Magazine article New African

WTO: A Game of Serious Arm-Twisting

Magazine article New African

WTO: A Game of Serious Arm-Twisting

Article excerpt

There was "business as usual" at the WTO General Council meeting in Geneva in July 2004. The powerful countries, as usual, used every trick in the book--arm-twisting, bribes, inducements and threats--to influence the outcome of the trade talks and the ability of developing countries to sustain their positions. Aileen Kwa traces some of the instruments used.

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Withdrawal of Aid

Kenya is one of the most vocal African countries in the WTO, championing the cause of developing nations. Just days before the July 2004 WTO meeting, the EU withdrew aid from Kenya (on 21 July), to the tune of US$60.2m. The reason given was the "prevailing governance situation in Kenya", because of the way the government had handled a corruption case. Informal sources have speculated that the EU did not want Kenya to be "too confident" at the meeting.

This was in line with the UK trade minister Patricia Hewitt's acknowledgement that "the UK is using its influence to persuade developing countries that a deal is in their interest".

Taming the Africans with AGOA III

The Africa Growth and Opportunities Act (AGOA) is a major inducement for some key African countries. African exports to the US increased by 55%. Kenya's exports to the US under AGOA, for example, trebled from $45m in 2001 to $150m by 2003.

Under AGOA II, African countries' ability to import fabric and yarn from countries other than the US was to expire in September 2004. This was a major worry for the African countries since most could no longer locally produce their own cotton (due to US subsidies) and imported yarn from the US was too expensive.

Timed at exactly two weeks before the July WTO meeting in Geneva, President George Bush signed into law the AGOA III legislation on 13 July, extending

the provisions of AGOA from 2008 to 2015.

The legislation makes provision for African countries to continue importing "third party" raw materials for another three years. This was packaged as a major concession to African countries such as Kenya.

Two proponents of the cotton initiative are also AGOA recipients--Benin and Mali. The other countries that are eligible to export textiles to the US under AGOA include Ghana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Niger, Rwanda, Senegal, South Africa, Tanzania, Uganda and Zambia.

Millennium Challenge Account

The Millennium Challenge Account--a development assistance fund--was first mooted by Bush in 2002 and came into effect in 2004. It has since been used as another carrot. It provided $1bn of aid to 16 developing countries in 2004. During the week of the WTO talks in Geneva, faxes were sent by the US to certain recipient countries, reminding them that they would be given this aid.

WTO member countries that had been selected as recipients included Benin, Bolivia, Ghana, Madagascar, Mali, Mongolia, Mozambique, Honduras, Lesotho, Nicaragua, Senegal and Sri Lanka. Significantly, two of the "cotton" proponents were also part of this list--Benin and Mali.

Sugar quota allocations

Sugar is a significant export commodity for some countries. On 23 July 2004, a week before the Geneva meeting, the US announced its sugar quota allocation for 40 countries. This system allows these countries to export a fixed quota to the US at a lower tariff rate. The largest recipients were the Dominican Republic (185,335 metric tons), followed by Brazil (152,691 metric tons), Philippines (142,160), Australia (87,402), Guatemala (50,546), Argentina (45,281).

Visa waiver

Negotiations on visa waiver to the US was completed only in the first week of July 2004. The visa waiver was granted to Nigeria.

Threats US "Food aid"

Elimination of export subsidies were supposed to be a big concession by the EU at the Geneva meeting. However, the EU offer was extremely weak, conditioned upon US discipline on food aid. …

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