African Trade Agenda
Third World Network-Africa Volume 4 Number 1 March 2012
INSIDE
UNCTAD’s alternative approach to globalisation acclaimed
pages 1-4
Africa on the horns of a WTO dilemma
pages 4-6
EPAs
Mkapa warns again on EPAs
pages 6-7
Minister urged on new alternative to IEPAs
pages 7-8
Dateline Africa
pages 8-10
Notice Board
page 10
UNCTAD’s alternative approach to globalisation acclaimed
by Tetteh Hormeku, TWN-Africa
W
ith barely a month to the thirteenth session of the United Nations Conference on Trade and Development (UNCTAD XIII), a multi-stakeholder panel has affirmed the enduring relevance and timeliness of the organisation’s vision of and approach to globalisation and development, particularly as enunciated in its flagship publication, the annual Trade and Development Report (TDR).
At an UNCTAD XIII pre-event held in Geneva on 20 February, 2012 to commemorate 30 years of the publication, the panel of academics, policy makers, government officials, negotiators and civil society actors were unanimous that TDR “has over the last three decades often been ahead of the curve in tackling debt and finance issues, predicting impending crises, and proposing active government action to correct market imbalances.”
Under the theme “Thinking Development: Three Decades of the Trade and Development Report”, the one-day event focused on the key issues in the global economy and the design of development strategies that have been addressed in the TDR over the past three decades. The discussions covered issues such as the origins and evolving ideas of the TDR, the TDR approach to development strategies, the macro-economic reasoning in the TDR and evolving issues in international economic governance.
In a wide-ranging opening overview, former UNCTAD Secretary-General Reubens Ricupero said that “over the three decades of its existence, the TDR covered a multitude of subjects and became a true encyclopaedia of development thought.”
He drew attention to some of the TDR’s most interesting conclusions “in areas that are closer to my experience such as the imbalances and shortcomings of the multilateral trading system, the rate of value added to manufacture exports as the definitive criterion of development, or the real nature of the successful development policies implemented by China and other Asian countries in contrast to the neoliberal travesty of such policies concocted by some organizations.”
He also pointed to the “the domain that proved to be the most accurate anticipation of things to come: the systematic analysis of the dangers of too
much and too early financial liberalization and deregulation; the enlightened proposition of a complete set of policy advice to deal in an effective and humane way with excessive indebtedness; and the promotion of sound policies to prevent and avoid financial and monetary crises.”
Underpinning all this was the TDR’s “overall perspective of development in its totality and complexity, of a whole greater than the sum of its parts, of its indivisible nature … The 1996 TDR was precisely devoted to the interaction of all factors indispensable to development: finance, exchange rates, investment, trade and technology.
Within this framework the TDR’s distinctiveness came to be defined by its twin focus on the importance of the external economic context and of the active policies undertaken by governments, with a capable state machinery.
In this context the publication has often swum against the current of neoliberal thinking, including the collective attitude of denial that has led to the recent crisis. According to him, the crisis was a direct product of the ideological belief that markets would self-correct the imbalances that they themselves had created.
Indeed, as Ricupero noted, “among all the TDR's achievements, the one that stands out as a lesson of immediate and urgent usefulness” is their analyses and warnings about the series of financial crises that have rocked different part of the global economy, from the Mexican, Russian, Brazilian and Asian crisis, to the recent and on-going full-blown global crisis. Ridiculed or ignored by mainstream neo-liberal institutions when they were made, these analyses and warnings nevertheless impress with the “their freshness, their analytical depth and their permanent validity”.
Also speaking at the event was Mr. Yilmaz Akyüz of the South Centre, formerly director of the UNCTAD Division on Globalization and Development Strategies. Tracing the intellectual background of the TDR, he touched on the analytical basis as well as the guiding principles that informed the work of the TDR.
