To: Organizations addressing Trade-Finance Linkages
 

1) Strong link between debt accumulation and trade, says UN Independent Expert
 
2) FFD Review: Making Trade an Engine for Development? – Bridges Article
 
3) Sign –on Statement on G20 Summit: Deadline November 12
 
 
1) Strong link between debt accumulation and trade, says UN Independent Expert
 
 
In a statement on the Financing for Development Process, the Independent Expert on Foreign Debt and Human rights, warned that "Measures to enhance the terms of trade for indebted countries, should be part and parcel of long-term debt sustainability.""The evolution of HIPC beneficiaries after debt relief clearly shows the strong link between terms of trade and the process of debt accumulation," he said.
 
Mr. Cephas Lumina, was appointed last March as the  effects of foreign debt and the policies adopted to address them on the full enjoyment of all human rights, particularly, economic, social and cultural rights in developing countries.
 
The respective resolution also requested the Independent Expert to "contribute, as appropriate, to the process entrusted with the follow up to the International Conference on Financing for Development (FFD), with a view to bringing to its attention the broad scope of his/her mandate". He submitted his statement as part of his contribution to the Doha FFD Review Conference.
 
Below is a relevant excerpt from the statement, addressing trade and debt.
 
For the full statement please visit
http://coc.org/system/files/Independent+Expert+Debt+Sttmt-11-08.pdf
A press release can be found at
http://coc.org/node/6262
 
"Trade and debt
 
Human Rights Council resolution 7/4 requests the Independent Expert to especially pay attention to the interlinkages between debt and trade. Indeed, a debt level consistent with meeting human rights commitments cannot be maintained by debt relief measures alone. The evolution of HIPC beneficiaries after debt relief –whereby several of them saw their debts quickly rise again due to the plunge in prices of commodities they export­ clearly shows the strong link between terms of trade and the process of debt accumulation. For instance, terms of trade for the Least Developed Countries and Sub-Saharan African countries declined on a sustained basis in the period 1994-2002, a dynamic central to their debt accumulation process in that period. While the last few years have seen a temporary improvement of terms of trade for developing countries in general, these have neither reached all developing countries, nor are they likely to be sustained in the current scenario of lower demand for commodities and the limited change in the export profiles of developing countries.
 
Measures to enhance the terms of trade for indebted countries, especially through diversification into exports with greater value and value-added, as well as measures to strengthen exports' contributions to public revenue, should be part and parcel of long-term debt sustainability. In turn, debt service payments should not be so high as to prevent the development of an export-investment nexus that can place the country on the path to greater prosperity and self-sufficiency in raising the standards of living of the population, and enhancing the enjoyment of human rights."
 
 
 
2) FFD Review: Making Trade an Engine for Development? – Bridges Article
 

I am sharing an article featured in last issue of ICTSD newsletter Bridges (Volume 12 No. 5) "FFD Review: Making Trade an Engine for Development?"
 
Description: In late November member states of the United Nations will have an important opportunity to rethink how to fulfil the promise they made six years ago to place the needs and interests of developing countries at the heart of the multilateral trading system.
 
In the almost seven years since the Doha WTO Ministerial that launched the new round, global trade has grown a startling 70 percent. This contradicts the assertion that market access negotiations in the WTO are essential to global trade growth and, certainly, we no longer hear references to the 'bicycle theory', so in vogue in the late 1990s. Clearly, achieving the larger global trade volumes that market access commitments usually enable, is not an issue. On the other hand, with soaring export volumes it has become clearer that harnessing trade for development and poverty reduction is what is proving elusive for developing countries. Against this backdrop, the FFD Review has much more potential to deliver progress on developing countries' trade interests than a conclusion to the Doha Round.
 
The full article can be accessed at http://ictsd.net/i/news/bridges/32697/
 
To print a full copy of the Bridges issue (this article is on page 15) go to
http://ictsd.net/downloads/bridges/bridges12-5.pdf
 
3) Sign –on Statement on G20 Summit: Deadline November 12
 
I'd like to encourage you to sign the statement below, concerning the November 15 Summit of Heads of G20 countries convened by the US government to coordinate actions around the global financial crisis. The statement follows and complements the statement that was circulated in last mailing (that one mostly addressed demands on process, this one fleshes out demands on substance).
 
