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Africa: Trade Update, UNCTAD
AfricaFocus Bulletin
Jun 22, 2004 (040622)
(Reposted from sources cited below)
Editor's Note
The United Nations Conference on Trade and Development (UNCTAD),
held every four years, met in Brazil last week. Participants issued
ringing statements in favor of South-South collaboration and the
need for greater equity in the international trade arena. The
meeting was virtually ignored by the press in the United States and
other developed countries. Nevertheless, the conference was an
indicator of greater international awareness, among almost all
political currents, that the current bias against developing
countries is both unfair and unsustainable.
The conference closing coincided with a ruling from the World Trade
Organization (WTO) in favor of Brazil and other developing
countries that U.S. cotton subsidies violate international trade
rules by undercutting the prices of more efficient cotton producers
in other countries.
On the sidelines of the UNCTAD meeting, the so-called "non-group 5"
of the U.S., EU, Australia, India, and Brazil met and agreed that
the interests of all parties, including developing countries,
needed to be taken into account in the next stage of WTO talks on
agriculture. Developing countries at the UNCTAD meeting, however,
also stressed the importance of stepping up joint action outside
the WTO negotiations.
This issue of AfricaFocus Bulletin contains excerpts from several
articles from the Third World Network, reporting on developments at
the UNCTAD meeting. The full text of these and a wide range of
additional reports on current trade issues from the perspective of
developing countries is available at http://www.twnside.org.sg.
Official reports from UNCTAD are available at
http://www.unctad.org. Additional reports from civil society groups
in the global South on these issues are available at
http://www.choike.org. A report on the state of the World Trade
Organization negotiations on agriculture from Focus on the Global
South is available at
http://www.focusweb.org/main/html/Article317.html.
Another AfricaFocus Bulletin sent out today contains excerpts from
a new report on trade and development written for the Commonwealth
Secretariat. See
http://www.africafocus.org/docs04/stig0406.php
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Additional note on bilateral US/Africa trade: A bill extending
African Growth and Opportunity Act (AGOA) provisions allowing for
easier access to the U.S. market for textiles from some African
countries, including textiles processed from "third-country"
fabric, has passed the House of Representatives, but is still to be
considered by the Senate. African countries and U.S. supporters of
the legislation fault the Bush administration and the Senate for
failure to prioritize the measure. African countries are already
losing orders because of the uncertainty. If the provision is
allowed to expire in September, says one strong advocate for
extending the exemptions, "AGOA will cease to be commercially
viable" ( http://allafrica.com/stories/200406020891.html). For more
background and updates see http://allafrica.com/agoa.
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UNCTAD XI Opens with Calls for a New Trade Geography of South-south
Trade
TWN Report by Martin Khor, Sao Paulo, 14 June 2004
Third World Network
http://www.twnside.org.sg
[Excerpts only; for full text see TWN website]
UNCTAD XI opened today with a call by leaders of developing
countries to build a "new geography of trade" which stressed the
role of South-South trade and cooperation in a globalising world.
Making the call, Brazilian President Luiz Lula da Silva said a 50
percent reduction in tariff in the trade among developing countries
could generate an increase of US$18 billion of trade for them.
There was thus a new move, he said, to reactivate the Global System
of Trade Preferences among Developing Countries (GSTP), which was
formed in the 1980s to make it possible for developing countries to
extend trade preferences to one another without extending these to
the developed countries.
"To the 44 countries that have signed the GSTP, we could add
another 40, and thus draw up a new trade geography of trade."
Lula was speaking at the inaugural ceremony of UNCTAD XI as well as
a high-level plenary session immediately after on the New Geography
of Trade.
The Brazilian President said UNCTAD had helped developing countries
identify the external constraints limiting the developing
countries. He quoted statistics showing the deterioration in
growth in many developing countries and the widening income gap
between North and South.
The world needed to change, he said, but all change needs choices
to be made. We need political courage, he said, adding that the
negotiations by the Group of 20 in Cancun was a fundamental move,
and "we will seek convergence with the needs of developing
countries."
