According to Mrs. Kinnock, it is clear that trade has much potential for developing economies and their integration in the global economic system. Economic growth is crucial for poverty alleviation and the achievement of the MDGs. However, the majority of developing countries face economic constraints; in Doha a clear commitment has been taken to address these constraints through assistance.
While the EU has agreed to provide some 2 billion euros per year from 2010 on aid for trade, she finds this to be simply “inadequate.” More substantial funding is required to build capacities and create infrastructures. For infrastructure alone, the African Commission estimates it needs 20 billion euros per year. It is also important to be clear on where this money comes from, to be sure that new funding is additional to any existing commitments. Currently, aid for trade money comes from ODA, and the G8 countries are failing to meet their 2005 pledges.
Equally important, according to Mrs. Kinnock, are issues of ownership and priority setting. There is a clear need to define what the objectives of additional programmes are, and to set them according to the specific challenges of each country. For countries like Ghana and Malawi, for example, technical assistance and access to credit are high priorities. However, donors often define different priorities when talking about aid for trade. It is important to put in place mechanisms for broader and effective consultation to clearly identify which specific elements have to be addressed.
Broadening the scope of the discussion, Mrs. Kinnock also touched upon the EPA negotiations, their process and possible effects. She reminded participants of the recently issued JPA Kigali declaration that asked for more attention to women in the EPA negotiations. She also questioned the EU on the absence of recovery plans to mitigate the negative effects that the conclusions of the agreements will have on ACP countries. As the IMF has also pointed out, it is clear that EPAs will produce shocks for several economies, with Senegal for example likely to loose some 10% of Government revenues.
In conclusion, she called on the EU to look into budgetary arrangements, to define where the money will come from and what will happen if the EPAs are not signed. More money needs to be put on the table to avoid the “system breaking down”, deeply discrediting the Doha round and the European Union.
See more from the 5 December briefing