Statement concerning the Government's strategy on international trade conditions for developing countries

Mister President,

Development assistance alone cannot solve the world’s poverty problems. Development assistance is not and can never be more than a part of what is needed to achieve sustained and sustainable development. Development assistance is vital, particularly for the poorest countries, but it is not sufficient on its own.

A strategy for achieving development must be based on the whole range of economic, social and political instruments. Too much emphasis on either development assistance or trade tends to maintain poverty and dependence. Only an integrated and coherent approach will bring about development.

Mister President,

The very poorest countries lack some of the basic prerequisites for participation in the world economy. They lack health services and educational systems. They have small, poorly developed economies. They lack effective, democratic systems of government.

This means that a strategy for increasing trade with the poorest countries must have a positive impact on development assistance, private sector development and trade.

The Labour Party’s policy does this. Our strategy is as follows:

• Firstly, the Government is increasing development assistance funding

This year’s fiscal budget includes a sharp increase in development assistance funding – the largest in decades.

A popular slogan runs "trade, not aid". But this is an evasion of responsibility. If the poorest countries are to have any hope of becoming part of the world trading system, they need both aid and trade. This was most recently emphasised by the Director-General of the WTO in a speech at the Ministerial Roundtable on Trade and Poverty in Least-Developed Countries in London on 19 March this year, which we both attended.

Trade does not materialize by itself in a vacuum.

Trade requires knowledge and expertise. - But where is the expertise to build on if girls and boys have to work on tobacco plantations and do not even receive a basic education?

Trade requires a healthy, able-bodied and productive population. - But how can we safeguard human capital in countries and societies – especially in Africa – where the HIV/AIDS epidemic is already directly affecting 20 – 35 per cent of the population and is breaking down family and social structures?

Trade requires a robust social system. - But how can we develop the private sector without a properly functioning infrastructure, in societies that are undermined by corruption and where there are no effective democratic political institutions?

Anyone with eyes to see will recognize that this is impossible -- without development assistance!

This is why the Government is giving priority to increasing development assistance funding

• because this helps people to survive and lead a decent life
• and because it is a way of helping people to help themselves.

• Secondly, the Government is increasing funding for private sector development

In this year’s fiscal budget, there is a substantial increase in aid for economic development, investment and private sector development in our partner countries. Support schemes have been simplified and given a sharper focus to ensure that our assistance becomes even more effective.

NORFUND has been further developed to make it into an instrument that can help to vitalize the economy and promote innovation in the poorest countries.

We will create new and stronger alliances with the poorest countries.

In January, Norway hosted an international seminar convened by the UN Conference on Trade and Development (UNCTAD) on the role of the private sector in achieving development, which focused on investments and private sector development. And the third UN conference on LDCs is being held in Brussels in May.

Investment, private sector development and trade are being put further and further towards the top of the agenda, both here in Norway and internationally. Our role should be to act as a catalyst and an ally for the poorest countries in these efforts.

• Thirdly, the Government will lower the threshold for participation in world trade by the poorest countries

Our policies must be coherent. Our development assistance and trade policies must run in the same direction. Aid without trade is like a seller without a market.

The poorest countries’ share of world trade is now less than one half of one per cent. The developing countries are now unanimous in their demands for better access to markets in industrial countries. And we agree with these demands. We must open up our markets to the goods that the poorest countries produce.

Norway has an open trading system, with duty- and quota-free market access for the vast majority of products from the LDCs. At the end of last year, the Government phased out the last textile quotas. This makes Norway one of the few countries that has eliminated all quotas for clothes and textiles.

The Government takes the developing countries seriously, even when doing so may conflict with other Norwegian interests. A few weeks ago, for example, the Government decided to maintain unrestricted imports of ostriches from the poorest countries despite the demands from Norwegian ostrich producers for import protection.

And the Government will continue this approach.

The EU has recently introduced duty- and quota-free market access for all products from the LDCs with the exception of weapons, with certain transitional arrangements for three sensitive agricultural products.

The Government’s objective is to increase imports from the poorest countries. We are currently working on various proposals for ways of lowering the threshold for imports from these countries.

Trade must be based on open and fair rules. This can best be accomplished through the World Trade Organization (WTO). If we are to succeed in our efforts to create a fair, rule-based trade regime, we must bridge the divide that brought negotiations in Seattle to a halt. In a new round of negotiations, I will focus on the importance of tariff reductions for export products of particular importance to developing countries.

We can only have an equitable international system of rules if the countries involved have the resources and expertise to make use of it. This is why the Government emphasises the importance of expert assistance. We recently decided to contribute almost NOK 5 million to a new fund that will provide trade-related assistance to the poorest countries.

Mister President,

The expansion of trade with the poorest countries does not serve their interests alone. It may also benefit Norwegian consumers.

We will not of course be granting any special advantages to the developing countries by relaxing standards on quality and protection of the environment, human health and safety when goods are imported to Norway. A trade policy that shows solidarity with the developing countries should be good consumer policy as well.

Mister President,

No chain is stronger than the weakest link. A trade strategy for the poorest countries involves the establishment of a framework and the basic parameters for private sector development and economic progress.

• This requires a sound economy
• It requires a properly functioning infrastructure and energy supplies
• It requires efforts to combat HIV/AIDS
• It requires sustainable investments and production systems
• It requires respect for human rights
• It requires a welfare system and equitable distribution
• It requires a fight against corruption and poor governance

In other words, it requires a broad-based effort across the board.

Mister President,

The Conservative Party and Ms Frost Sterri should be given credit for their commitment to expanding trade with developing countries.

But at the same time, the Conservative Party is making it harder for the poorest countries to take part in freer and more equitable world trade.

This year, the Conservative Party proposed a cut of more than NOK 2.7 billion in the development assistance budget. This would have reduced official development assistance (ODA) to 0.69 per cent of GNP, which is below the UN target of 0.7 per cent and far from the target of 1 per cent of GNP. This would have put Norway as a donor country in a bad light.

And this is nothing new.

• The Conservative Party proposes a reduction of the development assistance budget every year.
• Every year, the party suggests that Norway should spend NOK 2-3 billion less on promoting development.

This will not lead to more development.

This will not improve the framework for development.

And it is not the way to go if we are to include the developing countries in world trade.