Over 50 civil society groups propose Alternative Trade Mandate

Today, a European alliance of over 50 civil society organisations has launched the Alternative Trade Mandate, a proposal to make EU trade and investment policy work for people and the planet, not just the profit interests of a few. The launch was taking place as EU trade ministers and the European Commission are leaving for the World Trade Organisation (WTO) negotiations in Bali next week. “The current trade and investment regime, imposed by the EU and the WTO, isn’t working. Prising markets open for global agri-business is wiping out small farmers and is a major cause of hunger. The deregulation of financial services through free trade agreements impedes tough regulation of the financial sector, paving the way for the next disastrous financial crisis. We need to break away from this corporate driven agenda,” said Charles Santiago, a member of the Malaysian parliament, who was in Brussels to support the launch of the Alternative Trade Mandate.

The new 20-page mandate proposes that core principles such as human and labour rights and environmental protection should drive EU trade policy. On several areas, such as food, work, money and raw materials, detailed proposals for change are outlined. One proposal is for the EU to become more self-sufficient in protein and oil crops as alternatives to imports of (genetically-modified) soybeans, palm oil and agro-fuels, which are devastating for the environment and small farmers in the global south. The mandate also calls on the EU to hold European corporations accountable for human rights violations, environmental destruction, tax avoidance and tax evasion elsewhere.

The mandate also proposes a new process for initiating, negotiating and finalising trade and investment agreements, giving national Parliaments and civil society a stronger role and thereby rolling back policy-capture by big business.

“EU trade deals are negotiated behind closed doors in the interests of a few rich corporations. The people who are affected by these deals have never been asked what they really need. We want an open and democratic process, controlled by the people of Europe and their elected representatives, rather than unelected technocrats and corporate lobby groups,” said Pia Eberhardt from Corporate Europe Observatory, a member of the Alternative Trade Mandate Alliance. The proposals outlined in the Alternative Trade Mandate were developed in a four-year process, with public workshops held all over Europe and which engaged a wide range of civil society groups from both within and outside the EU.

A seriesof papers with more detailed proposals on several pressing issues accompanies the main text. The proposals will form the basis of an EU-wide campaign to make trade and investment work for people and the environment, which will first focus on the European elections next May, asking parliamentary candidates to pledge support for the Alternative Trade Mandate. “At a time of multiple global crises, the European Parliament needs MEPs who will stand up for trade rules that work for people and the planet. We need MEPs who will bring trade deals out of the shadows and into the light. We call on MEP candidates to stand up for democratic trade and investment rules that serve people, the economy and the environment at large – not just the profit interests of a few,” said Amélie Canonne, co-ordinator of the Alternative Trade Mandate Alliance.

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Europe’s banking crisis: A call for action

In an open letter published today on VoxEU.org, a group of leading scholars call on Europe's leaders to unite immediately to address the global financial crisis head on before it spirals out of control. While actions by US policy-makers are welcome, a decisive and coordinated response from Europe's nations is required, or they may find themselves fighting over how best to salvage the aftermath. The letter was written by Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz and Klaus Zimmermann. The letter says:

Europe is in the midst of a once-in-a-lifetime crisis. Every European knows what happened when financial markets seized up in the dark years of the 1930s. It is not an exaggeration to say that it could happen again if governments fail to act. We are not predicting that it will happen, but it is critical to know that this is what is at stake.
Trust among financial institutions is disappearing and there are risks that fear will spread more widely. Turmoil in financial markets must be stopped before it causes major damage to the real economy. The savings of hundreds of millions of Europeans are directly threatened. If the turmoil produces credit market paralysis, jobs and businesses will be destroyed on a massive scale. A further weakening of the real economy would put more loans at risk and create a vicious cycle of falling asset prices, deteriorating ability to repay loans, and diminishing credit flows.
Actions by US policymakers are welcome, but they are not sufficient. Decisive policy action is required in Europe as well.

* Policy spillovers: European-level actions to supplement and coordinate national actions
The US authorities learned last week that saving one bank at a time won't work; a systemic crisis demands a systemic response.
In Europe, saving one bank at a time means either a rescue effort mounted by one nation, despite important spillovers to neighbouring countries, or last-minute improvised coordination and agreement about fiscal burden sharing. The national responses and ad-hoc cooperative efforts to date have been useful. Yet interdependence among European banks is too deep and too wide-spread for national responses or case-by-case coordination to be enough. Each national policy intervention and each cooperative intervention by a small number of countries can have unpredictable implications for other European nations. It is critical that national authorities sit together and coordinate their responses, developing Europe-wide solutions where appropriate.
Now is the time to act while the situation still appears manageable. Last week's events in the US demonstrate that financial crises do not evolve smoothly and predictably. One unexpected event can trigger a cascade of failures and panics that become increasingly difficult to control.

* Solutions
Many solutions will be part of the answer. In the US, dealing with the immediate crisis requires restoring liquidity to money and credit markets, and creating the conditions for the resumption of the securitisation of prime mortgages and other illiquid but sufficiently homogeneous and transparent assets. In Europe, the key problem is high leverage among the internationally active large banks. Hence the EU contribution must be centred on a recapitalisation of the banking sector, through the injection of public equity or through mandatory debt-to-equity conversions. This has to be done at the EU level (e.g. through the EIB). The current approach of rescuing one institution after another with national funds will lead to a Balkanisation of the European banking sector. Agreeing a harmonised level for deposit insurance would also be important.
To prevent future crises of this nature, regulation of the European financial markets and institutions at the European level will also be required.
The problem is not a lack of understanding of how to stop financial crises. The problem is a lack of political will.
Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.

Alternative Ecofin endorsed Ljubljana Declaration

At the same time that the European Council for Economic and Financial Affairs (Ecofin) met in an informal meeting behind closed doors, trade unions, civil society groups and critical scholars have organised a public conference on the current economic and social policies of the European Union. In this Alternative Ecofin they made it clear that, contrary to the official view, the Union is in critical social and political difficulties. This is mainly due to the choice of policies which are harmful for the majority of the people in the Union and benefit only a small but powerful minority. The Alternative Ecofin challenged the assertion that there is no alternative to an increasingly neo-liberal policy and presented and discussed proposals for alternatives in various fields. They insist that broad public discussion must go on and this will contribute to the emerging of new relations of forces and power which are needed for a change towards a policy for a democratic, social and sustainable Europe. Find the full text of the Declaration if Ljubljana >>> here.