TWN Info Service on WTO and Trade Issues (May08/01)
11 May 2008
Third World Network

UNCTAD XII: Civil society calls for action on food and finance crises
Published in SUNS #6460 dated 22 April 2008

By Riaz K Tayob, Accra, 20 April 2008

Civil society groups have called for UNCTAD to take strong action to address the food, finance and economic justice crises. The groups have held a three-day Civil Society Forum (ending Saturday) preceding UNCTAD XII.

The Forum's main themes were spelt out in its opening session. Speakers emphasised the need for UNCTAD to address the crises caused by sharp increases in food prices, the unfolding financial turmoil, the dislocation caused by trade agreements, and the lack of economic justice.

Yao Graham, the director of Third World Network Africa (which hosted the event), said even though there is consensus in many countries that neoliberal policies have failed, most governments are still committed to these policies or to their own adaptation of the Washington Consensus.

Graham said that a great deal had changed since the 1996 UNCTAD meeting in South Africa when focus of NGOs' concerns was on the Bretton Woods Institutions. Now the WTO and the regional trading arrangements have gained more importance.

Graham added that high commodity prices had limited benefits for Africans. However multinational enterprises are profiting enormously and a Price Waterhouse Coopers report on the mining industry in 2006 was titled, Let the good times roll,' while the 2007 report was called, "Riding the wave" indicating how much profits have expanded in the sector.

In spite of the high growth in a country like Ghana, there is agreement that this has led neither to the expansion of opportunity nor employment. Liberalisation has driven people from the countryside to the city seeking jobs. Growth without development or equity simply reinforces traditional social relations. The current crisis of high food prices are not benefitting small farmers and this shows that during the years of export growth, very little attention was paid to expand food production.

Civil society has contributed to the fight against the WTO and the threat of the European's Economic Partnership Agreements (EPA). The elites in many African countries, he said, support these agreements, as a matter of belief, even though they threaten development within these countries and also African regional integration.

UNCTAD is important as a forum and has contributed to development debates, but it is under attack from the same forces that proclaim the virtues of globalisation.

In the past UNCTAD was fought for by developing countries trying to establish a New International Economic Order. As long as we recognise the need to fight and redress the global imbalances, then any erosion of policy space should be fought against.

UNCTAD remains an important area which is under threat and there is a responsibility to rally around and defend the space.

Martin Khor, director of Third World Network Malaysia, said that the most important demands of people are for food, jobs and land, and a good environment.

The developing countries that have improved their conditions in recent years have done so because they did not fall under the Structural Adjustment Programmes (SAPs) of the BWIs.

The new crises in the financial system are caused by the greed of financial institutions that created new instruments to make more profits for themselves. If the system is not changed rapidly, there could be a financial tsunami that will also have adverse effects on the developing world.

On the WTO, Khor said the main proposals are unfair to developing countries. They seek to force developing countries to open their markets through steep tariff reduction that threatens many jobs and sensitive industries, as confirmed by research by the International Trade Union Confederation.

In agriculture, he said, developed countries have primed themselves to continue to subsidise by shifting from one kind of subsidy to another. In exchange they are asking developing countries to cut their tariffs further by 36%.

Khor noted that under the EPA negotiations, the tariff cuts are even more steep. The economic policy space of ACP countries are also threatened by chapters on investment, government procurement and tougher rules on intellectual property rights.

UNCTAD conduct research into the collective effort for a new economic order. This is needed to counter the developed countries which have so many of their own think thanks and research centres.

The G77 and China would like to strengthen UNCTAD's role through an additional commission on globalisation and to work on issues like climate change, intellectual property and the financial crises. This seems to be opposed by the developed countries who want to constrain what work UNCTAD can do.

Khor said that the impact of trade liberalisation in Ghana has been huge. From self sufficiency in rice and poultry in the 1970s and 80s, Ghana is now struggling after the BWI programs that forced government to cut back its support to farmers and to cut its tariffs.

The scandal, Khor said, is that heavily subsidised European poultry and American rice is being sold in developing countries like Ghana below their cost of production. These artificially cheap products run the more developing countries' efficient farmers out of business. Africa has moved from being a net exporter of food to a net importer because of reduced support for producers and low tariffs.

Khor also questioned the World Bank's reasoning on developing countries supporting their farmers. The World Bank says that it is bad for the rich countries to subsidise their producers but because they are shooting themselves in the foot it is no reason for you to do the same. In spite of subsidised production in the rich countries, the World Bank proposes lower or zero tariffs on food products in developing countries.