Should you be interested in signing the first statement (now featuring an impressive number of over 2500 signatures), you can still do so also at http://www.choike.org/bw2/#english1
 
For a related article outlining some reasons why this summit maybe of interest to members of this group ("WTO vies for role in shaping  Bretton Woods II") visit http://coc.org/node/6257
 

URGENT ACTION: SIGN-ON STATEMENT -- DEADLINE WEDNESDAY

New Principles and Rules To Build an Economic System that Works for People and the Planet

Please sign on to the following statement by 11.59pm GMT on WEDNESDAY NOVEMBER 12th by going to:  http://www.choike.org/bw2.


TO BE RELEASED ON NOV. 13, IN ADVANCE OF THE NOV. 15 G20 SUMMIT IN WASHINGTON, DC

The past few months have seen one of the most significant financial crises in history. In recent weeks, world leaders have recognized the need to reform the global financial system and its institutions. On November 15, members of the Group of 20 are set to meet in Washington to begin the discussions. We are deeply concerned that the proposed meetings will be carried out in a rushed and non-inclusive manner, and as a result, will not address the comprehensive range of changes needed, nor fairly allocate their burden.

Please endorse the new statement below addressing principles and rules to build an economic system that works for people and the planet.  This statement draws from several recent statements developed by global civil society. If you have not already done so, you can also still sign on to the statement about a better process that has been circulated over the past two weeks.

Deadline for sign on for both statements is 11:59 pm on Wednesday, November 12 GMT.

  ------------------------
Banking on Change:
Towards an Economic System that Works for People and the Planet

 On November 15, the leaders of 20 nations and the major multilateral financial institutions will gather behind closed doors in Washington to discuss the future of the global economy. Led by outgoing U.S. President George W. Bush, this group includes many of the people, governments, and institutions whose policies are responsible for the current financial meltdown. As such, we believe they are the wrong group to be charged with reworking global economic rules and institutions. The world needs a process that is much more inclusive of other nations and the peoples of those nations.

This statement begins to sketch an agenda for change that would resolve the crisis by putting people and the planet first. It starts from the experiences of groups and communities around the world. It speaks to a financial meltdown triggered in the very heart of the globalized capitalist economy that has combined with the growing crises of climate chaos and hunger, and that now reaches into every corner of the planet. This new crisis of predatory and unregulated "casino capitalism" is destroying jobs, lives and livelihoods, while wreaking havoc on currencies and stock markets around the world. It has taken resources from the many, while concentrating wealth in the hands of the few.

To date, governments have largely responded by spending more than one trillion dollars bailing out private financial institutions and corporations. Meanwhile, the crushing needs of communities, ordinary citizens and fragile ecosystems have been largely ignored.

Now is the time to learn from this experience and from the consequences and devastating impacts of other recent crises, such as the debt crisis unleashed in 1982 and the financial crises in Mexico (1994-95), Asia (1997-98), Russia (1998), and Argentina (1999-2002). History continues to repeat itself. This pattern, culminating in the current global crisis, demonstrates quite definitively that a real transformation of the system is required.

New rules and institutions should be created in an open and inclusive process of dialogue.  They should be based on a new set of principles to guide economic activity. We offer an overview of those principles and an outline of new rules and institutions.           


1. We need a new set of principles to support new national, regional and global financial institutions: 
The following principles should underpin new rules and institutions: 
*  Economic democracy and equity, including the development of local economies, and community control and protection of water, seeds, genes, air, communal lands, fisheries, and other "commons";
*  ecological sustainability and environmental justice, including promoting long term, productive green investment;
the fulfillment, protection, and promotion of all human rights, including the right to food, air, and water, and the rights of workers, small-hold food producers, rural and urban communities, indigenous peoples, women, children, and the elderly;
*  gender, racial, ethnic and intergenerational justice and equality;
*  self-determination and sovereignty of peoples and nations; and
* non-interference, mutual cooperation, complementarity and solidarity.

