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Trade and human development

A key proposal of the United Nations Development Programme-sponsored book, Making Trade Work For People, is for the World Trade Organisation (WTO) ministerial conference in Cancun next September to make a declaration on special and differential treatment (SDT) and human development.

The declaration would link the WTO agreement to the achievement of the millennium development goals MDGs. The are a set of universally agreed targets for the world community on poverty reduction, primary education, access to basic health services, reduction of HIV/AIDS, potable water and gender equality.

Hence the principles governing special and differential treatment would be:

n Eligibility should consider the human development indicators and rankings of countries.

n Provisions should be unconditional, binding and non-negotiable.

n Provisions on government assistance for economic development should be reactivated, based on human development criteria; giving developing countries more flexibility to suspend WTO obligations where necessary for human development challenges. This would be subject to “internal and external validation”.

n Graduation from eligibility for SDT would be based on internationally agreed indicators of human and technological capabilities and the achievement of MDGs.

n The generalised system of preferences and other preferential schemes should be made part of the WTO mandate.

How might such an approach work for the countries of the Greater Caribbean region?

Looking at the human development picture, one notes the wide diversity of achievement (see table). Six countries have attained high human development category, 17 are in the medium category and one has low human development.

But several of those with high human development are small, service-oriented economies that are particularly vulnerable to the impact of trade liberalisation. The smallest economies in the region have heavy reliance on import duties for fiscal revenues, which finance basic social services for human development in these countries. Tariff liberalisation obligations for these economies should take into account the reliance of human development levels on trade taxes.

The majority of regional countries have shown indifferent performance in improving economic and human development levels in the past 25 years; a period of widespread trade liberalisation.

For 1975-2000, only six countries managed to sustain a rate of growth of real per capita income of more than two per cent per annum. Seven countries had a positive rate of less than one per cent and five registered negative growth.

In the 1990s, growth appears to have picked up, but only marginally.

Manufacturing is significant in many of the larger countries in the region, but meeting the challenges of international competitiveness often requires State supports of a kind used widely by the developed countries and the Asian countries at earlier stages of industrial development, but are now proscribed by the WTO. SDT would restore the flexibility to deploy such policies under agreed circumstances.

In many countries, agriculture is still a major source of employment and income. High tariffs and subsidies in the developed countries coupled with import liberalisation in the poorer countries and elimination of traditional export preferences could spell disaster for the latter. Special and differential treatment would recognise the social and economic role of agriculture in the light of the MDG of poverty reduction.

Professor Norman Girvan is Secretary General of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to [email protected]

©2003-2004 Trinidad Publishing Company Limited

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