WTO members pledge to assist poor countries in crisis

Tralac, April 30, 2009

Poor countries, including Kenya, are to receive financial support to develop and diversify exports when the ongoing trade negotiations under the World Trade Organisation (WTO) are concluded.

WTO members have pledged to assist Least Developed Country (LDC) members in addressing their supply side capacity constraints, as well as the challenges that will occur due to increased competition as tariff rates used to protect their economies drop, once the Doha Round is concluded.

“These measures shall be designed to enable such members to take advantage of increased market access opportunities, including through diversification of export products and markets”, said a WTO negotiating document tabled during a trade workshop in Nairobi, Kenya yesterday.

The draft modalities for non-agricultural market access (NAMA) developed in July 2008 said the countries will also be helped to meet technical standards and requirements as well as address other non-tariff barriers to trade.

According to Kenyan Trade Minister Amos Kimunya, the challenge facing the international community is how to translate these promises in the Doha mandate into reality.

“Failure to advance [the] Doha Development Agenda would certainly be a lost opportunity for developing countries to become fully integrated into the global economy”, he said in a speech read by Assistant Trade Minister Omingo Magara.

“The absence of a commitment to global trade liberalisation at WTO would further damage confidence in our already fragile global economy.”

The sub-Saharan African region stands to lose most should the talks fail as the share of exports from LDCs accounts for only 0.6 percent of global exports and 0.8 percent of imports.

Low levels of industrialisation, combined with the inability to access advanced technology and a lack of domestic savings to invest, are some constraints on export diversification within the East African Community (EAC).

The region has remained highly dependent on primary goods exports including tea, coffee, and tobacco that have led to declining terms of trade. It has also faced price fluctuations in the global market.

“The region has inefficient taxation systems in which it is difficult for the country to calculate the rebate of indirect taxes, thus penalising exporters”, said Victor Ogalo, programme officer at CUTS Africa resource Centre, Nairobi.

“There is also inability to meet standards of developed countries like the European Union and difficulties in preparing and enforcing the required technical regulations.”

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