Thai Prime Minster Thaksin Shinawatra, whose country had hosted
UNCTAD XI in Bangkok in 2000, took up the same theme. Four years
after the Bangkok meeting, he said, the world had changed with
optimism eclipsed by September 11 and the WTO Cancun ministerial
collapse.
Thaksin said we are yet to see globalisation with a human face and
the Washington Consensus turned out to be irrational.
Globalisation is seen to fail to deliver. The idea of
multilateralism itself is eroding.
"Since the cold war ended, there was a drop in aid and the
developed countries' trade policies became less accommodating to
the needs of developing countries. They have been slow to
accommodate the requests of developing countries even in the most
obvious areas such as reduction of agriculture subsidies."
Thus, he said, South-South cooperation has never been more
necessary. It was tempting to only blame the North but this cannot
get results. "For many of our countries, poverty reduction and
sustainable development cannot be solved by having market access to
the North. We need other options.
Thaksin advocated the principles of self-help (or reliance on
domestic economy) and partnership as a response to reduced
expectations from the North. "We should expect less from them,
and we need to partner more with other countries of the South" he
said.
"We should reduce our overwhelming dependence on markets of
developed countries and diversify our risks through South-South
trade. Critics note the diversity of the South and say it is an
obstacle to South-South trade but I say let us celebrate the
diversity of the South and try things that have not been done."
Thaksin admitted there is no guarantee that South-South cooperation
will work better than North-South relations. But in North-South
relations, the South has been facing the problem of the North
moving the goalposts "whenever we are about to score."
The North is not yet so convinced they should not do that, so we
should start another game we can win, he said. Thailand had
already created new frameworks to strengthen trade relations with
other developing countries and he looked to UNCTAD XI to practical
alternative solutions, with the South to become stronger and the
North to be more understanding and accommodating.
UN Secretary General Kofi Annan stressed there was a lack of
coherence in the international and domestic economies. African
farmers wanted market access to the North but find this blocked by
manipulative systems, whilst indigenous people with knowledge of
medicinal herbs do not know if they would be recognized and
rewarded.
Referring to double standards in Northern policies, he said: "We
usually call it the lack of coherence, but we can also call it
discrimination. We look to UNCTAD XI to change it."
Kofi Annan said we needed a development-friendly trade regime. A
successful conclusion to the Doha agenda is also needed and this
can be achieved only if the South is granted full access to the
Northern markets and if agricultural subsidies are reduced or
eliminated.
We must take advantage of South-South trade opportunities and
cooperation, he added. "A new round of talks to expand the GSTP
holds promises. If developing countries can reduce tariff margins
to one another by 50%, this will generate an extra USD15.5 billion
in trade.
"It could be a new global trade geography, which would help give
the South a rightful place in international relations." ...
UNCTAD XI consensus Declaration adopted after lengthy tussles
TWN Report by Meena Raman, Sao Paulo, 18 June 2004
Third World Network http://www.twnside.org.sg
After lengthy tussles on controversial issues over the past nine
months, UNCTAD XI has adopted the main text, called the Sao Paulo
Consensus, which in effect is the Declaration of the eleventh
session of the United Nations Conference on Trade and Development
(UNCTAD XI). It was adopted at the closing session on 18 June. ...
The Sao Paulo Consensus is a 24 page document which contains policy
analysis and responses needed in relation to four topics:
development strategies in a globalizing world, building productive
capacities and international competitiveness; assuring development
gains from the international t6rading system and trade
negotiations; and partnership for development.
From Tuesday to Thursday this week, there were negotiations on the
uncompleted 18 paragraphs of the draft negotiated text which have
been in brackets. Work on the last of these were completed
Thursday. Diplomats from developing countries were quite satisfied
with the results.
Perhaps the most important outcome relates to the issue of "policy
space". Developing countries have been arguing that they require
the space and flexibility to carry out national development
policies and that this space had recently been constrained and
narrowed by international rules, and may become even more limited
by future international rules.
The developing countries had called for a recognition of their
right to this policy space and thus a better balance between this
policy space and international rules.
Developed countries, especially the United States, were concerned
that recognition (through an intergovernmental consensus such as at
UNCTAD XI) of the right of developing countries to such "policy
space" would enable the latter to strengthen their bargaining
position to elude the rich countries' pressures for them to
undertake more liberalization and privatization commitments,
especially at the WTO, and through IMF-World Bank loan
conditionalities or through aid conditionalities.
