The Everything but Arms trade initiative, which provides preferential treatment to poor countries, benefits only a limited range of people in the target populations. It should also be expanded to more countries, civil society organisations say.
The Everything but Arms (EbA) initiative grants duty-free and quota-free market access to the European Union (EU) market for exports from least developed countries (LDCs).
"The EbA is very good but the main beneficiaries tend to be the entrepreneurs of state-owned enterprises," Rehman Sobhan, chairperson of the Centre for Policy Dialogue, said recently at a meeting of the United Nations Conference on Trade and Development (UNCTAD) in Geneva.
The Centre for Policy Dialogue is a civil society think tank based in Dacca, Bangladesh.
Sobhan has advocated that nongovernmental organisations (NGOs) should have more leverage "to argue that at least a third of any such company be owned by poor people or workers. This would bring the benefit of market access to the most deprived", he explained.
The EbA, which was adopted by the EU in 2001, grants access without any quantitative restriction to all LDC products except arms and ammunitions. Bananas, sugar and rice have also been excluded for a limited period.
"APRODEV welcomes the EbA initiative, though we recognise its shortcomings as a non-contractual relationship," Karin Ulmer, policy officer for trade and gender, told IPS in an interview. APRODEV is a Brussels-based association of 17 developmental and humanitarian church-related organisations in Europe.
But she does not support the statement by Sobhan and would rather argue that capacity and opportunity to take advantage of market access depends on many dimensions and policy areas. Therefore, a closer look is required at the specific countries, their economic development strategies and the way that these relate to trade policies.
"A key question is whether trade policy responds to and takes account of economic policy strategies, or if it is the other way around like is often the case in Africa. Economic policy should shape trade policies," she points out.
The development of regional markets would be a greater advantage to smaller and poorer economic and social groups than the EbA. "For example, there is a huge potential of more autonomous local and regional food markets in many developing countries," she explains.
"This is why we would like to see an EbA-like arrangement for all African countries (not only LDCs) to avoid the hubs and spokes approach and the splitting of African regional groupings and markets, as is happening under the economic partnerships agreements," Ulmer continues.
According to UNCTAD’s Economic Development in Africa Report 2009, expanding intra-African trade could help African countries to diversify their production to non-traditional products, especially manufactures.
UNCTAD has also proposed to regroup all structurally weak and vulnerable small countries into one group, which for Africa would mean scrapping the often arbitrary division between LDCs and non-LDCs on the continent.
"We would argue that intra and inter-regional trade often holds more advantages to poor producer groups, workers or small traders. As a study of ours in Zimbabwe shows, this is particularly true for women. Many different dimensions need to be looked at for disadvantaged women and men to benefit from trade," Ulmer adds.
Anne-Catherine Claude, EU policy officer at ActionAid, told IPS that, "LDCs are not in the position to use many of the preferences granted by the EbA because they do not have the technology and other productive capacities to shift to manufactures for export." As a result, they keep exporting mainly commodities and not value-added products.
ActionAid is an international development NGO whose aim is to fight poverty worldwide.
"Also, the EbA has often not been able to attract the necessary level of foreign direct investment needed to expand exports."
Regarding export industries, it is only businesses with a certain capacity and connections to markets that are best able to benefit from these initiatives, she continues.
"Low income groups benefit mainly through employment but this might vary depending on the economic structure of certain sectors. For example, in agriculture smaller farmers tend to dominate cotton and cocoa," Claude continues.
"Economic growth (through the EbA or other allowances) has not necessarily created increased participation of the poor in the economy because of their lack of access to factors of production. This is most evident in the case of women," she adds.
Claude insists on one point: trade policies do need to have some component of affirmative action – such as access to credit, technology transfer and social protection measures - to enhance the participation of small and medium- sized enterprises.
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