A United Nations agency put forward a trade “Marshall Plan” to rescue the world’s 50 poorest countries from what it called “a seemingly endless poverty trap.”

Under the plan from the UN trade and development agency UNCTAD, rich countries would formally pledge to allow all goods from the 50, known as LDC’s (least developed countries), into their markets free of duty and with no limits on quantity.

“This could produce welfare gains of up to $8 billion and additional growth of around four percent, a huge contribution to alleviating poverty in the LDCs,” senior UNCTAD official Lakshmi Puri, the report’s author, told a news conference.

Realization of the plan, to be taken up by LDC trade ministers at a meeting in Livingston, Zambia, on June 25-26 and sent to all UN member governments, would be “in the enlightened self-interest of all countries,” she declared.

LDCs with average incomes of under $1 a day range from Afghanistan and Bangladesh in Asia to Ethiopia and Malawi in Africa and Haiti in the Caribbean. They also include small island states like Kiribati and Tuvalu.

Under the plan, loosely modeled on the 1947 aid package for post-World War Two Europe devised by then US Secretary of State George Marshall, industrialised powers would also:

o Bind themselves to giving special access to LDC service providers, like tour agencies, to operate within their domestic markets and to allow in more qualified LDC workers—both professional and manual—on temporary contracts.

o Launch an “Aid for Trade” fund, with an initial $1 bln growing to $15 bln over 2-3 years, to help LDCs meet adjustment costs of opening their markets under global free trade pacts and obtain equipment and know-how to benefit from them.

Mesh with Western initiatives

Puri, head of UNCTAD’s Division on International Trade in Goods and Services, said the plan—which she argued would mesh with Western initiatives to alleviate poverty in Africa—could be brought into effect by the end of this year.

But heads of state meeting in New York in September to review faltering progress on the UN’s 2000-2015 development goals and trade ministers meeting in Hong Kong in December would need to act firmly on it, she said.

The commitment to so-called “duty-free and quota-free”, or DFQFT, access for LDC goods and the services package could form part of the final agreement in the World Trade Organisation’s Doha Round of liberalisation talks, Puri argued.

The Hong Kong meeting brings together ministers of the 148 WTO member countries, some 30 of them LDCs, to try to shape the outline of a new global trade treaty covering goods and services that would be completed by the end of 2006.

Incorporation of the twin packages in the WTO pact as binding agreements whose terms would not be changed would add stability to LDC economies, attracting more investment and encouraging foreign buyers to conclude supply contracts.

Puri said that—apart from the $8 billion welfare benefits through job creation and diversification of manufacturing—the DFQFT measure could bring LDCs export gains of up to $6.4 billion, 10% of their current total.

Gains from the targeted services package could be even greater at $10-$20 billion annually. (Reuters)