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"Bold steps needed for fair trade" – PM Blair

"Bold steps needed for fair trade" – PM Blair

Thank you for your recent letter about trade justice.

2005 was a big year for international development. In June, Gordon Brown's deal with world finance ministers cancelled large chunks of the debt that has crippled the poorest countries and held back their development. In July, at the G8 summit in Gleneagles, we secured an agreement that pledged $50 billion extra in aid.

The third crucial area for tackling world poverty is fairer trade. Trade offers huge potential for developing countries. Boosting Africa's share of world trade by one percentage point would increase their exports by $70 billion, dwarfing the money that the continent currently receives in aid. So increasing the opportunity to trade is vital. But inequities in the world trading system disadvantage poor countries - the West still has too many barriers to the products that they are well placed to produce and trade.

Trade reforms not only offer developing countries the prospect of selling their own produce, but also the chance to buy the goods and services that they need on better terms. So there are huge opportunities. But there are risks in trade liberalisation for developing countries - dislocation, job losses and income volatility - if it is done too quickly and when not in tandem with a broader development strategy. So the UK Government opposes forced liberalisation.

I agree with the Trade Justice Movement's key concerns that it is for developing countries to make their own decisions on the timing, pace, sequencing and product coverage of any market opening in line with their own national development plans and poverty reduction strategies.

Sadly, progress towards international agreement on a fairer trading system at the WTO talks in Hong Kong in December was limited. But the talks did agree some modest steps towards delivering the ultimate goal of an outcome to the Doha Development Agenda that will enable developing countries to trade their way out of poverty.

The progress included agreement on the ending of all export subsidies in agriculture by 2013 and a development package including steps towards duty-free, quota-free access for the poorest countries, Aid for Trade, and also some modest action on cotton, a key issue for West Africa in particular. These are worthwhile steps but not on the required scale to transform opportunities for many of the world's poorest countries.

The WTO talks also saw some welcome refinements in the European position in respect of liberalisation in developing countries. On services, the UK's established position is that developing countries should retain in full the right to accept or reject requests for market opening, as is enshrined in existing GATS architecture. Prior to Hong Kong the EU (whose position necessarily reflects the balance of opinion across all 25 member states) had proposed mandatory quantitative targets for the liberalisation of service markets. But at Hong Kong, the EU withdrew this proposal, seeking instead to galvanise discussions on services on a voluntary basis, a development the UK warmly welcomes.

On industrial goods, prior to Hong Kong, the EU proposed a formula for the opening of markets with a single 'co-efficient' (i.e. tariff ceiling) for both developed and developing countries (albeit with exemptions for least-developed and other vulnerable developing countries). At Hong Kong, the EU instead indicated it could support a deal with separate co-efficients for developed and developing countries - with developing countries having a higher co-efficient, giving them relatively greater discretion over tariffs. The UK welcomes this change as a step towards delivering on the principle of "less than reciprocity"- under which developed countries should make bigger concessions in respect of their own markets than developing countries are required to make in respect of theirs.

The overall outcome at Hong Kong was disappointing, but we hope that the steps that have been taken provide a springboard to conclude the Doha round this year. The UK has made it clear that as important as the development package is, it should only be a first step towards much bolder steps to fairer trading rules.

We need to press forward and build on the momentum created at Hong Kong to ensure that the Doha Development Agenda delivers its development promise across all the dossiers. The UK will do everything we can to play our part in ensuring this happens.

Yours Ever,

Tony Blair

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