G-33 blasts draft World Bank paper on SPs as anti-development

New Delhi, Jan 14 (UNI) The G-33 group of 46 developing countries including India has flayed the initial draft paper circulated by the World Bank as "fundamentally flawed" as it ignored the reality of the prevailing agrarian structures in most developing countries and misinterpreted the impact of Special Products (SPs).

In a detailed critique on the initial draft paper authored by Maros Ivanic and Will Martin for the World Bank, the G-33 conveyed to the World Bank of "a serious reputation risk" in promoting a paper that inferred on the basis of unwarranted assumptions that raising agricultural prices substantially through SPs "would create large increases in poverty -- sufficient in some cases to undo decades of development progress -- and push the already poor deeper into poverty." The G-33 Group of countries, which is pushing for SPs in the WTO agriculture negotiations, has cautioned that such a misleading paper could have adverse consequences for the Doha Round negotiations in the World Trade Organisation (WTO).

The initial draft paper titled "Potential Implications of Agricultural Special Products for Poverty in Low-Income Countries", was presented by the authors to the World Bank President in October 2006. The paper was subsequently revised by the authors.

The G-33 while conveying serious concern on the revised draft paper, urged the World Bank to substantially modify the paper as a matter of priority.

Expressing dismay that even the revised draft paper remained essentially the same, the developing countries said in a statement released here that the slight difference was that instead of assuming a direct price increase of 50 per cent, it assumed high import substitution elasticities to get a similar effect on prices.

"Clearly, the objective of the instrument of SPs has not been understood by the authors. The G-33 has repeatedly explained that the aim of SPs is not to raise prices of qualifying products over an extended period of time. Rather, SPs are a flexibility intended to enable developing countries to address externally generated shocks that could disrupt incomes and food security, particularly for low income and resource poor agricultural producers," the critique said.

Further, the paper made a sweeping generalisation that if poverty was to be successfully reduced, there was need for caution in using the flexibility provided by SPs. This was despite the G-33 critique clearly mentioning that the product coverage in the study was narrow, its scope confined to only four countries, and that the situations which were sought to be simulated were completely arbitrary.

The G-33 pointed out that the Ivanic-Martin paper "ignores the reality of price declines, price volatility and predatory competition, including dumping of heavily subsidised products, which raises the risk levels of developing countries without providing an adequate safety mechanism or flexibility to deal with the adverse impacts of trade policy changes for their vulnerable agricultural sectors." In this context, the group cited an independent evaluation of World Bank Research, 1998-2005, carried out on behalf of the Bank by Angus Deaton of Princeton University criticising the use of questionable evidence, the drawing of conclusions that are not supported by evidence, in order to "proselytise on behalf of Bank policy, often without taking a balanced view of the evidence and without expressing appropriate scepticism. Internal research that was favourable to Bank positions was given great prominence and unfavourable research ignored." According to the critique, the evaluators repeatedly found that too large a fraction of Bank research "had neither great relevance to policy nor claim to academic distinction". Also, it was noteworthy that the external audit had been critical of the research done by the Bank on globalisation, growth and poverty and concluded that "much of this line of research appears to have such deep flaws that, at present, the results cannot be regarded as remotely reliable, much as one might want to believe the results." UNI