David Cameron arrived at the G8 saying the usual things about world leaders recognising the needs of low income countries.
But developing countries should not hold their breath waiting for real action. From past experience, G8 summits offer little more than commitments made in the joint communiqué. Even this does not always mean a lot: the commitment made at Gleneagles in 2005 to double aid to the poorest countries never materialised.
This time round the prospects for development are even worse than usual, as the main themes are centred on G8 concerns. The big news from the summit thus far concerns an EU-US trade deal, with no benefits for developing countries.
This is all the more frustrating as, on trade, the G8 really could do something significant. The World Trade Organisation (WTO) has a principle of Special and Differential Treatment (SDT) for developing countries. If this were extended to all trade-related agreements between G8 members and developing countries, the benefits would be large. The primary interests of developing countries would then be recognised. However, this is a hope rather than an expectation.
The current (Doha) round of WTO negotiations has been stalled for years. As the major emerging countries are not at the summit, there is little the G8 can do to move things forward. The G20 - a wider grouping including China, India, Brazil and others - might be more successful, but it would also be unlikely to reflect the real concerns of small developing or low income countries. This is because the G8 (and G20) focus on market access and tariffs whereas for the majority of (smaller) developing countries the more important concerns are so-called “trade-related” (issues such as investment, intellectual property rights and product standards that affect and are related to trade).
In principle, developing countries already have mostly tariff-free access to the EU and US. The EU grants this access to least developed countries under an initiative known as Everything But Arms (a slight misnomer as some agricultural products are also excluded). Legislation in the US has made it easier for many African countries to export to the US.
The apparent generosity of the access is often illusory as there are very important technical restrictions. The first arises under Rules of Origin, which are basically about determining how much of a good is actually produced in the exporting country. Tariff-free market access is only granted if this share exceeds some threshold.
The second restriction concerns standards. Sanitary standards for agriculture products, for instance, that restrict exports on health grounds. Technical standards have proved to be an effective instrument to restrict developing countries’ access to OECD markets, and these issues are too complex to be addressed by the G8.
If G8 countries are to show a genuine recognition of the concerns of smaller or low income developing countries they should commit not to impose extra burdens on those countries that go beyond the obligations of developing countries in the WTO.
The least developed countries have minimal obligations under the WTO; often they are not required to make any commitments. Special development needs, such as food security, are acknowledged as entitling them to exemptions. Developing countries (other than the very poorest) have obligations under the WTO but the commitments expected are less than those for developed countries.
Extending this different treatment principle to trade-related agreements between OECD and developing countries would have significant implications.
To give one example, the New Alliance for Food Security and Nutrition is a major initiative launched at last year’s G8 with the aim of stimulating agricultural growth in Africa through foreign private sector investment. In sentiment it is similar to the Nutrition for Growth meeting that preceded the Lough Erne summit. Though this is obviously trade-related, as proposed the initiative is incompatible with differential treatment in the WTO.
In fact, it reverses the WTO principle: African countries that sign up are expected to remove any barriers to trade or investment in agriculture whereas no obligations are imposed on the behaviour of the multinational companies (that provide the seeds, technology and investment) or developed countries that are part of the “alliance”.
This undermines the ability of the developing countries to implement appropriate food and agriculture policies. Insofar as the proposal combines and confuses an essentially public health issue (nutrition and malnutrition) with food production, it has dangerous echoes.
The attempts by “Big Pharma” to use intellectual property rights protection under the WTO (another trade-related issue) to maintain high prices and market share for their branded AIDS drugs in developing countries were eventually defeated by the WTO’s public health clause. The more objectionable features of the “new alliance” could be challenged under the WTO, although action by the G8 now to enshrine differential treatment in agreements of this form would be a more positive and effective action.
If the G8 also supported measures to enhance the productivity and competitiveness of domestic producers, supply-side capacity will improve and genuine development gains are more likely. Ensuring that trade agreements between rich and poor countries really benefit development requires preferential treatment.