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CUTS-ARC
SOUNDS
Promoting
South-South Civil Society Cooperation
Vol. No. 3 of 2003
A
Bi-monthly E-Newsletter
Published by CUTS- Africa Resource Centre, Lusaka, Zambia
No.
2 of 2003 If you are receiving this inadvertently, we apologise for the same. Please do let us know to make the necessary changes CONTENTS
EDITOR’S
NOTE
Cancun
Collapse Affects Food Security FORTHCOMING
EVENTS Negotiating African Poverty Africa could have done better
economically. In the first decade, following most African countries’
independence, there was considerable growth in economic, social and
infrastructure sectors. Then three things happened: first, the world prices
for commodities dropped; second, Europe offered a hand with huge loans at low
interest rates, which escalated over time; and third, Africa was told to
deregulate in line with world markets in capital and trade - liberalisation,
which required competing on an equal footing with the developed world. The third set of measures were
taken at the behest of the World Bank and the International Monetary Fund (IMF),
largely to qualify for new loans to pay back old debts. The debt overhang of
these countries, which were not resolved by these programmes, continued to
inhibit foreign direct investment, imports and social spending. The investment
to GDP ratio fell from an average of 21.5 percent in 1973-81 to 17.1 percent
in 1986-89. This contributed to the general economic crisis of the 1980s,
which has since been termed as a ‘lost decade’ for African countries and
people. Africa has suffered in the past
and it continues to suffer even today. Besides, going by the trend, while
world poverty is expected to come down from 1.1 billion to 800 million by
2015, Africa’s poverty, especially in sub-Saharan Africa, is set to rise
from 315 million to 404 million in the same period, making the region
inhabited by the poorest people. Progressive
African leaders know this and they are trying their best to reduce, or even
reverse, the ever-growing poverty in their countries. That is why, when they found
the Cancun negotiations not working for them, they walked out of the meet.
They knew that the ministerial draft did too little on Special and
Differential Treatment (S&DT) for the poor countries; it was not favorable
on the non-agricultural market access and that the text on the cotton
initiative did not reflect the proposal to phase out subsidies. Also, the
draft talked little about compensating the losses to the African producers on
account of subsidy provided by the rich nations to their farmers. The message from Cancun for the
rich countries, therefore, was that the developing countries are no longer
willing to accept the distorted agricultural trade, tilted in favor of the
rich countries. The truth is that the more the agricultural subsidies remain
in place in the North, the more other trade barriers will become steeper, not
to mention new trade barriers. The idea that a major liberalisation of
agricultural trade could reduce global poverty by another 300 million people
by 2015 should then be revised if trade talks aimed at opening up rich
countries' agricultural markets are going to collapse each time the poor
countries take a united stand. Therefore, the poor countries
are seeking something that works for them. For example, Zambia’s commerce,
trade and industry minister Dipak Patel suggested that for his country to come
out of the poverty situation, it may have to get away from World Bank’s
prescriptions and engage in private partnership project (PPP) ventures with
the Asian economies of Japan, Malaysia, Indonesia, China and India that have
thrived on PPP. Civil society also followed suit when they walked out from the
meeting organised by the International Monetary Fund (IMF) officials, who
wanted to hear civil society’s view on Zambia’s economic situation. These actions have come about
after an extended period of co-operation with what does not work. Maybe,
partnerships might be a better alternative. The United States of America–the
largest bilateral donor to the developing world–certainly believes so as
they seek to enact the Millennium Challenge Account that will increase core
official development assistance by 50 percent over three years to a total of
$15,000mn annually, starting in the fiscal year of 2006, with a critical
component forged in the partnerships. Other partnerships are founded within the African Caribbean and Pacific Countries-European Union (ACP-EU) cooperation, whose overall objective is poverty reduction in the ACP countries. The other partnership is the Africa Growth and Opportunities Act (AGOA). The most promising idea originated by the African leaders themselves is the New Partnership for Africa’s Development (NEPAD), which, it is hoped, will provide the needed relief to translate economic growth into poverty reduction, whether through good governance, equitable income distribution and reduction in the prevalence of war and conflict. Editor Poverty
Impact of Doha Development Agenda Negotiations The Doha development
negotiations at Cancun, in Mexico, could have been derailed easily with
individual countries’ agenda. Therefore, to discuss the possible measures to
prevent diversion of attention from the main goal of the negotiations and to
bring poverty reduction to the main stream of the Doha Development Round
negotiations in the Fifth Ministerial Conference, CUTS-ARC in collaboration
with Overseas Development Institute (ODI), London, organised a panel
discussion on the sidelines of the ministerial conference. A key suggestion
that came out of the discussions was that the Trade Policy Review Mechanism (TPRM)
of the WTO should incorporate analyses of the key development indicators of
the member countries–such as human development index (HDI), health,
education, etc.–and bring them in line with the WTO agreements and policy
framework negotiations. Javed Sakhawat of Associates of Development
Initiatives, Dhaka, emphasised that merely prefixing the word development does
not make the Doha development agenda a development-friendly agenda.
