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Small island economies seek special treatment

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Small island economies seek special treatment

Postby axel » Wed Jan 12, 2005 9:24

MAURITIUS: Small island economies seek special treatment
11 Jan 2005 19:11:14 GMT

PORT LOUIS, 11 January (IRIN) - Small island countries will remain economically marginalised unless urgent steps are taken to improve market access for their products, delegates attending a UN Conference in Mauritius heard on Tuesday.

Senior government representatives from several Small Island Developing States (SIDS) highlighted that over the past decade trade liberalisation had severely battered their fragile economies.

Participants appealed for "special" treatment for their exports, which would compensate for the high economic costs resulting from their remoteness and smallness.

"We need some interim measures, just until we can diversify our economy. Right now we depend too much on a few crops, and that continues to place us in an economically disadvantageous position," the Comoran director of regional economic cooperation, Said Mohammed, told IRIN.

Mohammed noted that development in several small islands in the Indian Ocean region was also hampered by the size of their domestic markets, and an absence of minerals and most other high-value raw materials. In the Comoros the shortage of fertile land continued to undermine agricultural production.

"It appears that all of the poorer small islands are confronted by the same or similar problems: in the Comoros there is an over-reliance on vanilla, ylang-ylang (perfume essence), and cloves; in the Seychelles tourism generates the most revenue. Among the smaller islands it is either coconuts or sugar which provide the population with their livelihoods," he pointed out.

One of the more serious consequences of this over-reliance on a handful of cash crops is that SIDS are often at the mercy of international price fluctuations.

While the poorer Indian Ocean island states, such as the Comoros and Madagascar, complain of poor market access, their more affluent neighbour, Mauritius, says it has to contend with growing miconceptions about its relative prosperity.

Mauritius has recorded impressive economic growth since the 1980s, which has increasingly attracted foreign investors. Much of this success has been attributed to moving from a dependence on sugar towards greater diversification of its industrial base. The government also aggressively supported free-trade economic policies and welcomed high-technology manufacturing, financial services and data processing.

But, according to Danielle Wong, director of the Mauritius Export Processing Zone Association, much of the island's success in recent years was directly linked to the preferential access it enjoyed to markets in Europe and the United States.

"Admittedly, we managed to graduate in wealth from this special treatment, and it is not clear what the consequences would have been, were we not entitled to these concesssions," Wong told IRIN.

Although Mauritius was considered relatively well off compared to neighbouring Comoros, Madagascar and the Seychelles, the island would struggle to compete internationally without trade preferences.

"If market access is eroded, then at least special compensatory support should be made available in the form of investment-related incentives," said Wong.

There was also recognition that, given the inherent weakness and structural handicaps of Indian Ocean SIDS, market access alone would not unlock economic opportunities.

The Mauritian Minister of Foreign Affairs, Krishna Cuttree, suggested that increased market access should be accompanied by capacity building, and recommended that donors spend more to support the diversification of island economies.

But while there was a consensus that international support was vital to accelerate development, delegates stressed that more could be done among regional island groupings to enhance economic stability.

Malagasy representative Vola Razafindramiandra noted that while Madagascar was relatively large compared to most SIDS, it shared the common problem of underdevelopment.

"Rather than trying to negotiate special trade deals with the European and American governments individually, we may succeed as a collective voice. We need to improve our regional capacity to ensure that we can conduct effective trade negotiations with our western counterparts," he told IRIN.

source: REUTERS

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