African governments worried over ‘Aid for Trade’

The EU's executive arm, the European Commission (EC), has promised that substantial "aid for trade" will be available to African, Caribbean and Pacific (ACP) nations, who are set to sign  Economic Partnership Agreements (EPAs) with Brussels by the end of this year. The aid is intended to increase the ACP’s trade share that currently accounts for less than 1% of the global exports.The funds would also help ACP producers meet the EU's often exacting veterinary and food safety standards.

In May this year, the EC committed to granting 2 billion euros (2.75 billion dollars) in annual aid for trade by the year 2010, bulk of which they expect to be going to the ACP nations, although the source of funds has remained unexplained till now. This has created extreme skepticism on part of the African diplomats who fear that this aid might not be an additional fund but result in a regurgitation of the existing Economic Development Fund (EDF).

"The problem with aid for trade is that it is substantially undefined," an African diplomat, speaking on condition of anonymity, told IPS. The diplomat also accused the EC of trying to entice the ACP countries into signing the EPAs, despite their concerns that the level of market opening required as part of those agreements would leave indigenous enterprises at risk from outside competition.

The concern have been proved not to be unfounded as Katrin Jansen, a programme assistant with the Brussels-based organization Women in Development Europe, said EU officials have admitted that they plan to increase aid for trade without increasing the overall amount of development assistance provided by the Union. She also expressed her apprehension regarding the shift of funds from the health and education sector and demanded that these sectors remain in priority since they are of primary importance for the livelihood of the poor in developing countries.

Moreover, the amount of aid may prove insufficient once distributed among the 79 ACP states. In a 2006 report, the Commonwealth Secretariat estimated that southern Africa alone will need over 1 billion euros to help it adjust to an EPA. There have been accusations on the EC by various civil society bodies in the past regarding EC’s unwillingness to make more generous offers on aid for trade. In doing so it would have to acknowledge that the challenges inherent in the EPAs are bigger for poor countries than it has been prepared to admit until now, thereby reducing the likelihood that these agreements will be concluded before the Commission's stipulated deadline of Dec. 31.

The anti-poverty campaigners have protested at how a proposal on aid for trade published by the Commission in April does not contain any measures designed to ensure that small producers are paid fair prices for their goods which goes against the principle of the Cotonou agreement of 2000.

Furthermore, a Brussels based trade advocacy centre representative also described one of the clauses in the proposal as worrying which may require poor countries to devise national strategies aimed at integrating them into the international trading system.

The Egyptian government presented a paper on aid for trade, which has been discussed at the World Trade Organisation (WTO) in Geneva. It recommends that one of the key objectives for an effective international strategy on aid for trade should be to develop a monitoring and evaluation mechanism to ensure that the spending has the intended results.

An EU officials although denied the allegations of seeking to recycle the previous funds. The official explained that the latest version of the European Development Fund is only due to become operational in January 2008, while aid for trade funds could come into circulation before then.

Resource: www.ipsnews.net
Released on:  20 July, 2007