Discussants concluded that since there is a close link between poverty and
multilateral trade, the alternatives (one of which is preferential
arrangements) are bad, especially for the weak partners, most of whom are poor
countries. (For
details, log on to: www.cuts-international.org) National Preparatory
Workshop for the 5th WTO Ministerial Conference Following the
government’s invitation to civil society to provide inputs to the
government’s position paper on the Fifth WTO meeting, CUTS-ARC, in
cooperation with the Zambia Trade Network and Fredrich Ebert Stiftung,
organised a pre-Cancun preparatory workshop at Lusaka on 21st –
22nd August 2003. The workshops brought together civil society
organisations, business community and other private sector participants. In
his opening speech, Zambia’s Minister for Trade, Commerce and Industry Dipak
Patel paid a glowing tribute to the civil society, which he recognised as
being often closer to the people, thus being better placed to articulate the
interests of the average citizens and also monitor the implementation of such
National Programmes. Paper presentations came up with three thematic issues,
including the role of civil society organisations in WTO, Zambia's position(s)
on agriculture and General Agreement on Trade in Services (GATS)
and Zambia’s position on the Singapore issues (competition policy,
government procurement, transparency and investment).
The plenary discussion was sympathetic to the fact that Zambia was neither
technically nor administratively ready to engage in any specific negotiation
on the Singapore issues. They, therefore, suggested adopting a cautious
stance. (Detailed
Report on: www.cuts-international.org) The Cotonou Agreement
after 2008: Back to Lome¢? Although it is very
difficult to have a clear vision of what situation will prevail after 2008 for
Cotonou Agreement, this can be deduced to some extent from various indicators.
The least developed countries (LDCs) are entitled to “keep Lomé”, or even
a slightly improved version of it, without having to reciprocate. By contrast,
non-LDCs, who will decide whether they are in a position to enter into
Economic Partnership Agreements (EPAs), can be transferred to the EU’s
Generalised System of Preferences (GSPs)—a non-reciprocal set of
preferences, less generous than Lomé—or they can benefit from alternative
WTO-compatible arrangements. Some countries will
negotiate EPAs as regional groups, others will negotiate individually, while
still others may try to obtain another type of agreement from the EU. These
positions will depend on whether the country is a “bilateralist”
(considering trade policy as a tool of foreign policy towards a given country
or region) or “multilateralist” one (those, who think European trade
policy objectives must be pursued within the WTO framework, by directly
influencing the establishment and application of world trade rules).
Cancun Collapse
Affects Food Security The
International Food Policy Research Institute (IFPRI) is concerned that the
collapse of the global trade negotiations in Cancun will impact negatively on
the world food security. The greatest challenge is the impasse on the trade agreements, which allow for the return of trade subsidies and discourage the growth of global trade. This means that with subsidies in place, other barriers to trade will become even steeper, thus, threatening the global food security, where consumers have to pay an extra $240bn for farm produce, subsided by the developed countries under the aegis of the Organisation of Economic Co-operation and Development (OECD) at $75bn annually. This is the fear that is weighing heavily on the IFPRI’s Director-General Joachim von Braun. He warned that such a situation was unsustainable and that it would lead to a backlash from the African countries, which feel that the global trading ground is not level. (East African Standard, 29.10.03) COMESA Committed to
Doha Agenda Despite Setback The
Common Market for Eastern and Southern Africa (COMESA) recently reaffirmed its
position of working towards implementation of the Doha Declarations and
decisions, despite the setback at WTO’s Fifth Ministerial Conference at
Cancun. The regional body has instructed its officials to work on proposals
left pending at Cancun before the meeting of the General Council on 15th
December 2003. The
failure of the ministerial conference has brought with it the fear of
increased regional and bilateral trading arrangements, in which the strongest
dictates with the rule of threats of sticks and makes promises of providing
carrots. At Cancun, when African countries were expected to progress,
especially in the area of the heavy cotton subsidies, they were surprised to
be confronted with a text on cotton (Job/150/Rev.2 Para 27) that needlessly
advised African cotton producers to “diversify” out of cotton in order to
accommodate the rich and heavily-subsidised farmers of the EU and the USA. But
the truth is that agriculture is the mainstay of many Africans, who cannot
just diversify when the noose tightens around their trade livelihood,
especially by deliberate actions by the West to kick them off the trading
floor by their subsidies. (Zambia Daily Mail, 15. 10.03 & www.seatini.org) Africa: Why So Little
FDI? Apart
from opening trade markets in the EU and the USA, what Africa needs is more
foreign direct investment (FDI). However, FDI is shrinking even in the West,
where, according to the World Investment Report released by the United Nations
Conference on Trade and Development, FDI reduced from $590bn in 2001 to $460
bn in 2002. Africa had its share of FDI pie cut by 41 percent—in line with
global trend—from $19bn in 2001 to $11bn in 2002. But won’t Africa fit a
competitive new market for export production? Many
disagree on this by pointing to everything poor or lacking about Africa. Poor
physical infrastructure, poor sectoral policies, poor approaches to investment
location, poor information disclosure, poor geographical positioning of some
African countries, poor labour laws that result in meagre incomes and an
unattractively small market base for future products, lack of skills for
country marketing, lack of stable and comprehensive trade policies, etc.
