First round of trade negotiations EU-Central America: Risky imbalances

NGOs have today criticised the EU for its aggressive position in the bi-regional trade and political negotiations with Central America. Last week, the first official round of negotiations between the European Union (EU) and Central American countries begun in San José, Costa Rica, with the view of establishing a comprehensive “Association Agreement” between both regions, covering trade, political dialogue and cooperation aspects. Luis Guillermo Perez, Executive Secretary at CIFCA, said: "These negotiations are a risky gamble for Central America. There are enormous institutional, commercial, cultural and developmental imbalances between the two regions, yet the EU insists on applying a one-size-fits-all approach in the negotiations. In such a scenario, European interests will be best served, while Central Americans will be the net losers".

Stepping away from its traditional multilateral approach, the EU is currently negotiating a series of bilateral agreements with various countries and regions in the world. These agreements all include provisions for a Free Trade Agreement (FTA). Past experiences of FTAs between rich and developing countries have shown these agreements are not a win-win game: "They create winners and losers - and the losers are often the poor and marginalized groups as well as the environment", declared Camilo Tovar, representative of ALOP in Europe. Erik Van Mele from Oxfam said: "Small producers in Central America will not be able to compete with the subsidised European agribusiness imports, and as a consequence, they will lose even more markets and income. This is a fact: fourteen years after the implementation of the FTA between Mexico and the United States, hundreds of thousands of small farmers have left the countryside".

The NGOs wrote last week to European Commissioners Benita Ferrero-Waldner (External Relations) and Peter Mandelson (Trade), expressing their concerns about the negotiations, and the lack of involvement of civil society. "So far, transparency in these negotiations has been almost inexistent. We believe the European Commission should urgently propose a mechanism to make the negotiations transparent and open to civil society participation", concluded Lourdes Castro from Grupo Sur.

Lessons from Argentina: How unorthodox wisdom propelled high-growth recovery

Argentine Senator Cristina Fernandez Kirchner seems to be headed for a solid first-round victory in today’s presidential election, and a new paper from the Center for Economic and Policy Research (CEPR) looks at the economic expansion that has propelled her candidacy. "Argentina challenged the conventional economic wisdom, and won," says economist Mark Weisbrot, co-Director of CEPR and lead author of the paper. Argentina's economy has grown by more than 50% in real (inflation-adjusted) terms during the past five and one half years of expansion, making it the fastest-growing economy in the Western Hemisphere. Unemployment fell from 21.5 to 9.6%, and more than 11 million people, or 28% of the population, have been pulled across the poverty line. Real wages have increased by more than 40 percent.

A number of policy choices seem to have contributed to the recovery, some of them unorthodox and controversial. Among these were: the Central Bank's targeting of a stable and competitive real exchange rate; Argentina's break with the IMF and its policy prescriptions; and its tough bargaining with international creditors over defaulted external debt. The paper, Argentina's Economic Recovery: Policy Choices and Implications, looks at these and other policies, as well as the role of the IMF during the recovery. The authors argue that Argentina's recovery and its successful macroeconomic policies may have important lessons for other middle-income and also low-income countries. This is especially true at a time when the influence of the IMF and allied institutions over economic policy has declined drastically in recent years. The paper also looks at the current state of the economy.

Trade Union Summit on Europe-Africa in Lisbon

Today a major two day Trade Union summit that will address the relationships between Europe and Africa is opening in Lisbon, Portugal, bringing together more than 60 trade union leaders from Africa and Europe ahead of a European Union – African Union Summit planned for 8 and 9 December during which a Joint Strategy for future and existing cooperation between the two continents is to be adopted. Many trade union leaders from both Africa and Europe are concerned by the minimal attention that the Joint Strategy devotes to labour issues and decent work. This lack of interest from EU and AU leaders is hard to understand as the creation of more and better jobs is a common aspiration of peoples from both Europe and Africa.

Under the slogan “putting decent work at the heart of the Joint EU-Africa Strategy” trade union leaders will discuss issues related to employment, respect for workers’ rights, social dialogue, migration and economic partnership agreements (EPAs). Participants in the Summit include on the European side: José Antonio Vieira da Silva, Portuguese Minister of Labour and Social Solidarity, Margarida Marques, director of the European Commission Representation in Portugal, Ana Gomes, European Parliament, Maria Helena André, Deputy General Secretary of the ETUC, João Proenca (UGT-P) and Manuel Carvalho da Silva ( CGTP-IN Portugal) and on the African side: Bience Gawanas, Commissioner Social Affairs Department of the African Union, Andrew Kailembo (ICFTU-AFRO) and Adrien Akouete (DOAWTU). ITUC General Secretary Guy Ryder leads the International delegation.

