TWN Info Service on WTO and Trade Issues (May08/05)
11 May 2008
Third World Network

UNCTAD XII: Civil society blasts further erosion of policy space
Published in SUNS #6461 dated 23 April 2008 

By Martin Khor, Accra, 22 April 2008 

The policy space for development has eroded further in the past four years since UNCTAD XI in 2004, and the present UNCTAD XII should make decisions that can empower developing countries to use policy tools for development.

This is one of the main points of a joint statement by civil society groups attending UNCTAD XII taking place in Accra. The statement was presented by the Civil Society Forum at the inaugural plenary session of the Committee of the Whole on 21 April.

The CSOs identified free trade agreements and economic partnership agreements as the major cause of the erosion of policy space in recent years. They warned that the WTO's Doha negotiations have produced a very imbalanced draft outcome, with developed countries able to escape commitments while developing counties would bear a heavy cost in reductions in industrial and agricultural tariffs.

The statement also highlighted the world food crisis and finance crisis, and asked for immediate international action. It also has specific proposals on strengthening UNCTAD.

Below is the civil society statement to UNCTAD XII:


Civil society organizations (CSOs) taking part in UNCTAD XII The Civil Society Forum, meeting on the occasion of UNCTAD XII, took place in Accra on 17-19 April 2008. It convened social movements, pro-development groups, women's groups, trade unions, peasants and agricultural organizations, environmental organizations, faith-based organizations, and fair trade organizations, who expressed a variety of perspectives on trade, investment and competition policies, and their impact on development.

Participants of the forum are united in the defence of a number of principles, positions and actions that they wish to present to the member States of the United Nations Trade and Development Conference at its 12th session. This is a summary of a longer statement that we are also issuing.


We are very concerned that Globalization has made this an era of growing inequalities and great global instability. The opposite poles of wealth and poverty reinforce each other with every new manifestation of the flaws of the system.

Most notable today are the massive losses (now estimated by the IMF at almost US$1,000 billion) arising from the global financial crisis, and the world crisis of rising food prices and food shortages.

We want the governments and the UNCTAD XII to take action now on these two crises. The financial institutions and speculators must be regulated. So too the global financial system that promotes the free flow of capital including speculative funds and activities. The UNCTAD Secretariat has done great work on finance, if we had followed its advice there might not have been such a crisis today.

UNCTAD XII must encourage it to expand its finance work and the Secretariat must study how developing countries will be affected by the fallout of the financial crisis, what they can do about it, and how to overhaul the global financial architecture, so that finance serves the needs not of speculators but the goals of development, jobs and income, with environmental sustainability and gender equality.

As for the food crisis, this is mainly caused by supply not meeting increased demand. One reason is the shift from producing food to bio-fuels, and this trend should be reviewed and reversed. But another reason is that developing countries had been wrongly pressured by the loan conditionalities of the World Bank and IMF to cut government subsidies and support to small farmers, and to cut their food import duties. At the same time, the high agricultural subsidies continue in rich countries. The local farmers have livelihood problems because the surge of cheap and subsidized imports have overwhelmed them.

The food crisis makes policy change necessary. Developing countries must be allowed to defend their food security and small farmers, so as to quickly expand food production through sustainable agriculture, and to raise tariffs to prevent import surges. The developed countries must quickly phase out their distorting subsidies, including those distorting subsidies within the so-called Green Box subsidies.

Land for bio-fuels should be turned back to farming for food. There must be changes to policies at the World Bank, IMF, WTO and the FTAs including the EPAs. UNCTAD can play a central role in this reform and to help us find the right solutions to the food crisis.

UNCTAD's work on Commodities should be expanded to help developing countries to boost food production, to get better value for their commodities and to add value to their raw materials by processing and manufacturing.


The significant achievement of UNCTAD XI was to recognize the importance of policy space for developing countries. However, policy space for government intervention and regulation has declined further since then. Besides loan conditionalities and existing WTO rules, we recently have bilateral free trade agreements including the EPAs.

They lock in developing countries including the poorest into inappropriate liberalization of imported goods and services and inappropriate IPR policies. The FTAs and EPAs also introduce new rules on liberalizing investment and government procurement, going beyond the WTO, and eroding the governments' ability to regulate for development and for the public welfare.

We believe that the erosion of policy space remains the number one issue, especially since this loss of policy space is also a threat to the ability of developing countries to deal with the finance and food crises.

Therefore, our first and foremost demand is that UNCTAD XII deal even more forcefully with the policy space issue. UNCTAD - both the Secretariat and the inter-governmental machinery - must have expanded mandate to re-empower developing countries with the use of policy tools for development.


The North-South FTAs including EPAs mainly promote the North's corporate agenda and are a grave danger for developing countries. The UNCTAD Trade and Development Report 2007 was valuable for highlighting the cost and benefits of North-South FTAs. UNCTAD must continue to focus on this.

It is true that some developing countries have gained from trade liberalization. The accompanying conditions and factors were present. But a majority of developing countries have suffered from premature import liberalization before they were able to compete. Their local industries and agriculture were stifled by cheap imports, with loss of farm livelihoods and industrial jobs.

We urge that the wrong policies of the World Bank and IMF and recently of the EPAs and FTAs be immediately rectified. As for the EPAs, the EU should stop putting pressure on ACP countries to conclude them. At the least there should be no expansion into non-goods issues like services, IPRs, investment, procurement. An alternative to EPAs should be found.

At the WTO, the Doha negotiations have so far produced very imbalanced results. Developed countries can continue their high agricultural subsidies through shifting of the boxes, because part of the so-called non-trade distorting Green Box subsidies have been found in reality to be trade distorting but the proposals to improve disciplines on them are weak and inadequate.

Yet while these Northern subsidies continue, the developing countries are pressured to cut their agricultural tariffs further by an average 36% making them even more vulnerable to import surges and rural dislocation.

In the industrial goods negotiations, the Swiss formula, never used before, will drastically lower the tariffs of industrial goods in developing countries, damaging or even destroying many local industries. Benefits are few but costs are high for developing countries. It is certainly not a Development Round.

The LDCs are told they do not have to reduce their tariffs at the WTO, but most of them will be affected by even deeper tariff cuts through bilateral agreements like the EPAs. Non-tariff barriers are increasingly used to block the more competitive products of developing countries.

UNCTAD XII is an opportunity to discuss the trade and development issues, and to strengthen UNCTAD secretariat to do independent research to assess WTO and FTAs.


We believe UNCTAD has a unique role especially in these uncertain times. Its role as a support to developing countries in development issues and processes must be expanded. In particular:

1. The Commissions of UNCTAD should continue. In addition, a new Commission on Globalisation and Development Strategies should be established by UNCTAD XII.

2. UNCTAD should be given an expanded mandate on policy space, the concept and its application.

3. UNCTAD should be asked to expand its work on topical issues that are important to the world, including the food crisis, finance and development, climate change, migration, trade agreements, intellectual property, South-South cooperation. It must give us the development perspective and the way forward on these issues.

4. UNCTAD's technical assistance should not be donor-driven but driven by the needs of recipients including civil society. It should for instance not be limited to implementing WTO rules, but also creatively explore alternatives in a fast changing world.

5. The UNCTAD Secretariat must be allowed to continue its research in an independent manner, so that it can produce objective research aimed at supporting development goals of developing countries. This will also add to diversity of views among the international agencies. +