Development aid back in focus at WTO as talks sour

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GENEVA, Oct 11 (Reuters) World Trade Organisation (WTO) negotiators have turned their focus to development aid in an attempt to salvage souring talks over a global free trade pact.

The WTO's Doha round was launched in November 2001 with the aim of reducing global poverty by repealing barriers to trade in farming, industry and services that distort prices and make it hard for developing countries to compete.

But despite its lofty ambitions, known as the Doha Development Agenda, the talks have fallen prey to divisions among the WTO's 151 member states over how much developing countries should have to open up their markets under a deal.

Many diplomats see parallel discussions over ''aid for trade'' -- a financial package to help developing nations boost their exports in the wake of a Doha deal -- as a way to take the edge off poorer countries' concerns in the broader negotiations.

Argentina, one of the emerging powers who this week angered the United States and European Union with calls for more tariff cut exemptions for developing countries, told a WTO meeting on Thursday that the development funds were vital to making the Doha round palatable to the WTO's least developed members.

''Aid for trade should become an important component of market access for low-income countries, as part of the Doha Development Agenda,'' Argentina said in a statement.

Diplomats said a Nov. 20-21 global review session on aid for trade may also provide an opportunity for ministers to come to Geneva and breathe life into the sickly Doha talks. A full ministerial meeting is not expected to occur this year.

Still, some observers cautioned that the aid for trade funds, to be channelled through agencies such as the World Bank, may not do enough to address poorer countries' hesitations in the Doha talks, which also include the services sector.

Carin Smaller of the Institute for Agriculture and Trade Policy said it remained unclear which countries would qualify for aid for trade money, and how much donors were willing to cough up for the projects.

And Amy Barry, who leads Oxfam's work on the WTO, said that while many poor nations would benefit from added investments in communications and other infrastructure, they should not be required to accept ''potentially devastating'' Doha provisions to qualify for the funds.

''Aid for trade should not be used -- either as a carrot or a stick -- to encourage developing countries to sign a trade agreement that does not promote their development interests. No amount of aid can compensate for fundamentally unfair and harmful trade rules,'' she said.

REUTERS SYU BST2322

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