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How the U.S. is Helping the World's Poor

How the U.S. is Helping the World's Poor

Alan Larson, Under Secretary for Economic, Business and Agricultural Affairs
Interview in the Economics and Development Newspaper
Washington, DC
October 1, 2004

QUESTION: Do you think the Millennium Development Goals need to be revisited?

UNDER SECRETARY LARSON: I don't think the picture is unremittingly bleak. If you look more closely at the data the World Bank has put out, it's clear that some countries in some regions are making relatively good progress towards the achievement of these goals. In other places there's less progress being made. Countries like India and China have made significant progress over the last generation. If you look selectively in Africa, countries such as Uganda have made enormous strides in attacking HIV/Aids, and Mozambique in reducing poverty. Our view is that each country bears the primary responsibility for the achievement of these international development goals. Our approach is to try to learn from the successes in some places and try to encourage those practices elsewhere, where progress has been slower.

QUESTION: Do you think the targets can still be met by 2015?

UNDER SECRETARY LARSON: President Bush announced our support of these goals more than two years ago when he announced the Millennium Challenge Account and we continue to work towards them, recognizing there has to be a partnership between developing and developed countries.

QUESTION: How do you respond to James Wolfensohn's criticism in Shanghai earlier this year that the developed world's interest in global poverty "is near a low point" and that not much will change while the War on Terror and Iraq take centre stage?

UNDER SECRETARY LARSON: For the US, the War on Terror has, brought a new focus on the imperative of promoting opportunity and development around the world. In the immediate aftermath of the terrorist attacks of September 11, 2001, the US played a leadership role in launching the Doha Development Agenda. About a year after September 11, President Bush unveiled the National Security Strategy, which made development, along with defense and diplomacy, one of the three main pillars of our national security policy.

Since September 11 the president launched the Millennium Challenge Corporation, which promises to increase our official development assistance (ODA) by 5 0% annually once it's fully operational by 2006. It also incorporates very innovative ideas about how to make development assistance more effective. In addition, the president has implemented a $15 billion HIV/Aids initiative. So when you take all of this and other programmes together, US development assistance is targeted to be 75% higher by 2006 than in 2001. We've shown that we can be very engaged in the War on Terror and still make dramatic increases in our commitment to development

QUESTION: US commitment to development is at 0.2% of national income, which is short of the 0.7% target set by the UN. Why?

UNDER SECRETARY LARSON: It may be a target set by the UN but it was never a target that the US government ever subscribed to. The point is that US assistance levels are up sharply. We are exceeding the goals and promises that we set out. Were not just providers of ODA; we provide more private development assistance than any other country in the world. The key point is that in our system the Congress appropriates development assistance, and it would have to be the Congress and not the UN that sets any targets for the future. Beyond that, the focus on input targets actually distracts attention from what we think is important, which are the outcomes. It is the real development outcomes that matter to people and because of that President Bush has associated the US with these international development goals.

The other point that needs to be constantly emphasized is that development assistance, as important as it is, is far from being the most important source of development finance. The savings of developing countries are vastly larger; these countries' export earnings are in excess of $2 trillion a year and have the possibility to grow rapidly; foreign direct investment into these countries is about $140 billion a year; even remittances from individuals sending money back from developed to developing countries is between $80 billion to $90 billion a year. The key, as was stressed in the Monterrey Consensus, is that all of these sources of financing for development are brought together as effectively as possible in support of development, and that's what we're trying to do.

QUESTION: So you don't think that 0.7%, should be adopted?

UNDER SECRETARY LARSON: It's not a target my country has adopted. What we are doing, through the support of Congress, is raise significantly the amount of funds made available by American taxpayers to support development. We're also trying to use other tools - including trade liberalization, foreign investment and the private sector in developing countries as additional tools for achieving these international development goals.

QUESTION: On trade liberalization, the Administration has been criticized over the 2002 Farm Bill, which, according to Oxfam, raised US agricultural subsidies by 80% a year for 10 years. How does that fit in with your development agenda?

UNDER SECRETARY LARSON: The US is playing a leading role in promoting the elimination of agricultural export subsidies and is achieving a drastic reduction and harmonization of those domestic agricultural subsidies that are distorting trade. This is a position we have been fighting for the last two years on the Doha Development Agenda, and if we achieve it, which I think we can, it will be a great victory, not only for the trading system but also for development. Frankly, your numbers on the Farm Bill are off the mark by along way. Our farm subsidies levels have been basically flat since the passage of the Farm Bill. The vast majority of the subsidies that we do provide, some 80%, are designed not to increase production for exports but rather to protect the environment.

As for those subsidies that do affect trade, we are fighting to get them reduced. Our trade distorting subsidies are much lower than those of the EU and Japan. I'm not saying that in defense of them but stressing the point that a solution has to be one that involves major political effort by all countries that have trade distorting subsidies, and particularly by Europe and Japan. We are ready and we have made some ambitious proposals to eliminate export subsidies and make drastic reductions of our domestic trade-distorting subsidies.

QUESTION: Isn't the key point that it's important to have fair trade not just free trade?

UNDER SECRETARY LARSON: The whole point of the Doha Development Agenda is to create more opportunities for developing countries to prosper through trade. The World Bank has made clear that the bulk of the benefits of a successful Doha Round would accrue to the developing world. Some of those benefits would also come about through a reduction in trade barriers in the developing countries themselves. They pay large duties on the trade they conduct with each other. To move forward on trade will require a significant effort on the part of all the developed countries, ours included, as well as the developing countries. What we are striving for in the Doha Round is trade that is freer and fairer - and is fairer because it's freer. [End]

Released on November 16, 2004

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