This issue was resolved under paragraph 8, which now acknowledges
that "it is particularly important for developing countries,
bearing in mind their development goals and objectives, that all
countries take into account the need for appropriate balance
between national policy space and international disciplines and
commitments."
The text also states that "the increasing interdependence in a
globalizing world and the emergence of rule-based international
economic regimes have meant that the space for national economic
policy (especially in trade, investment and industrial development)
is now often framed by international disciplines, commitments and
global market considerations.
"It is for each government to evaluate the trade-off between the
benefits of accepting international rules and commitments and the
constraints posed by the loss of policy space."
According to some diplomats from developing countries, the
paragraph on "policy space" was an important development in UNCTAD
XI as it was the first time that the concept of the developing
countries' need for policy space (and especially in the context of
international rules and disciplines) had been had been recognized
in an inter-governmental consensus document. ...
[The report from TWN continues with more detail on resolution of
disagreements between developed and developing countries on other
issues in the text, including the role of UNCTAD, corporate
responsibility, and development financing.]
UNCTAD XI: Calls to Break the "Conspiracy of Silence" on
Commodities
TWN Report by Goh Chien Yen, Sao Paulo 15 June 2004
Third World Network http://www.twnside.org.sg
Participants at an UNCTAD XI event today called on UNCTAD and other
agencies to "break the conspiracy of silence" on the commodities
crisis and to take comprehensive action.
At the same event, UNCTAD Secretary-General Rubens Ricupero
announced that UNCTAD will set up a global partnership for
commodities to deal with a diverse range of commodity issues and
problems. The partnership, he said, will take the form of an
international task force on commodities involving "all interested
stakeholders."
Ricupero said there were different problems relating to different
commodities, so no single agency had a recipe for solutions. "The
time has come for a global partnership for commodities," he said,
adding that the idea comes from a recent initiative of the UN
General Assembly to establish an independent expert group on
commodities.
Following the report of the expert group, UNCTAD is suggesting the
establishment of a partnership on commodities using a networking
approach, which will also involve the Common Fund for Commodities,
the World Bank, ITC, ILO, Commonwealth Secretariat, and civil
society groups and the private sector.
It will deal with a diversified range of subjects, including
production, diversification, improving value added of products, and
re-evaluation of old compensatory mechanisms. ...
Many speakers and participants at the session highlighted the
seriousness of the commodities crisis and the plight of
commodity-dependent countries and producers.
Ricupero said he was thrilled last year when President Chirac of
France spoke of a "conspiracy of silence" on commodities and tried
to launch a special initiative on commodities at the Evian G-8
meeting. However Chirac did not get a response from the other
leaders.
Some developed countries had said there was nothing to be done
about commodities and that the market would take care of the
problems. "This is very curious as the same countries are spending
$3 to 4 billion a year in subsidies to support their cotton."
They could start by completely withdrawing support from cotton, if
they believed what they said, added Ricupero. But there was no
basis in economic science for leaving it to the market to solve the
commodity problem. Even neo-classical economists had recognized the
need for action on commodities, which had been a prominent topic at
the meetings to set up an International Trade Organisation (at
Havana).
Ricupero recalled that later there had been the commodity
agreements. The coffee agreement had been the result of President
John F. Kennedy's wisdom in wanting to help the Latin American
countries. When the political support was no longer there, the
agreement collapsed. This was not because it was inherently wrong.
What happened after the collapse was much worse than the situation
at the time of the agreement.
"Whatever the shortcomings of the coffee agreement, the producers
were incomparably better off then than they are today," said
Ricupero. "We have not solved the problem, and there is no way we
can avoid facing the problem." ,,,
Martin Khor of the Third World Network, said the "conspiracy of
silence", that President of Chirac had exposed, was unfortunate, as
the commodity crisis was probably the biggest trade problem for
many developing countries.
