Wednesday, 14 December 2011

Inequality overshadows WTO Ministerial

The international trade union movement has warned of growing social unrest and increased social hardship if trade liberalization continues against the backdrop of harsh unemployment and austerity measures. Ten years since the Doha Round of trade talks opened in 2001, the global economy has witnessed a food crisis, a climate crisis, a financial crisis and a severe jobs crisis. “The existence of the WTO has done nothing to prevent trade imbalances growing to unsustainable levels accompanied by dangerously widening income inequality,” said Sharan Burrow, General-Secretary of the International Trade Union Confederation (ITUC).

The deal on the table at the 8th meeting of Trade Ministers in Geneva 15 -17 December 2011 will not help trade to drive economic recovery, employment creation and genuine economic development, and ultimately puts the multilateral trading system at risk. The trade union delegation attending the talks will be monitoring a number of issues up for negotiation by Ministers and will aim to maintain policy space and to keep new issues such as the Singapore issues (investment, competition policy and government procurement) out of the WTO negotiations. According to ITUC, the talks should provide a package for Least Developed Countries to have duty free and quota free market access for all products, the elimination of cotton subsidies and a waiver for commitments in services.

The ITUC is calling for an evaluation of the Doha round outcomes to assess its impact on providing decent work, improved living standards and diversifying the economies of developing countries. “Without measuring the impact on developing countries and workers, it makes little sense to move forward with trade liberalization. The developmental mandate of the Doha agenda must be reaffirmed if the round is to be concluded.” said Sharan Burrow.

* Find the Global Union Statement of Priorities for the 8th WTO Ministerial Conference >>> here.

Tuesday, 13 December 2011

Eurodad: ECAs push poor country debt and shrinks aid budgets

Campaigners are demanding tighter controls on the activities of so-called export credit agencies (ECAs) after a new report lifts the lid on how the shadowy government bodies force vulnerable developing nations ever-deeper into debt, while allowing European governments to count their own financial gain as development aid. “Almost 80% of developing country debt to European governments comes from loans that supported European commercial interest and not development,” says NĂºria Molina, director of the European Network on Debt and Development (Eurodad) which drew up the new report, Exporting goods or exporting debts? Export Credit Agencies and the roots of developing country debt. “They are undermining aid efforts, and keeping countries mired in poverty,” adds Molina.

ECAs are public bodies that provide credit guarantees to companies and financial institutions to ease exports from the country in which they are based. This allows exporting companies to invest in riskier projects than what would normally be the case, often in developing countries. Export credits to developing countries almost tripled in 2008 as compared to pre-crisis levels, showing the need to tighten up on controls. UN figures show that European government ECAs supported more than $1trillion in trade and investment in 2007. The figure increased by 35% in 2008-2009 as an effort by European governments to save their export industries at a time of dwindling global markets.

Export credits greatly reduce the amount of aid to developing countries, as when most European governments cancel developing country debt they charge that amount from the aid budget. According to the study, 85% of developing country debt cancelled by European governments and charged from the aid budget in 2005-2009 was actually debt created from export credits, which are in most cases driven by commercial, not development objectives. Counting cancellation of export credit debt as aid monies draws monies away from real aid, making fewer resources available for the world’s poor. The activities of these public bodies are hardly controlled at all, so the projects they support have often caused human rights violations and environmental damage in poor countries.

European Union regulations agreed in September, although welcome, don’t go far enough. Based on its Responsible Finance Charter, Eurodad is proposing concrete measures for governments to clean up their export credit operations including:
* Ensuring that ECAs and the projects they back are opened up to public scrutiny;
* Ending the use of aid money to cancel export credit debt;
* Introducing binding regulations to stop export credits being peddled aggressively to developing countries to the benefit of companies in industrialised nations.

Thursday, 1 December 2011

Durban: Turning Green Climate Fund into Greedy Corporate Fund?

Today 163 civil society organisations from 39 countries released a letter exposing an attempt led by the US, the UK and Japan to turn the Green Climate Fund into a “Greedy Corporate Fund” at UN climate talks in South Africa. The Green Climate Fund was created to support people in developing countries – people who are the most affected by the climate crisis but are the least responsible for it. But at the climate negotiations this week, developed countries are trying to allow multinational corporations and financiers to directly access GCF financing. This means companies could bypass developing country governments and their national climate strategies to get to public money.

“Turning the Green Climate Fund into a Greedy Corporate Fund would be
shameful, yet this is what is being attempted at the Durban climate
talks,” said Meena Raman from Third World Network. “Led by the US and the UK on behalf of Wall Street and The City, this attempt to hijack developing countries’ funding is outrageous. Communities need this money to address climate change and to finance their own development – without repeating the same mistakes that the rich countries have made,” said Karen Orenstein from Friends of the Earth US. “The role of private investment in financing climate activities must be decided at the national and sub-national levels in line with countries’ priorities, not corporate bottom lines. The move to allow the private sector to go directly to the Green Climate Fund for money undermines the possibility of a democratic, participatory process for meeting the needs of communities struggling to fight climate change,” said Lidy Nacpil of Jubilee South Asia/Pacific Movement on Debt and Development.

Few adaptation measures in developing countries will be attractive to the private sector, as they will not generate revenue. Some key mitigation programs may also not be financially lucrative. Groups also warned against closed door negotiations on the Green Climate Fund by South Africa, the US, and other developed countries. “Whatever happens in Durban must be fully transparent. We are deeply concerned by reports that South Africa is informally consulting behind closed doors on the Green Climate Fund decision,” said Bobby Peek of groundwork / Friends of the Earth South Africa. “This will greatly undermine the legitimacy, and ultimately the effectiveness, of the Green Climate Fund.”

The concerns expressed in the letter come on top of the long-held
rejection by many in civil society of any role for the World Bank in the
Green Climate Fund.