As Prime Minister Jean Chrétien prepares to host his counterparts from the G8 industrialized countries in the Alberta resort of Kananaskis next week, there has been no shortage of hints that he will use the event to unveil major initiatives on Canadian aid and trade policies toward developing countries. Taken together, they could amount to the most significant changes in more than a decade to our policy toward the poorest countries in the world.
While Canadians seem to share the Prime Minister's vision of our obligation to aid poor countries, the results of a survey we are releasing today show some of the problems Mr. Chrétien may face in achieving this goal.
The national survey, conducted for the Asia Pacific Foundation by Decima Research, found that 71 per cent of Canadians agree that it is important to provide foreign aid to poor countries, and that 68 per cent support the elimination of our trade barriers as a means to help these countries create jobs for themselves.
However, the survey results also point to two politically sensitive areas -- tied aid and labour market adjustment -- where Canadians show considerable concern about the domestic impacts of generous aid policies.
That Canada and the rest of the G8 need to do more on aid and trade liberalization is not in doubt. G8 leaders committed themselves in Munich in 1992 to increase the quantity and quality of development assistance and to direct this assistance increasingly toward the poorest countries. However, 10 years later, Canada's bilateral aid to the 49 least developed countries (LDCs) has declined in real terms by almost 50 per cent -- to $180-million (U.S.) from $350-million in 1992. The G8 as a group has not done any better -- bilateral aid to LDCs declined by 56 per cent during the same period.
In addition, the proportion of Canadian tied aid -- aid that the recipient must spend on Canadian goods and services -- now amounts to 75 per cent of the total, up significantly from 44 per cent in 1992. While this may benefit Canadian firms in the short run, aid experts agree it is not as effective a tool in helping development in the poor countries.
When it comes to promoting trade through liberalization, Canada has not done much better. A recent World Bank study showed that Canada imposes high tariffs on 10 times as many exports from the least developed countries as are imposed by countries in Europe or by Japan.
Today's survey shows, however, that Canadians are reluctant to change our protectionist approach. As much as they want to help LDC exports, they are hesitant about the extent to which Canadian markets should be opened.
So what should Ottawa do as its part to help these countries? The $500-million (Canadian) announced in last year's federal budget for the G8 Africa Initiative is a good start to arrest the decline in Canadian aid. But poverty is not limited to Africa -- a greater mass of the poor lives in Asia. Ottawa needs to make sure that our largesse does not end up ignoring the efforts made by Asian LDCs in their fight against poverty as well. After all, these countries account for 40 per cent of the 614 million people living in the LDCs.
Ottawa could change its aid procurement policies. Our survey shows that Canadians would accept a reduction in the amount of aid tied to Canadian products or services. Moving to a level of 50-per-cent tied aid over the next five years would help ensure that more Canadian aid dollars stay in the poorest countries, while still assuaging concerns about some benefits remaining in Canada.
This broad target should be buttressed by completely untying all aid for the least developed countries. These countries are, after all, the poorest in the world and the case is strong for Canadian aid dollars to be spent more effectively there.
Finally, if we are serious about opening our markets to LDCs, we must include countries that have the capacity to export to Canada, and that means Asian LDCs. An agreement to open our markets only to African LDCs would be little more than symbolic. True, such an opening would likely have a negative impact on domestic employment -- particularly in the clothing industry -- but the impact would be small and transitory.
Asia Pacific's survey showed Canadians are reluctant to open our markets aggressively when faced with the prospect of job losses. But the solution is neither to force people to yield to high-minded moral arguments, nor to acquiesce in the prevailing protectionism. The answer requires specific measures to facilitate labour market adjustment in the affected communities and the political courage to deal with these issues sooner rather than later.
Ottawa has options in place for job-search and skills-development services, self-employment assistance and labour market partnerships. These could be augmented by additional EI benefits that would be triggered when any job loss is directly related to opening markets for LDCs.
At Kananaskis, Canada and the G8 have an opportunity to take action to move the global development agenda forward. Increasing aid, untying it, and opening markets to all LDCs would be a credible start. Making sure that Canadians are protected from the domestic risks would make this action sustainable.
John D. Wiebe is president and CEO of the Asia Pacific Foundation of Canada.
The 49 least developed countries
LDCs are designated by the UN on the basis of poverty, weak human resources and low economic diversification. Africa has 34 LDCs; Asia, 9; the Caribbean, 1; the Pacific region, 5.
Africa: Angola, Benin, Burkina Faso, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Zambia.
Asia: Afghanistan, Bangladesh, Bhutan, Cambodia, Laos, Myanmar, Maldives, Nepal, Yemen.
Caribbean: Haiti.
Pacific: Kiribati, Samoa, Solomon Islands, Tuvalu, Vanuatu.
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