A final political Declaration will be adopted. The Declaration will include proposals that social dialogue be given a central place in the EU-Africa Strategy as it is a key mechanism of democratic governance. Trade unions are likely to renew their call for sustainable development and the respect of workers’ rights, especially in the oil and mining sector in which many European multinational enterprises are operating. Finally it is expected that trade unions will urge European leaders to carry out their long-standing promises regarding development assistance and debt cancellation.

Global Coalition: World Bank needs an oil change

More than 200 organisations from 56 countries are calling on the World Bank and other international financial institutions to end subsidies to the oil industry. In a statement, the groups refer to ‘oil aid’ as one of the most glaring barriers to fighting climate change and addressing energy access in developing countries. As the heads of the World Bank gather in Washington this weekend to discuss their energy lending and climate change strategy, the latest annual report of the International Finance Corporation (IFC) indicates that little has changed in the institution’s approach. In 2007, the private-sector lending arm of the World Bank provided more than $645m to oil and gas companies. This is an increase of at least 40% from 2006.

“The World Bank’s approach to climate change and energy is inconsistent and contradictory,” said Jennifer Kalafut of NGO Oil Change International. “Despite commitments to cut global greenhouse gas emissions, it continues to increase support for oil extraction projects around the world.” In 2006, the World Bank increased its energy sector commitments from $2.8bn to $4.4bn. Oil, gas and power sector commitments account for 77% of the total energy sector programme while ‘new renewables’ account for only 5%. “Investing in renewable electricity will save 10 times the fuel costs than if we stayed on a ‘business as usual’ course with fossil fuels,” said Daniel Mittler from Greenpeace International. “We can cut global CO2 emissions by 50% by 2050, while addressing issues of energy access for the poor and maintaining global economic growth.”

The Bank’s support to the oil sector is also highly inequitable. While the majority of its oil projects are designed for export to wealthy countries, 1.6 billion people, including 500 million in sub-Saharan Africa, still lack access to electricity. “By funding these oil projects the World Bank is undermining its own goals of fighting energy poverty and reducing greenhouse gas emissions. It is also perpetuating problems of conflict and human rights violations often associated with extractive projects, as in the case of the Chad-Cameroon pipeline,” said Korinna Horta from Environmental Defense, a U.S-based NGO. The hundreds of groups and affected communities that have signed this statement are demanding that the World Bank and other public financial institutions stop financing oil projects. They assert that development assistance should be tackling the issue of energy poverty and building clean energy pathways rather than subsidising big oil.

Zoellick should address World Bank's dam past, change its future path

(IRN) As World Bank President Robert Zoellick prepares for his first meeting with the Bank's shareholders this weekend, a new report of the International Rivers Network reveals that the Bank approved more than US$800m for nine hydropower projects in fiscal year 2007. This is more than it provided for renewable energy and efficiency projects combined. As the Bank jumps back into the big dam business and neglects better energy and water solutions, the legacy of its past dam projects tragically lives on. This Bank-funded dam legacy includes the displacement of at least 10 million people, lost livelihoods, damaged ecosystems, corruption, massive debt burdens and, in some cases, serious human rights violations. People from Argentina to Zambia are still waiting for past promises to be met and for damages to be repaired.

The International Rivers Network's October 2007 briefing paper, The World Bank's Big Dam Legacy, sums up some of the low-lights of the World Bank's dam history. "The World Bank defends its renewed zeal for large dams with assertions that it has learned from past mistakes. This claim is not credible as long as the legacy of the Bank's dam projects remains unresolved," asserts Shannon Lawrence of International Rivers Network (IRN). A new IRN report, Shattered Lives, Broken Promises, which was launched in Washington today describes the heartbreaking case of the Bank's water-project legacy in southern Pakistan. Ann-Kathrin Schneider of IRN, who is working with communities in Pakistan, explains: "The Bank-funded canals and drainage systems have contributed to the destruction of lakes and wetlands upon which coastal communities depend for fishing and animal-grazing. The Bank has failed to ensure that these communities receive adequate compensation or that these critical wetlands are restored."

