G8 moves a bit on aid and debt, but fails on trade and climate

By Martin Khor (TWN), 11 July 2005

The outcome of the summit of the Group of 8 (G8) in Gleneagles last week has been disappointing from both the development and environment viewpoints.

The Make Poverty History campaign of citizens had put a challenge to the G8: double aid, eliminate poor countries' debts and establish just trade rules. The British premierTony Blair put African development and climate change at the top of his own agenda.

The G8 communique and related documents showed some steps forward on aid anddebt, but failure on trade and climate change.

On aid, the G8 announced an increase of $48 billion in additional annual aid (ascompared to the 2004 level), starting in 2010. Bob Geldof, the pop star in theforefront of Live Eight concerts, was euphoric, giving the G8 'ten marks out of ten'for aid.

However, experts in development groups analysed the figures and found that the realincrease was only $20 billion, with the rest being the 'repackaging and recycling' ofaid already committed. It will also arrive only after a five year delay.

'While this aid increase is a step forward, it is far from the historic deal that millionsaround the world have been demanding,' said the Make Poverty History (MPH)campaign in a statement. 'This aid will still arrive five years too late and falls farshort of the scale needed to end poverty in the world's poorest countries.

'In real terms, much of the pledged funds are a restatement of recent aidannouncements. For most of the 50 million children who will die of poverty over thenext five years, the G8 leaders have offered too little, too late. By 2010, we will stillsee the awful inequity whereby a child dies every 3.5 seconds, just because they arepoor.

'The G8's promise of US$48 billion boost to aid in five years is mostly made up ofmoney already pledged. MPH calculates that only around US$20 billion is newmoney. Some of this money is also likely to be raised through borrowing from futureaid budgets, rather than new contributions.'

On debt, the G8 leaders confirmed what their Finance Ministers had agreed to lastmonth. The debts of 18 countries (which have completed their HIPC process) to theWorld Bank and IMF (and the African Development Bank) would be cancelled. Several other countries (up to 17) may also become eligible in the next year or two,provided they also complete the HIPC process.

As most debt campaign groups have concluded, this is a good start, but not enough. First, there are over 70 countries that require debt cancellation if they are to meetdevelopment goals, including the Millennium Development Goals targets. The 17countries announced by the G8 are thus an inadequate number.

Second, the debts cancelled are only partial, as commercial debts, for example, are notcovered. Third, for the other 17 countries to become eligible for debt relief, they areobliged to follow policy conditions (including privatization and trade and investmentliberalization), many of which are detrimental to their own development and havecontributed to their poverty in the first place.

Debt campaign groups have correctly called on the G8 to improve on all the abovepoints: to expand the extent of debt relief, allow more countries to be eligible, and todo away with the conditions.

On trade, the G8 did very poorly. They did not come up with any new commitmentsto end their own protection, or indicate any change in their policy of pressurizingdeveloping countries to open up their markets.

The operational part of the G8 Summit's 'Trade Statement' pledged to increasemomentum towards an ambitious and balanced outcome in the negotiations, calledon WTO Members to end negotiations by the end of 2006, and expressedcommitment to improve developing countries' participation.

'We recognise that, in particular, least developed countries face specific problems inintegrating into the international trading system and will continue to work to ensurethat there is appropriate flexibility in the DDA negotiations. This flexibility will helpleast developed countries to decide, plan and sequence their overall economicreforms in line with their country-led development programmes and theirinternational obligations.

'We must focus on the core issues to create new market opportunities. In agriculture,we are committed to substantially reducing trade-distorting domestic support andsubstantially improving market access. We are also committed to eliminating allforms of export subsidies and establishing disciplines on all export measures withequivalent effect by a credible end date.

'We are also committed to opening markets more widely to trade in non-agriculturalproducts, expanding opportunities for trade in services, improving trade rules andimproving customs and other relevant procedures to facilitate trade.

'In this spirit, we also reiterate our commitment to the objective of duty-free andquota-free market access for products originating from LDCs. We will pursue a highand consistent level of ambition in all areas. We also recognise the importance ofaddressing products of interest to LDCs as part of the single undertaking of theDDA.'

The summit merely repeated the G8's known positions, for example, by agreeing toeliminate agriculture export subsidies but not giving an end date, which is what wasalready stated a year ago in the WTO's July 2004 package.

The G8, in stating their goal of an 'ambitious and balanced outcome in negotiations'also indicate no change in their intention of opening up developing countries' markets,despite the UK government's recent statements that liberalization should not beimposed on poor countries.

The G8 statement did mention that least developed countries should have 'appropriateflexibility' in the negotiations, so that they can decide on their economic reforms. But the term 'least developed countries' only covers the poorest countries, thusexcluding a majority of developing countries, which also have many poor people.

This is consistent with the European Commission's position in the WTO negotiationsthat special consideration can be given to LDCs, but that it would be difficult to giveconcessions to other developing countries, while the big countries like India andBrazil should be treated almost without concession.

At the WTO, the EC, US and other developed countries have been making use of thisconcept of 'differentiation' in an attempt to split the ranks of developing countries. The G8 statement on trade appears to be doing the same.

The G8 summit did not indicate any change of heart from the aggressive campaigntheir negotiators are pursuing at the WTO talks to rapidly open up the developingcountries' agricultural, industrial and services sectors. Many analysts have pointedout that such a move will cause even more dislocation and damage to the localeconomies that have already been done by previous liberalization.

Unless the G8 changes course on trade, the gains to some developing countries in aidand debt relief will be more than offset by the G8's damaging trade policies.

Climate change was the other area of greatest disappointment. With the US adamantagainst joining any targets to cut emissions of greenhouse gases, there was an attemptto get it to at least admit that there is a climate crisis and that human activity is at leastpartly responsible.

In the end, President Bush agreed to having vague language to that effect. The newaction is that meetings will be held that would include G8 countries as well as 'majoremerging economies' such as India and China to discuss issues such as the exchangeof technology for clean energy and emission reduction.

Blair claimed that this was a step forward, as it would involve the US as well as keyenergy-using developing countries, which is needed if a new international agreementis to be eventually obtained.

However, climate scientists and environmental groups saw the G8 as failing, since themeeting could not even agree on the parameters of the problem (such as that a 2degree Celsius increase in temperature is the crisis point, and that carbon dioxidecontent in the atmosphere beyond 400 parts per million would trigger that temperaturerise), let alone agree on concrete action.

As the crisis is imminent, and the time to begin tackling it is long past, the G8 failureto agree on emission-reduction targets and timetables is a great opportunity lost.

The communique only says that the G8 will act to stop and reverse the growth ofgreenhouse gases as 'science justifies.' This allows the US to refuse to act until itdecides that the science is conclusive.

Even establishment scientists acknowledged the G8's failure. 'It's a disappointingfailure,' said Lord May, president of the Royal Society. 'Make no mistake, thescience already justifies reversing, not merely slowing, the global growth ofgreenhouse gas emissions.'