase south-south trade.
Others, however, were more critical of the multilateral trading system. New Zealand Associate Foreign Affairs and Trade Minister Matt Robson, stressing the importance of coherence in policy development at all levels, pointed out that "national trade, economic and defence policies can undermine our development efforts," while Eveline Herfkens, Minister for Development Cooperation from the Netherlands, described the lack of democratic control and participation within the international financial organisations and the WTO as "another major obstacle to pro-poor global governance". Malaysia’s Minister of Rural Development Azmi Khalid criticised industrialised countries for maintaining protectionist regimes and subsidies while insisting that developing countries open up their markets. He added that, "we would like to see that the WTO adheres to trade-related issues", and stressed that multilateral trade rules must be (re)designed to benefit developing countries.
Civil society critical
Non-governmental organisations and trade unions were critical of the conference outcomes, saying that the NGO caucus convened concurrently to the meeting was "not part of the Monterrey Consensus" as they did not consider it "a sufficient basis for combating poverty or for advancing economic, social and cultural rights". While many campaigners cautiously welcomed pledges by the US and the EU to step up ODA (see BRIDGES Weekly, 19 March 2002, they stressed that wealthy nations still had a long way to go to meet the target of 0.7 percent of GDP. Others were even more critical, in particular of the US, whose ODA spending amounts to just 0.1 percent of GDP. "[The US pledge] is a public relations gesture designed to deflect criticism," said Paul Ladd, chief economist of the British charity Christian Aid. "It seems to be a down payment for poor countries agreeing to open their markets to US goods," he added. Others also questioned the US commitment to reducing trade barriers in light of the Bush administration’s recent decision to raise tariffs of up to 30 percent over a range of steel products (see BRIDGES Weekly, 12 March 2002).
For further information visit http://www.un.org/esa/ffd/.
"Governments adopt, NGOs, refect Monterrey Consensus," UN WIRE, 25 March 2002; "US Ties new aid package to reform target, " GUARDIAN, 23 March 2002; "Global leaders say poor need trade as well as aid," REUTERS, 21 March 2002; ICTSD Internal Files.