Among the key analytical touchstones are the analyses by Raúl Prebisch on the role of industrialisation, trade and development which formed part of the larger post-war development thinking underlying much of UNCTAD’s concerns in the 60s and 70s. This was combined with the heterodox Keynesian tradition, not only in macro-economics, but also in finance, accumulation, distribution and growth. Added to these, the work of the UNCTAD secretariat were guided by the principles of independence, competence, relevance and usefulness, scientific modesty and integrity.
Akyüz also traced some of the most important contributions of the TDR, especially “in debt and finance where TDR was well ahead of the curve.”
While the TDR drew many of its analytical tools and arguments from the heterodox tradition, it also made some important original conceptual and analytical contributions.
For instance, right from the1980s the TDR argued for replacing creditor-led, ad hoc and arbitrary debt workout mechanisms with statutory mechanisms. “The lack of a well-articulated, impartial framework for resolving international debt problems creates a considerable danger … that international debtors will suffer the worst of both possible worlds: they may experience the financial and economic stigma of being judged de facto bankrupt, … At the same time, they are largely without the benefits of receiving the financial relief and financial reorganization that would accompany a de jure bankruptcy handled in a manner similar to chapter 11 of the United States Bankruptcy Code”
Unfortunately, due to opposition mainly from financial markets, the proposals contained in the TDR for orderly debt work-out were largely ignored. “Only, now traumatized by the periphery debt crisis, the eurozone is rediscovering it. “
Akyüz also discussed the TDR attention in the 1990s on to capital flows and financial instability. For instance, it argued that the success of Brady plus washington consensus policies (and NAFTA for Mexico) could attract large amounts of capital, leading to Balance Of Payments and financial fragility and eventually to crises. Starting in 1991 it constantly urged Mexico to avoid build up of short-term debt, appreciations and deficits, and use control over inflows (TDR 1995: 76-77).
After Mexico 1995, TDR gave a warning that for Argentina the key question was not “if” but “when”. This was followed by an analysis in TDR 1996 that some East Asian countries were heavily dependent on capital flows and highly vulnerable.
“These were not simple conjectures but conclusions from rigorous analyses in the tradition of Keynes and Minsky that mainstream discovered only after the subprime crisis” he added.
Ms Jayati Ghosh, Professor at Jawaharlal Nehru University, New Delhi, India, expressed the hope that the Report would soon receive wider recognition so that its thinking can in fact become the mainstream. She stressed its importance in raising issues such as development banking, the influence of capital flows on exchange rates, the financialization of the commodity markets, and job and employment implications of growth.
Picking up the employment thread, Mr. Rolph van der Hoeven of Erasmus University, Netherlands, formerly of the International Labour Organization, asked why governments during the global financial crisis served as bankers - but not employers - of last resort. He called for the incorporation of employment policies on both national and international levels into the financial policy framework, a point the Trade and Development Report has raised many times.
It is exactly this approach that has been one of the key qualities of the Report over the years, argued Mr. Faizel Ismail, Ambassador, Permanent Representative to the World Trade Organization, from the Permanent Mission of South Africa. He shared experiences from his country, where the Report has helped inform active government policymaking.
Speaking on evolving issues in international economic governance, Arturo O’Connnell focused on the G20 whose activities have dominated the limelight of the governance of the international economy since the on-going global crisis. He noted that while the expansion of the G7/8 with the addition of a set of developing countries is positive, the G20 suffers many limitations.
Among these is the fact that the G20 is a forum which, even though complemented by dozens of working groups, does not approach an intergovernmental structure. This is typical of the shift in international affairs from the international institutional format -- strong treaty based binding forms of decision-making – to forums, soft, discretionary, groups without any commitment and power to taking binding decisions. “Peer pressure is no substitute to binding rules”, he added
He also pointed to the serious democratic deficit of the G20 which excludes the participation of one hundred and twenty countries. Paradoxically, while there is a parallel meeting of business leaders, even if they are not necessarily the ones worst affected by the crisis, nor with any novel solutions to put forward, there is no attempt even to reach out to former presidents. In the end the G20 is less a representative of a wider community of countries, an more of a co-optation by the powerful to serve their needs, with a process monopolised by sections of the bureaucracies of a selection of countries -- finance ministries and a bunch of people meeting in forums with ideas that are not to be implemented, and dominated by a small epistemic community.