International Rivers Network, the Bank Information Center, the Center for International Environmental Law and the Heinrich Boell Foundation today hosted a high-level panel discussion on the need to improve the World Bank's tools for addressing its legacy of harmful projects. "The new presidency offers a chance for the World Bank to address the unresolved legacy of its past," said IRN's Ann-Kathrin Schneider at this event. "The Bank should develop remedial action plans with the people who have been harmed by its past projects, and pay reparations to compensate for their suffering. The mandate of the Inspection Panel should be extended to monitor the implementation of such action plans."

Cotton subsidies: US must react to WTO Panel

The US must act immediately to reform its trade distorting cotton subsidies, otherwise its credibility as an international trading partner will be undermined, and significant damage will be done to the multilateral trading system, said Oxfam in response to a WTO panel ruling that confirmed that the US has failed to reform its program sufficiently. The US is still paying billions of dollars of such subsidies to its cotton farmers, despite having lost a WTO case against Brazil in 2005, with no encouraging signs of reform coming from the US Congress. There is little time for the US Congress to make more meaningful reforms to agricultural subsidies in order to comply with international trade rules before facing possible retaliation from Brazil.

"This ruling reinforces the need for reductions in US cotton subsidies in both the context of the Doha Round and the 2007 Farm Bill," said Isabel Mazzei, head of the Geneva office of Oxfam International. "The US cannot continue to ignore the WTO and the effects of cotton subsidies on global markets and, ultimately, the livelihoods of poor farmers in the developing world." In 2005, the WTO ruled that US cotton subsidies violate WTO rules and gave the US until September 2005 to reduce them. In response, the USDA agreed to reform export credit programs to comply with the ruling, and Congress eliminated the Step 2 cotton export subsidy program in 2006. But these programs represent only 10% of the overall cotton subsidy programs and some of the most trade distorting programs, like the counter cyclical payments were left untouched. In September 2006, Brazil asked for a WTO "compliance panel" to determine whether the US has done enough to comply with the ruling. This week, the WTO has confirmed that the US has failed to reform its agricultural subsidies enough to comply.

According to a recent study conducted by Dan Sumner and others at the University of California Davis for Oxfam, reforming US cotton subsidies would increase world cotton prices by 6-14%, resulting in additional income that could feed an additional million children for a year or pay school fees for at least two million children living in extremely poor West African cotton growing households. A typical cotton-producing household in West Africa has about 10 family members, an average life expectancy of about 48 years and an adult literacy rate of less than 25 percent. Cotton is often the only source of cash income for these families who live on less than $1 a day per person.

Pressure on EU for flexibility in EPA negotiations is growing

Oxfam International has welcomed the decision of 5 October by Ministers from the Economic Community of West African States (ECOWAS) and Mauritania to officially request an extension of the Economic Partnership Agreement (EPA) negotiations into 2008. Oxfam believes that the European Union (EU) must use this occasion to show its commitment to the spirit of the Cotonou partnership, and continue talks until all sides agree to a deal that will boost development. In the extra-ordinary Ministerial in Abidjan, Ministers concluded that the EU’s latest proposal, which will still require extensive liberalisation, does not address the development needs of the region. They were very clear that it is not possible to conclude an ‘inclusive’ and ‘balanced’ agreement this year and called on the European Union to maintain the Cotonou trade regime to allow negotiations to continue.

According to Ablasse Ouedraogo, special adviser to West Africa’s chief negotiator, “West Africa has been negotiating in good faith, but as our Ministers stated in the declaration, it is now absolutely clear that we can’t reach an agreement by the end of the year. We call upon Europe to enter into a constructive dialogue with us, providing the necessary time to forge an agreement that will enhance regional integration and support West Africa to take advantage of globalization.” The position of the West African Ministers reflects the concerns of producers and civil society organizations. “The African Industrial Association (AIA) welcomes the ECOWAS decision,” said David Thual, Adviser to the AIA president. “The AIA urges negotiators to take advantage of the forthcoming months to define an EPA, that takes into account the difficulties African industry is facing and offers real development prospects”.

In the past two weeks, events in other ACP regions have followed a similar pattern. In the Caribbean, extraordinary Ministerial talks with the European Commission ended without agreement. The European Commission and the Pacific have agreed to try and sign a deal concerning only the trade in goods by November, leaving other areas for negotiation in 2008. However, even this is unlikely to be achieved as many areas of disagreement remain between the two parties. Talks in East Africa remain fraught with difficulties and exporters are getting anxious. To avert disruption of trade the Seychelles has asked for immediate entry into the preferential scheme that many Latin American countries use (GSP+), which would give nearly the same access to the EU market as the current Cotonou scheme. Other East African countries have asked the EU for ‘interim’ measures to be put in place to continue negotiations in 2008.