On the basis of such principles, finance should be aimed at and linked to strengthening national and local real economies to meet the requirement of sustainable and equitable development. And governments should support innovative new regional financial bodies such as the South Bank in South America, which has the potential to serve the needs of those regions more effectively than the IMF and World Bank. Regional emergency funds are also needed to help ensure the food and energy sovereignty of nations.


2. Enough with market fundamentalism: the world doesn't need another "Washington Consensus."  The so-called "Washington Consensus" that has preached deregulation, privatization, the over-leveraging of banks, and trade and capital liberalization over the past thirty years has been extremely damaging to workers, communities and the environment. It is discredited and should be officially abandoned. It should not be replaced with any new "one-size-fits-all" dogma.

Rich world leaders and institutions not only promoted the frenzy of deregulation and privatization in their own countries, but pushed it on developing countries through aid and loan conditionality. As they mobilize trillions of dollars to clean up the mess at home, they must do their fair share to redress the devastating impacts of their mistakes on the South. This should include cancellation of all unsustainable and illegitimate debts claimed from countries of the South and restitution and restoration of the social and ecological debts owed to peoples of the South.  These resources, together with the rapid and full disbursement of previously scheduled aid increases, should be provided free of macroeconomic and structural conditions. The right of all countries to define their own paths toward sustainable and healthy economies must be respected. The onerous conditions attached to existing aid, loan, and debt-reduction programs should be removed before they do further dama ge. < br>

3. Curb the power of the IMF, World Bank, and WTO: The present crisis has again demonstrated how we are all impacted by three powerful global institutions whose policies have been instrumental in its creation: the IMF, World Bank, and the WTO.  Nonetheless, much of the current debate among financial institutions and governments involves giving them enhanced roles. The WTO, for example, continues to press for further deregulation and privatization of the financial sector, principally through its General Agreement on Trade in Services. For individual countries and the global community to adopt critical new regulations of the financial sector, not only should the WTO's current Doha Round be suspended, but also existing WTO rules constraining regulation of financial services should be rolled back.  Likewise, efforts by the IMF and World Bank to expand their influence as a result of the financial, climate, energy and food crises should be rejected. Furthermore , glo bal, regional and national economic governance institutions must be democratic and accountable to the women and men they are supposed to serve.


4. Regulate the global economy effectively: Governments should take immediate action to develop a new international regulatory architecture with democratic checks and balances that is aimed at promoting the interests of workers, small-hold farmers, consumers, and the environment and preventing future financial crises; the United Nations should play a central role in its development.  This should cover not just banks but also the parallel and under-regulated financial system, including hedge funds and private equity funds. Some first steps should include regulating derivatives, stopping speculation on staple food commodities, applying stricter international capital reserve requirements, a speculation tax on international transactions, closing tax havens, and stronger transparency rules. Governments will also need to renegotiate the dozens of free trade agreements and bilateral investment treaties that currently ban governments from placing controls on capital flow s and applying other sensible conditions to foreign investment and other financial transactions.

Such steps are possible and many more will be needed to build a truly just global economic system that works for people everywhere, local communities, and the environment. This is the change that the world needs and for which we will continue to struggle.

Signed: list organizations

   These background documents include:
-- Call for Global Action Against Debt and IFIs, October 12-19, 2008
-- ATTAC's statement on the financial crisis and democratic alternatives
-- Responses from the South to the World Economic Crisis (Caracas Statement)
-- Social Movement on Debt in South America, Letter to South American Presidents
-- The global economic crisis: An historic opportunity for transformation (Beijing Declaration)
-- 1999 Joint Statement by IFG, IPS, TWN and FOE on Global Financial Reform
-- International Trade Union Confederation, Statement by Global Unions to the 2008 Annual Meetings of the World Bank and International Monetary Fund
-- Trade Union Statement to "G20 Crisis Summit," The Global Unions "Washington Declaration", November 2008.
-- South Centre, "South Centre calls for Revamping the Global Financial Architecture," October 29, 2008.