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Heads of three multinational organizations chide both developed, undeveloped nations as Cancun trade round begins.

GENEVA - The International Monetary Fund, the Organization for Economic Cooperation and Development, and the World Bank are calling on the World Trade Organization (WTO) to break with trade policies "that hurt economic development."

The joint declaration comes as the 146-member nations of the Geneva-headquartered WTO gather in Cancun, Mexico for the groups fifth annual round of global trade negotiations.

In the declaration, the heads of the three economic agencies - IMF Managing Director Horst Koehler, World Bank President James Wolfensohn, and OECD Secretary Genera Donald Johnston - said, "Donors cannot provide aid to create development opportunities with one hand and then use trade restrictions to take these opportunities away with the other."

Trade, they continued, "can be a powerful tool for development. To be fully effective, trade policy should be placed firmly within national strategies for development and poverty reduction, and be built on a foundation of good governance."

Developing countries, they added, "must adopt trade policies with a foundation of good governance so they can be fully effective."

Ambitions for Canc?uot;must be commensurate with these objectives. We need a decisive break with trade policies that hurt economic development."

Donors, they said, "cannot provide aid to create development opportunities with one hand and then use trade restrictions to take these opportunities away with the other and expect that their development dollars will be effective."

Developing countries "have an important responsibility in using the multilateral system to promote better integration among themselves and with the global economy. Their tariffs and non-tariff barriers stand as major obstacles to their mutual trade."

The agricultural sector was singled out for particular attention by the three financial institutions.
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"Agriculture is of particular importance to the economic prospects of many developing countries, and reforming the current practices in global farm trade holds perhaps the most immediate scope for bettering the livelihoods of the world's poor," they said.

"Yet, developed countries impose tariffs on agriculture that are 8 to 10 times higher than on industrial goods. Many continue to use various forms of export subsidies that drive down world prices and take markets away from farmers in poorer countries. In every sector except agriculture, these same countries long ago agreed to prohibit export subsidies."

These agricultural supports "cost the average household in the EU, Japan, and United States more than a thousand dollars a year. Much of this support depresses rural incomes in developing countries while benefiting primarily the wealthiest farmers in rich countries, and does little to accomplish the environmental and rural community goals that developed countries strive to pursue," they said.

"All countries have an interest in a successful outcome and all have a duty to promote a broad and balanced agenda. But appropriate action by the developed countries is crucial."

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