So far, the European position remains that a free trade agreement is needed by the end of Dec 2007 – even if it only covers goods. If not, tariffs on ACP exports will be increased. The challenge now is for Europe to show more meaningful flexibility. Eric Hazard, Oxfam’s West Africa Campaign Manager said, “These events send a strong political message demanding action from Europe. European countries need to listen to ACP regions, re-orient talks towards development and urgently take steps to ensure that discussions on all issues can continue into 2008.”

New International Coffee Agreement reflects interests of small scale coffee farmers

The agenda of small-scale farmers and workers makes headway in the new International Coffee Agreement (ICA) which came to successful conclusion last week as members of the International Coffee Organization (ICO) concluded a year and a half of negotiations. The ICA serves as the operating charter of the ICO, the only forum that brings the majority of coffee producing and consuming countries together to address critical issues facing the coffee sector. For years campaigns such as Oxfam’s coffee campaign have identified the ICO as an important venue for strengthening small farmers’ interests. The new ICA reflects such advocacy work and puts many important issues on the ICO's agenda for the coming years.

The following points, included in the new version of the ICA, are victories for small-scale farmers and work across the world:
* Recognition of the relationship between a sustainable coffee market and achievement of the Millennium Development Goals;
* Objectives to develop a sustainable coffee sector in economic, social and environmental terms and enhance the capacity of local communities and small-scale farmers to benefit from coffee production;
* Acknowledgement of the importance of establishing and strengthening cooperation with NGOs;
* A new article on the ICA's project work, which has included efforts to improve farmers' productivity and sustainability;
* Creation of a new 'Consultative Forum on Coffee Sector Finance' which will bring together experts to discuss finance and risk management with a emphasis on the needs of small and medium scale producers and local communities; and
* Expansion of the ICO's role in disseminating information about the coffee supply chain with emphasis on facilitating access to information by small coffee producers to assist them in improving their financial performance.

While the new ICA adds important elements to the ICO's mandate, the Agreement itself expresses intention. The true value of the new Agreement will be as good as the implementation, which means that while NGOs welcome this development they will continue to push ICO member countries to follow through on the promises made to small farmers and farm workers. In particular, Oxfam continues to call on ICO members to create forums for small-scale farmer organizations to have direct channels to voice the challenges they face as farmers struggle to earn a decent living from their coffee crop.

G20 meeting in November: Contribution to responsible lending?

(Eurodad) NGOs from around the world, including Eurodad, CIDSE and Jubilee US, have written to South Africa’s Finance Minister, Mr Trevor Manual, ahead of the G20 meeting in Cape Town (17-19 November) to demand representation at the meeting. One of the major items on the agenda is the discussion around a “Charter of responsible lending” that was mentioned during the last G8 meeting, held in Heiligendamm (Germany) on 6-8 June. The letter says:

“We recognise that the G20 is a more inclusive forum than the G8. We believe such an important discussion ought to take into account the interests and proposals of all stakeholders: sovereign lenders, sovereign borrowers, private lenders and civil society groups from both lending and borrowing nations. This is why, in the spirit of ownership of such an important global initiative, we request the following:

* Representation of civil society organisations at the G20 meeting.
* Facilitation of and support for a pre-CSO meeting.
* Discussion around the principles and proposals for a responsible financing framework as tabled by civil society organisations.

We believe the G20 discussion in November can act as a stepping stone towards the setting of commonly agreed - and fair – rules in international sovereign debt management.”

Following-on from this initiative, Eurodad will launch its own “Charter for Responsible Lending” later this month. The charter outlines the essential components of a responsible loan in order to improve the quality of lending and help to avoid future rounds of unsustainable and illegitimate debt, as well as fairness should repayment difficulties arise. Eurodad’s charter will be published on the Eurodad website once finalised. A series of dialogues and discussions centred on the proposals outlined in the charter is being organised over the coming months. Contact ghurley@eurodad.org for further information.

Trade unions to multinationals: Leave Burma now!

(ITUC) The International Trade Union Confederation (ITUC) is writing to several hundred companies known or suspected of having business links to Burma to pull out of the country and "stop propping up the brutal regime", and is calling on governments to extend economic sanctions to cover all economic sectors. While numerous foreign companies have ceased doing business with Burma, under pressure from the international trade union movement and human rights and democracy groups, many multinational companies still have relations with the military dictatorship. "No company can claim to have clean hands if it is doing business in or with Burma, since the Generals take their cut out of every deal. We have been calling for several years on companies to disinvest, and those who have refused to do so will now be exposed to the full weight of public condemnation for effectively supporting a ruthless, corrupt and bloody dictatorship", said ITUC General Secretary Guy Ryder.

