The aid-for-trade scam
Last week I initiated a discussion of one of the most contentious planks on which the EPA is based; that is, the supposition that its development dimension is securely rooted in assured EU development assistance. But as we saw the general development assistance promised in the EPA is none other than that already pledged under the 10th EDF of the Cotonou Agreement. The EU Development Commissioner has stated that under the Cotonou Agreement disbursement of those funds to all ACP countries is assured, therefore countries that do not sign EPAs cannot be legally penalised. Indeed, he stated quite unambiguously that the available funding is unrelated to the EPA. Thus: “They will benefit from the same financing within the EDF framework. This financing is allocated on the basis of development criteria which are independent of the position taken in relation to the EPA” (cited in last week’s article).
I have received a flood of communications expressing great consternation at the commissioner’s declarations, which I quoted last week.
A WTO initiative
As pointed out last week, the aid-for-trade proposal is similar in that it too is not EPA inspired. This is an EU initiative which the WTO introduced at the Hong Kong Ministerial in 2005. That initiative led to the creation of a WTO work programme on aid-for-trade. Later a task force was established and came up with recommendations that were endorsed in 2006. One of the recommendations suggested a monitoring role for the WTO. This was subsequently expanded to require that the WTO produce an annual global review at the Committee on Trade and Development, before going forward for annual debate at the General Council.
After the proposal was laid at the WTO the EU was very involved in the process, producing its own aid-for-trade strategy. This is the product of an agreement between member states and the European Commission and is somewhat based on the recommendations of the task force.
The financing provisions for the strategy envisaged by the EU are two billion euros per year beginning in 2010. Half of this amount would be supplied by the European Commission from already available funding (another re-packaging) and the other half would come from member states. Currently the European Commission provides 840 million euros and the member states 300 million euros for aid-for-trade. The hope is that member states would increase to 600 million euros by this year, reaching the one billion euros target by 2010. The provision of this funding is not dependent on the successful conclusion of the Doha Round of negotiations.
The purpose of the aid-for-trade proposal is clear: “The Aid-for-Trade [proposal] is thus not a substitute for the successful conclusion of the Doha Development Agenda, nor is it linked to the successful conclusion of the EPAs” (Specht, Barbara, EU Strategy on Aid -for -Trade, 2007)
Categories
Using the format produced in the task force’s report, the EU’s aid-for-trade strategy defines six categories, namely:
1. Trade policy and regulation
2. Trade development
(These two constitute what has been termed as “trade-related assistance”)
3. Trade-related infrastructure
4. Building productive capacity
5. Trade-related adjustment
6. Other trade-related needs
The financial commitments referred to above, which are to be attained by 2010 refer only to the first two categories listed; that is, trade-related assistance. The other categories (3-6) are termed the “wider aid-for-trade agenda” for which the EU has made no specific financial promises at the WTO.
Unconvincingly, both in its proposal laid at the WTO and in subsequent references seeking to belatedly link aid-for-trade to the EPA, the EU has so far only produced a number of best-endeavour statements expressing its intention to:
1) identify suitable areas of aid-for-trade
2) ensure better ownership and participation from recipients
3) promote institutional, financial, social and environmental sustainability
4) ensure “joint” analysis, programming and delivery systems
5) advance regional trade and development and
6) implement effective monitoring and evaluation.
To achieve all these, the EU has indicated it would work through procedures it already utilizes in the Integrated Framework, which it currently uses to provide assistance to LDCs.
Concerns
In addition to the dubious attempt to promote the aid-for-trade strategy as an EPA-inspired provision of aid, the proposal as it stands raises several other concerns. One of these has already been briefly indicated; that is, the absence of specific legally binding, time-bound provisions for the delivery of assistance through clearly specified delivery mechanisms. What we have at best are very broad categories under which the assistance would be given. This vagueness in the development dimension of the EPA, (which relies principally on EU development assistance) stands in stark contrast to the specific time-bound legal provisions of the trade dimension of the EPA, which impacts CARIFORUM severely. As we have come to expect, there is also a liberal dose of laudable objectives to accompany the EU’s good-faith/best-endeavour provisions.
Another weakness is that the aid-for-trade proposal is more demand-driven than supply-directed. This would be fine, except that attached to the proposal are numerous caveats, which provide the EU with lots of opt-out opportunities, if it so desired.
Finally, all these weaknesses leave doubts about the efficacy of the delivery mechanisms attached to the aid-for-trade proposal. We saw earlier in this series that the EU’s track record as an effective aid-provider is extremely poor. The long experience of Caricom with the Lom