The crises of food is caused by the removal of supports and subsidies in developing countries and sharp liberalisation. A clear message needs to be given to UNCTAD XII that the way out of this is for developing countries to invest more money into the sector, subsidise infrastructure and inputs, pursue meaningful land reform and increase applied tariffs to protect from import surges.

Khor said that sustainable means should be sought to allow farmers to increase production now that prices are high with the assurance that they will be supported even if prices fall in the future.

Kingsley Ofei Nkasah, President of the Ghana Union of Agricultural Workers, said that globalisation produces massive wealth and simultaneously increases poverty. The developed countries flagrantly refused to really reduce their agricultural subsidies. Workers are suffering from greater labour market flexibility and atomisation which allows relocation of production to benefit the needs of capital.

The World Bank's imposed conditionalities have reduced the benefits our countries can derive from production and there are many worker struggles against free trade agreements and Export Processing Zones.

Labour flexibility, Nkasah said, is now almost a necessity and pre-condition for attracting foreign direct investment. Between the 1980s and 1990s, in Ghana and Gabon the number of people formally employed in agriculture has been reduced by about 80%. And farmers are increasingly contracted to larger suppliers because they cannot export their produce alone because they are choked by the TNC dominated system from doing so.

Aftab Alam of Action Aid Pakistan said that increasingly large TNCs are benefitting from the current spike in food prices and from the increased concentration and monopolisation in the sector. Liberalisation was also seriously undermining food sovereignty, rural development and national growth in developing countries.

In Ghana when the tariff on rice was reduced from 100% to 20% there was a 200% increase in imports that negatively affected local producers. Similar or worse results followed from liberalisation of rice in Gambia and poultry in Cameroon. Alam said that Africa experiences much greater disruption of its agriculture relative to its share of world trade. It was difficult to understand why Africa with a 5% share of global trade faced 50% of the global import surges in poultry.

Alam said that it was a crime to dismantle institutions that stabilised prices for farmers as this has caused problems not just in Africa but in Asian countries like Indonesia as well.

Alam cited a number of statistics on the monopolisation and increased concentration in the agricultural sector. He said only 2 companies controlled 75% of the global grain trade, 4 companies controlled 60% of coffee trade (Nestle controlled 50% of the instant coffee trade), 3 companies controlled 85% of tea trade. On agricultural inputs he said only 2 companies controlled 65% of the maize seed trade while 2 companies controlled 65 of pesticide trade.

He warned that global concentration was increasing. For instance in 1998 six companies had dominant control of global coffee trade while in 2000 there were only 3. The majority of gains, Alam said, remains with the importing and consuming countries.

In addition, prices were not stable and even if prices rose, the benefits did not go to farmers. He said it was important for UNCTAD XII to produce something tangible to assist producers. Alam said we have seen lots of promises resulting in either no follow up or no impact.

On food prices, he said that the agricultural surplus of developing countries in the 1960s and 1970s as virtually disappeared and this aggravates the crises. In 2007 the food imports of LDCs were 90% higher than it was in 2000. LDCs have limited means to cope with this unlike their developed country counterparts.

Iara Pietricovsky de Oliviera, of REBRIP in Brazil, a CSO umbrella organisation on trade issues, said that at the UNCTAD XI meeting in Sao Paulo, CSOs tried to create the potential to strengthen its impact. It was expected that UNCTAD would be the first line of defence and an agent for change, with the capacity to confront the negative actions against the poor countries.

Currently, there are lot of problems but in Latin America there is a difference namely, changes in the political landscape in many countries like Brazil, Venezuela and Bolivia. Real south-south initiatives have been created that have resisted free trade agreements but also established institutions to confront the BWIs in the region like the Banco Sur (Bank of the South).

A representative of the Bolivian Organisation for Economic and Social Inclusion said that he expected UNCTAD XII to call for the elimination of subsidies in agriculture. Mohammed Adam Nashiru, president of the Peasant Farmers Association of Ghana, called for greater action and campaigns against economic injustice as the needs of peasant farmers were urgent.

The Deputy Secretary General of the General Agricultural Workers Union said that the WTO reinforced the interests of the developed countries and questioned developing countries membership in the body. It was time for developing countries to set up alternate institutions, just as what Latin America done with Bank of the South. +