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Developed countries asked to remove trade barriers

By Our Special Correspondent

NEW DELHI SEPT. 3. With practically the whole world preparing for next week's Cancun Ministerial meeting of the World Trade Organisation (WTO), the World Bank today released a report, which, it said, was tilted towards a pro-poor Doha outcome.

The Cancun (Mexico) meeting is a carry-forward of the last Ministerial meeting at Doha where a number of issues of importance to developing countries were put on the agenda and the World Bank has said that a trade deal at Cancun that addresses the concerns of the developing countries could spur growth and reduce poverty by as much as 144 million people by 2015.

In its report titled `Global Economic Prospects-Realising the Development Promise of the Doha Agenda,' the World Bank has flagged off certain issues critical to developing countries. For instance, in the case of agriculture, it said that, "of the gains from full global liberalisation of merchandise trade, reducing protection in agriculture alone would produce nearly 60 per cent of the gain.

Agriculture is central to the development promise of this trade round because some 70 per cent of the world's poor people live

in rural areas and earn their income from agriculture. Largely exempt from the pre-Uruguay Round trade agreements to reduce protection, agriculture is among the most distorted sectors in international trade," the report has said.

Listing out some facts, the reports brings out that agricultural subsidies in the Organisation for Economic Cooperation and Development (OECD or the developed European countries) amounted to more than $300 billion, of which some $250 billion went directly to producers. The resulted in stimulating overproduction in high-cost rich countries and shut out potentially more competitive products from poor countries.

OECD Governments support sugar producers at the rate of $6.4 billion annually, an amount nearly equal to all developing country sugar exports.

The U.S. subsidies to cotton growers totalled $3.9 billion last year, three times the U.S. foreign aid to Africa. These subsidies depressed world cotton prices by an estimated 10 per cent, reducing the income of thousands of poor farmers in West Asia, Central and South Asia, and poor countries around the world.

In West Africa alone, where cotton is a critical cash crop for many small-scale and near-subsistence farmers, annual income losses for cotton growers were about $250 million a year. Rice support in Japan amounted to 700 per cent of production at world prices, stimulating inefficient domestic production, reducing demand and denying export opportunities to India, Thailand, Vietnam and other countries.

On manufactured products, the report said that though average tariffs on manufactured products were lower in the rich countries when compared with tariffs in developing countries, the rich countries were charging tariffs from developing countries which were substantially higher than those charged from other industrial countries. For example, exporters of manufactured products from industrial countries faced, on an average, a tariff of one per cent on their sales to other industrial countries whereas exporters from developing countries paid anywhere from two per cent if they were from Latin America to eight per cent if they were from South Asia.

Highlighting the importance of services and labour services for the developing countries, the report said that in 2001, remittances from permanent as well as temporary migrants provided some $71 billion to developing countries, nearly 40 per cent more than all official development assistance and significantly more than net debt flows to developing countries.

The report also points out that if temporary movement of labour up to 3 per cent of the total labour force in rich countries were permitted, the developing countries would stand to gain as much $160 billion in additional income.

Higher growth for India forecast

PTI reports:

Coinciding with the Reserve Bank of India's projection of a gross domestic product (GDP) growth `significantly' more than 6 per cent, the World Bank today forecast a higher growth for Indian economy this fiscal but warned that unchecked fiscal deficit may spoil the prospects of attaining the Tenth Plan target of 8 per cent.

"If the Tenth Plan target is to be achieved, a large number of areas like fiscal deficit have to be addressed," World Bank Country Director, Michael S. Carter, said releasing the report `Global Economic Prospects 2004' here today.

The World Bank pegged the combined GDP growth of India and other South Asian nations at 5.4 per cent this year as compared to 4.2 per cent in 2002 and 4.9 per cent in 2001.

The projection comes close on the heels of RBI's annual report, which portrays a growth significantly higher than 6 per cent in this fiscal. Like RBI, the World Bank also avoided giving any specific figure for the growth in GDP for India for 2003-04.

"Growth is expected to accelerate to 5.4 per cent in 2003 in South Asia, assuming a return to normal agricultural production, a recovery in external demand, and continued improve- ments in political stability and regional security," World Bank senior economist, Dominique van der Mensbrugghe, said.

The higher growth would be possible due to better performance of the Indian economy, which contributes 80 per cent of the total production of the South Asian region.

Last year, the growth in South Asia was 4.2 per cent mainly on account of the drastic fall in India's GDP growth to 4.4 per cent.

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