Others
blame FDI contraction on corruption, with its natural fall-out of high
transaction costs. What should not be ignored are the conflicting and
confusing regulations that duplicate functions of agencies and increase red
tape to investment establishment, thus leaving the entire country’s trade
system vulnerable to corruption. However, there is still hope for recovery:
Africa’s extracted natural resources continue to implement regional and
inter-regional free trade initiatives, and lessons in the privatisation
programme, applied to ensure that benefits from FDI reach all, are felt by the
society as a whole. (The Herald, 08.09.03) IMF Debt-Relief Programme
Under Scrutiny When
the IMF and World Bank first launched the Highly Indebted Poor Countries (HIPC)
initiative in 1996, it entailed coordinated action by the international
financial community, including multilateral organisations and governments, to
reduce to sustainable levels the external debt burdens of the most heavily
indebted poor countries. But a working paper published by the IMF noted that
the initiative is “not a guarantee for long-term debt sustainability".
This is hardly surprising knowing that the wisdom of an exclusive focus on
increased spending on social services, such as health and education, has not
always been associated with improved social indicators. Such a dependency,
according to debt relief campaigners, requires further foreign aid. Without
it, struggling economies in Africa may find themselves in a debt-trap once
again. More so, because some of the countries already "suffer" from
aid dependency syndrome. (UN Integrated Regional Information Networks, 22.10.03) Brace
Up for the Millennium Challenge Account for
Partnerships The
largest bilateral donor to the developing world, the United States of America,
will, in the fiscal 2006, enact the Millennium Challenge Account (MCA) that
will increase the US core official development assistance by 50 percent over
three years, to a total of $15,000mn, annually. A critical component of this
programme will be forging of partnerships to fight global poverty between
donor and developing countries, international agencies, non-governmental
organisations, businesses and other stakeholders that provide economic
opportunities for all their people. MCA
is predicated on the importance of partnerships in leveraging resources for
development, since the development record of the past few decades shows that
enduring growth and prosperity are built less on official development
assistance than on open markets, increased trade, sustainable budget policies,
and strong support for individual entrepreneurship. Governments
and civil society need to work closely to allow the private sector to act as
the engine of growth and job creation. A variety of private sources, viz.
non-governmental organisations (NGOs), private voluntary organizations,
foundations, corporations, higher educational institutional community, and
even individuals, many through remittances – now account for 80 percent of
total capital flows to the developing countries. A US Commerce Department
study showed two years ago that since the 1960s, private capital flows to
these countries jumped from $15,000mn to $326,000mn, annually. In country
after country, there are numerous examples of how new alliances and the
leveraging of private sector and other non-governmental resources, are forging
a better future for families and communities. (United States Department of State, 09.10.03) Post-mortem
of the WTO Cancun Ministerial in January 2004 (For details, log on to www.cuts-international.org) Competition
and Consumer Protection in Uganda
Consumer
Education Trust (Consent), in association with CUTS-ARC, prepared a
reader-friendly research report on this important subject. The report analyses
with facts and figures the status of consumer protection and competition
policy scenario in Uganda from the perspective of consumers. This publication
is part of the capacity building and awareness creation activities of CUTS-ARC
and CONSENT on consumer protection measures and economic welfare in Africa.
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