He said that as such the G20 does not measure up to the challenge of the current circumstances of the international order, the crux of which to is to tackle two issues at the same time.
The first is to abandon the ideas which have led to the present crisis. Here developing countries need to affirm the relevance of their experience that there are different ways – not necessarily a single one — to development from the ones the advanced countries have followed. This involves a central role of the state, combined with “friendly market” policies (as against “market-friendly” policies), in order to pay attention to the welfare of the majority of society.
The second challenge is a new distribution of power in international institutions. This requires not only re-organising the voting power in these institutions, but more crucially the generation of a new consensus. This means that the ideas of the developing countries must become mainstream, common sense ideas. For this, developing countries must learn to stand up for their own policies, or the policies that other developing countries are applying and abandon the continued politeness before the claims of neo-liberalism.
In his view, this is one of the reasons for the importance of the TDR. For the teachings of the TDR over the past 30 years are precisely what now need to propagated.
It is not an exercise in “I told you so”. Rather it is to affirm that the neo-liberal ideas were wrong, and that there were objective criteria for this assertion, just as there are for alternatives
Africa on the horns of a WTO dilemma
by Sylvester Bagooro, TWN-Africa
T
he eighth Ministerial Conference of the World Trade Organisation (WTO) which took place in Geneva from 15-17 December, 2011, has worsened the dilemmas faced by African and other developing countries in the on-going Doha negotiations. Not only are these countries faced with the increasingly near impossible task of safeguarding their development needs and interests in a round of negotiations which have been touted as developmental. They now also have to deal with attempts by the rich countries of the North to dismantle key elements of the WTO architecture -- in pursuit of their own issues which are outside the mandate of the Doha negotiations. How African and other developing countries manage this difficult situation will be critical for the their place in the international trading order for years to come.
The Ministerial Conference ended with no clear direction as to the future of the Doha negotiations. Instead of the ministerial declaration normally adopted at the end of these meetings, the December 2011 conference ended with a Chairman’s summary of the varying views of Ministers on global trade governance and the way forward. This was an unsteady compromise between those who wanted to continue with the negotiations and sort out key remaining differences, and those who wanted to truncate the negotiations and start a discussion of new issues. Many African and other developing countries are confronted with the fact that key conclusions so far arrived at on important issues in the negotiations are unacceptable, and indeed threaten greater damage to their development prospects than at the start of the negotiations. At the same time, however, abandoning the negotiations will clear the way for the advanced industrial countries to reintroduce their pet themes which threaten even worse damage.
Prior to Doha, most developing countries were opposed to the demands by the rich countries for a new round of trade of negotiations. Instead, they preferred for the WTO to continue with its “in-built agenda”, in particular around the distortions in agriculture behind which the rich countries were shielding their producers while wrecking havoc on the rest of the world. In addition, African and many other developing countries wanted to focus attention on the imbalances and difficulties in the Uruguay Round agreements which established the WTO, and which had placed huge burdens on these countries and their development. In the end, these countries reluctantly accepted the launch of the Doha negotiations because the built-in as well as the implementation issues were given priority on the agenda of negotiations.
Once the negotiations started, however, the developing countries found their issues marginalised, while they came under untold pressure to give priority to issues of primary interest to the rich countries. These included principally the so-called Singapore issues of investment, competition, government procurement and trade facilitation, by which the rich countries sought to pave the way for their investors to easily enter and operate in the economies of developing countries. Sustained resistance to this state affairs by developing countries, aided by global civil society advocacy, culminated in the collapse of the 2003 Cancun Ministerial Conference of the WTO, and the withdrawal of three of the Singapore issues from Doha negotiations.