From 1980 to 2000, world prices for 18 major commodities fell 25%
in real terms, with the decline being steep for cotton (47%),
coffee (64%), cocoa (71%) and sugar (77%). The effects were
devastating: Sub-Sahara Africa was losing an average of 16% of its
GDP in 1987-89 from terms of trade decline (compared to 1980),
while the situation worsened much further in the 1990s.
Khor said he hoped UNCTAD's relative silence on the issue in recent
years was not because of immense pressure on it. Referring to
Ricupero's announcement of establishing a partnership on
commodities, Khor said UNCTAD "should not be shy" of taking the
lead on the issue and the lead to "break the silence on
commodities."
When Ricupero replied at this point that UNCTAD could do so if
requested by the governments, Khor asked participants in the room
if anyone present would object to UNCTAD's leadership role on this
issue. When no one showed objection, Khor said that it was right
for UNCTAD to be the lead agency, especially since the very
creation of UNCTAD was inspired by the need to combat problems of
low commodity prices and of declining terms of trade.
In the 1970s and 1980s, negotiations on commodity agreements under
UNCTAD had been the main international trade negotiations. The
collapse of many agreements was due not so much to their inherent
weakness, but the withdrawal of political support of developed
countries.
In the wake of lack of international action, and the ill-advised
policy of the Bretton Woods institutions in promoting the export of
commodities in many developing countries, and their loan
conditionality to these countries to close marketing boards and end
subsidies, an over-supply situation had developed for many
commodities, leading to the continuous decline in their prices.
Khor proposed an action plan for commodities. He said the UN and
UNCTAD in particular should give the highest priority to resolving
the commodities crisis, which should not be neglected further just
because it was not on the WTO's agenda. An international UN
conference should be convened to discuss comprehensively the wide
range of problems faced and possible solutions.
Khor added that many experts, including previous speakers, had
identified over-supply as the main factor causing price declines.
Thus, it was crucial to find ways to reduce over-supply and align
global supply more with demand, to stabilize prices.
He called for a review of the possible positive role of
producer-consumer commodity agreements, drawing on the positive
elements of previous and present agreements, and building on them.
The political will should be found to revive the concept of
agreements, which could however be run differently if necessary.
In the absence of such agreements, producers should cooperate to
rationalize their global supply so as to better align it to global
demand, and such initiatives should be encouraged and not be
frowned upon. It was useful to develop South-South cooperation in
this regard, as part of the "new trade geography" announced at
UNCTAD XI by Brazilian President Lula the previous day.
Developed countries should also eliminate as soon as possible
export subsidies and other subsidized forms of export competition,
as well as trade-distorting domestic subsidies, under all boxes in
the WTO agriculture agreement, so as to stop unfair competition
with developing country commodities.
The Bretton Woods institutions should review and change their
policy advice such as requiring countries to expand commodity
production even if there is a surplus, and to close state marketing
boards without making provisions to fill the void.
Brazilian Agriculture Minister Roberto Rodriguez said the easiest
way to reduce the rich-poor gap was for developed countries to open
their markets to developing countries. This was because they had
only a small minority dependent on agriculture and they could also
afford to pay their farmers not to produce. ...
Nigeria's Ambassador to the WTO, Matthew Nwagu, said UNCTAD should
take on more roles in the commodity issue as most commodity aspects
were under the purview of UNCTAD. He said poor peasants could not
meet the high standards set by the North. Moreover, developing
countries simply could not have a say in the level of commodity
prices due to the over-supply situation. The cocoa producers, for
example, were helpless in the situation. The World Bank and IMF had
also removed the state marketing boards but there was no successor
put in their place and this had contributed to the ruin of
commodity trade, and there is now a yawning gap. He urged UNCTAD to
consider what it could do on the whole range of issues.
The managing director of the Common Fund for Commodities, Rolf
Boehnke, said the meeting had succeeded in stimulating discussion
on the many problems, which included low prices, debt, supply
constraints, overproduction, market access barriers and limited
access to finance, and the market distorting effects of subsidies.
Areas that were mentioned for action included enhancing production,
improving product quality, improving standards, diversification,
enhancing production of emerging products and cooperation among
producers. The Common Fund took note of the proposal to hold a
comprehensive commodity conference and it would join with UNCTAD,
governments and NGOs to develop an agenda for action.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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