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Climate Change Assistance so Near and Yet so Far
Inter Press Services, June 02, 2010

Technology transfer and aid for trade could assist least developed countries (LDCs) suffering the effects of climate change. But negotiations in the World Trade Organisation (WTO) are not helping to make this a reality, while aid for trade lands up at the wrong institutions, such as the World Bank.

"Fisherpersons in Lake Victoria have three elements at their disposal: fishing gear, fish in the lake and access to markets.

"They are affected both by trade and climate change. To help them adapt to climate change, one can give them other possibilities to earn their livelihood and that’s where trade could help," said Rashid Kaukab, deputy director of the Consumer Unity and Trust Society (CUTS).

"The effect of trade can be positive if they have access to international markets and use their earnings to buy a bigger boat, or negative, if the EU imposes a new standard that makes them lose their market access," argued Kaukab. CUTS is an Indian-based nongovernmental organisation (NGO) working on international trade and other issues.

The problem is that climate change and trade are rarely analysed in relation to each other. For example, Uganda has a national adaptation plan of action to fight climate change and a national export strategy but the latter barely mentions climate change, added Kaukab.

Kaukab was speaking at a roundtable discussion organised by the International Centre for Trade and Sustainable Development (ICTSD) on May 28 in Geneva. ICTSD is a Geneva-based NGO using dialogue on trade policies to promote sustainable development.

Theoretically, multilateral trade liberalisation should provide access to better technology, which is a critical element of ameliorating climate change, said Debapriya Bhattacharya, special advisor on LDCs at the United Nations Conference on Trade and Development (UNCTAD).

"But technology is subject to intellectual property regulations. Under the WTO’s Trade-Related Intellectual Property (TRIPS) agreement, transfer of technology could not be put into operation and therefore remains hostage to trade negotiations. The Doha Round could provide a solution if it truly addressed development but negotiations have not gone further."

For the UNCTAD official, border adjustment taxes try to "level the playing field" between polluter and non-polluter countries "but there is a strong concern that they may be protectionist. Standards and eco-labelling are also suspect because they may create the barriers we are trying to avoid," he added.

Border adjustment taxes are levied by carbon-taxing countries on goods manufactured and imported from non-carbon-taxing countries.

Vinaye Ancharaz, senior lecturer in economics at the University of Mauritius, believes that aid for trade funds could be used to top up funds set aside for climate change. Aid for trade was launched in 2005 to help developing countries build economic infrastructure and productive capacities, among others.

In 2007, Africa received 9.5 billion dollars in aid for trade, which represented a 38 percent increase over 2000-2005. "This is good because African countries are the least integrated in the world economy," argued Ancharaz.

"However, Ethiopia, which is the biggest recipient of aid for trade on the continent and fifth in the world, got only one dollar in terms of per capita aid. So there is a need to significantly increase aid for trade."

A whole range of bilateral and multilateral funds are available to fight climate change. Of special interest to Africa is the LDCs Fund, operated by the UN as part of the Global Environment Facility.

"However, there are only 180 million dollars in the fund presently, which is very little compared to the adaptation needs of African countries, of which the estimated cost is 588 million dollars," Ancharaz pointed out.

The EU has pledged to provide additional money over the next three years. "But where will this money go?" the Mauritian academic asked. "I bet very little will reach the LDCs fund.

"Most of it will go to the World Bank and will be available as loans, which is unfair because African countries have contributed very little to climate change but they are the most vulnerable to it. It is immoral for these countries to have to borrow to adapt to problems that are not of their making," Ancharaz insisted.

Regarding how aid for trade could top up under-endowed climate change funds, he gave the example of many African countries needing to shift to crops that are more weather resistant. Countries can ask for money under aid for trade to develop such crops and also to move out of agriculture. "With climate change you cannot depend only from agriculture," he added.

"Soil rehabilitation and changes in crop mix can all be marked as building productive capacities in terms of aid for trade."

The same goes for the water stress resulting from climate change: "You need to build dams and water distribution networks and manage scarce water resources more efficiently. All this can be included as economic infrastructure under aid for trade," said Ancharaz.

For him, there is a need to promote complementarities and existing synergies, particularly since he considers the climate change adaptation projects as more strongly owned by African countries than the aid for trade projects that mainly flow in a bilateral mode on the basis of the World Bank’s poverty reduction strategy programmes.

One solution, he argued, may be to create a centralised fund for aid for trade, as initially advocated by economics Nobel laureate Joseph Stiglitz and the World Bank.

But Frans Lammersen, principal administrator at the development cooperation directorate of the Organisation for Economic Cooperation and Development, which represents rich states, strongly objected that "we should not create a global fund for aid for trade that would only result in one more costly bureaucracy.

"Aid for trade is in line with the Paris Declaration on Aid Effectiveness; it has created its own accountability mechanism. It is about mainstreaming trade in development. It is very much country-owned because sectors are chosen by recipient governments."

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