MALAWI'S MIXED FEELINGS ON HONG KONG TALKS

UNCLAS LILONGWE 000181

SIPDIS

SIPDIS

STATE FOR AF/S, AF/EPS, EB/TPP/MTA
STATE PLEASE PASS USTR

E.O. 12958: N/A
TAGS: EAID ETRD ECIN ECON MI
SUBJECT: MALAWI'S MIXED FEELINGS ON HONG KONG TALKS


1. In a recent briefing for the private sector, Malawi's trade
ministry indicated both satisfaction and disappointment at the
outcome of December's WTO ministerial conference held in Hong
Kong. As expected, the GOM had been concerned mainly about
concessions to least-developed countries (LDCs). The Ministry
was particularly pleased with agreements on LDC development,
aid for trade, and non-agricultural market access. Malawi is
also happy with the decision to amend the TRIPS agreement.


2. To take better advantage of open markets, the GOM
understands that Malawi needs to build capacity and deal with
supply side constraints such as poor infrastructure (roads,
telecommunications, utilities),trade facilitation structure
(customs administration and standards) and other trade-related
public institutions. Malawi assumes that an "Aid for Trade"
agreement will increase aid and that it stands to gain
substantially through programs that would address its supply-
side bottlenecks.


3. While noting good progress on eliminating export subsidies
by 2013, the GOM expressed dissatisfaction with the WTO's
failure to reach a consensus for domestic support for
production. Citing the relative sizes of domestic production
support vs. export subsidies (particularly the EU, with 55
billion euros for domestic support and 1 billion for export
subsidies),the GOM ministry argued that the removal of export
subsidies will have little benefit to Malawi as long as
domestic subsidies are still in place.

4. COMMENT: The GOM's trade position appears to be driven
mainly by the fear of further erosion in trade preferences.
These preferences have given Malawi the very limited access to
developed markets that it has had so far. As world markets
liberalize, the GOM is anxious to see programs that will give
it an effortless leg up in building exports. At the same
time, there is little understanding that Malawi could make a
much bigger difference by improving its own internal business
environment, or indeed that no program will produce dramatic
results until that work is done. In any case, it is clear
that Malawi's support for further world trade liberalization
will come only with measures that make global competition look
easy.
GILMOUR