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South-south trade to help reduce intensity of financial crisis
Considering how south-south economic co-operation can help reduce the negative impacts of the global financial crisis on developing economies was the focus of discussions among developing country financial experts and government officials during an UNCTAD organised meeting on south-south trade, held in early February 2009. While trade between developing economies has grown at an average of 13%between1995-2007, the global financial crisisnow threatens to reverse these trends. Participants to the meeting agreed that the UNCTAD-supported Global System of Trade Preferences Among Developing Countries (GSTP) is a potential mechanism that could bused to stimulate trade and demand within developing nations, though it is not sufficienalone; trade enhancements and strong commitments by countries were also deemed necessary.
Meanwhile ministers and trade experts from Brazil, India, and South Africa reportedly meto discuss growing mutual trade on the sidelines of the World Economic Forum in Davos, Switzerland on 31 January 2009. Sources report a meeting is to be scheduled between the three emerging economies for the near future where the focus of talks will be a possible trade agreement between Mercosur, the Southern Africa Customs Union, and India.
India to triple trade with Africa
India has announced a plan to triple trade with Africa over the next five years in an attempt to strengthen relations in the region where Chinese competitors have made significant inroads. India aims to reach USD 100 billion in trade through agriculture, small industry, mining, Information and Communication Technology (ICT), and chemical industry projects, among others. Despite the global financial crisis, the Indian government also plans to double credit lines to Africa over five years and to provide USD 500 million for the “Aid to Africa” initiative.
Economic Partnership Agreements and benchmarking
The South Centre has undertaken research to examine development indicators to be used as benchmarks to ACP liberalisation in the EPA. The methodology borrows liberally from the indicators the EU has used in the recent past and still uses today in its various General System of Preferences arrangements for developing countries, in ‘graduating’ them from exporting certain products to the EU market. The Economic Partnership Agreements are widely acknowledged to pose a major challenge for the ACP states, since they are essentially free trade agreements based on reciprocal market liberalisation. Actors need to stringently monitor the implementation of EPAs, where applicable, and also be able to put in place halts on the liberalisation process if the desired development goals are not being attained.
To view this note, please see “EPAs and Benchmarking Development: South Centre Analytical Note, January 2009,” www.southcentre.org
World Bank global economic prospects
The volume of world trade is likely to contract for the first time since 1982, further reducing the potential for growth in developing countries according to a recent World Bank report. While commodity prices have lessened food price increases, it has also provoked new problems for commodity-dependent developing nations, like Zambia. In this 2009 released report on the economic prospects for the year ahead, the author concludes that food and oil shortages are not inevitable if careful policies are practiced. “Action is needed at the global level to discourage export bans of food grains, strengthen agencies like the World Food Programme, and improve information about and coordination of existing domestic grain reserves,” said author Andrew Burns.
To view this report, please see “Global Economic Prospects 2009: Commodities at the Crossroads,” Andrew Burns, World Bank, 26 January 2009, www.worldbank.org
News Sources
1. “UNCTAD: South-South trade could soften impact of financial crisis for vulnerable economies,” pressemitteilungen.epo.de, 5 February 2009.
2. “The South trades closer to home,” Jonathon Lynn, International Herald Tribune, 9 February 2009.
3. “India plans to triple trade with Africa, deepen ties,” Bappa Majumdar, Reuters, 21 January 2009.
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