Aid for Trade : Poor Washing Abounds at the Sixth WTO Ministerial in Hong Kong

December 15, 2005

by Anuradha Mittal

In addition to the "development package," the other delusional package doing the PR rounds at the ministerial is "Aid for Trade."

US Trade Representative Rob Portman announced on December 14 that the US will "more than double its grant contributions to Aid for Trade, from $1.3 billion in 2005 growing to $2.7 billion annually by 2010." Earlier in the week, the EU promised $5 billion to LDCs. Japan too has announced plans to increase aid funding for developing countries to help them access opportunities to trade.

Chairman of Senate Committee on Finance, Senator Chuck Grassley's press release however makes clear the U.S. intentions behind the proposal: bribe poor countries to move deadlocked trade talks. "The United States is generous with our resources to help developing countries get a bigger piece of the pie. I hope today's trade aid pledge will demonstrate the American' good will and jumpstart the stalled trade talks," he said.

This statement from Senator Grassley requires a certain degree of official amnesia. It ignores that the USTR is making false promises. The USTR's own briefing papers acknowledge that this promise is "subject to President's budget request being approved." The U.S. congress which faces a deep budget crisis is very unlikely to approve the request.

More importantly, the aid for trade package demands further concessions from developing countries in forms of tariff reductions and market access of developing countries. According to Kevin Gallagher of Global Development and Environment Institute at Tufts University," The current deal on the table will bring less than a penny per day per person while it will cost these countries $62 billion in lost tariff revenue." In addition the scheme is built around developing countries prioritizing trade in their development plans and servicing needs of donor countries by improving their ability to export specific products. This is certainly the case with the Japanese aid for trade package. In addition most of the money comes from existing aid budgets. American money was already pledged once this year. Much of the 'promised' EU money does not exist, while Japan's offer is in the form of concessional loans that will further push the poorest countries into debt.

Aid for Trade" scheme basically trades off developmental agenda to promote rich countries interests. Hon. Sheila Kawamara Mishambi, member of East African Legislative Assembly, speaking at a press conference described the proposal as, "We are not in support for aid for trade. It is a smoke screen to smuggle in other issues that do not benefit us. Let the WTO stick to what it is supposed to do. Simply, conventional aid has not proven to solve African problems. Goodwill for funds has in the past resulted in resources taken out of our countries. It has indebted Africa. As far as we are concerned, a discussion of aid does not belong in the World Trade Organization."

Lori Wallach, Director of Public Citizen’s Global Trade Watch echoed similar sentiments. "This development package proposal is an attempt to change the subject from the failure of the WTO talks; it actually highlights the crisis at the WTO when the Bush administration has to cook up a development package to try to get the developing countries to not walk out of the negotiations of the development round! Meanwhile, the only thing worse than a bad, anti-development deal, is one that is based on a lie." It is obvious that the "development package" and "Aid for Trade" spin might fool some people, but to most NGOs and social movements, this is nothing but a "face saving" devise to create the illusion of a successful Ministerial which is development oriented.