According to the trade unions, Burma's economy is built on absolute repression of its workforce, with the use of forced labour still rife in the country despite international pressure on the regime to respect fundamental rights. The case for full and effective sanctions is now absolutely compelling, and any company which does not withdraw voluntarily must be made to do so by governments and international and regional organisations including the United Nations and the European Union. The international trade union movement and the European Trade Union Confederation (ETUC) have for many years called on the EU to include Burmese state monopolies covering gas, oil, mining, tropical woods and precious stones in the list of companies with which EU-based multinationals are forbidden to do business.

Top of the ITUC list are several key multinationals with well-documented business links to Burma, including Caterpillar (USA), China National Petroleum Corp. (CNPC), China National Offshore Oil Corporation (CNOOC), Daewoo International Corporation (Korea), Siemens (Germany), Gas Authority of India (GAIL), GlaxoSmithKline (UK), Hyundai (Korea), ONGC Videsh Ltd (India), Swift (Belgium), and Total (France). Several hundred other companies are currently being investigated for links to Burma, and the results will be published shortly. Military aid will be a special focus of the trade union campaign, which will also look closely at the junta's growing economic links with India, China and several other countries. India's trade for example has grown from some US$341m in 2004-5 to $650m the following year, with a target of US$1bn set for 2006-7. - "Companies which think they can continue to pretend that their business with Burma somehow helps ordinary people there are seriously mistaken. They will come under unprecedented pressure to pull out," said Ryder. The ITUC is asking its affiliates to join worldwide Burma democracy and human rights demonstrations.

EU’s assurances on trade rejected by campaigners

(Eurostep) Anti-poverty campaigners have refused to accept a claim by the European Commission that it is not “steamrolling” African, Caribbean and Pacific (ACP) countries into signing free trade deals. On 27 September, some 200 organisations in 40 countries banded together to hold an international day of protest against the Economic Partnership Agreements (EPAs) that the Commission hopes to sign with ACP states by the end of this year.

Peter Mandelson and Louis Michel, the European commissioners for trade and development aid respectively, issued a statement, which attempted to refute some of the arguments against the EPAs that their officials have drafted. The commissioners said that the EPA negotiations are “certainly not about EU companies and investment muscling into these markets”. “In fact, if we exclude South Africa, we trade less with all of sub-Saharan Africa than we do with South Korea alone,” the commissioners added. They also denied that they are ‘steamrolling’ ACP countries into signing accords by 31 December, insisting instead that they are “doing everything in our power to be as flexible as they can”. Still, they warned that steep tariffs would be imposed on imports from the ACP if the deadline is not reached.

Oxfam spokesman Alexander Woolcombe argued that the Commission’s assurances were not consistent with its demands that the EPAs cover topics such as terms of investment for Western firms and opening up the public procurement markets of poor countries. The ACP side has asked repeatedly that such issues should be taken off the agenda. “Very few ACP countries will be ready to sign an EPA by the end of this year and must not be coerced into doing so,” said Woolcombe.

First EU report on policy coherence for development

(CIDSE) Presented as a staff working paper, the first report done by the Commission on Policy Coherence for Development doesn’t bring much new information but confirms the fact that there is still a long way to go. It closes with the following remarks:

"In terms of concrete results however, progress remains below the ambition set in the European Consensus on Development. Awareness and knowledge remain insufficient. The involvement of actors beyond the development community is still limited, both within the institutions and within civil society and the private sector.
Continuous high-level political commitment is needed to ensure further progress so that, the coherence, effectiveness and visibility agenda of 'Europe in the World' becomes a reality.
This in turn calls for increased awareness of the fact that development and poverty reduction are eventually in Europe's own interest … There are also still a number of potential links that should be further explored. Dialogue with developing countries on the effects of EU policies other than aid must be enhanced, at country and regional levels as well as globally. The process of drawing up Country Strategy Papers offers a framework in which the Commission and Member States can develop such policy dialogue. The relevance of the PCD approach to developing countries' own policies should also be considered, since in most policy areas the positive impact of EU policies depends on parallel efforts being undertaken by partner countries. The inclusion of PCD in the new Joint EU-Africa Strategy under preparation is an important step in that direction."

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