Attempted Hijacking: Trade for Development!

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Rich Countries Work to Undermine Mandate UN's Premier "Trade for Development" Agency at 14th Conference of the United Nations Conference on Trade and Development (UNCTAD)

What if there were a United Nations agency that could assist developing countries in using trade for their own development purposes, while helping them advocate for a more fair and sustainable trading system? That could advocate for more fair and just international tax and debt systems? That had specialist divisions working to support Least Developed Countries (LDCs) and the developmental challenges of Africa, among other regions? That could use integrated approach to the evolution and management of globalization, regarding the interdependence of trade, finance, investment and technology as they affect the growth and development prospects of developing countries, rather than assuming that trade occurs in a global policy vacuum?

Such an agency exists: the UN Conference on Trade and Development (UNCTAD). Every four years, it holds a conference to debate these issues and to set the mandate of the work of the agency for the next quadrennial. Unfortunately, every four years, some rich countries push to turn it into an agency for implementing corporate trade agreements negotiated elsewhere, and to keep the agency on the sidelines of global debates and rule-setting (dominated by developed countries) on tax, debt, fiscal and macroeconomic policies, technology, and other key issues. (You can see here my commentary on the last struggle.)

On July 17-22 in Nairobi, Kenya, governments from around the world will meet to hash out UNCTAD's mandate for the next four years. The results of these negotiations will have meta-implications for development policy in developing countries around the world.

More than 331 civil society organizations (CSOs) including trade unions, farmers, development advocates, and public interest groups from over 150 countries sent a letter on July 14th to member governments of UNCTAD, demanding that they agree that UNCTAD continue its positive mandate for development. (The letter is available in English, Spanish and French.)

The CSOs highlighted that:

UNCTAD can play a unique role in the panorama of international economic institutions thanks to its focus on the interdependence of trade, finance, investment, macroeconomics, and technology as they affect the growth and development prospects of developing countries. However, to live up to its name and promises, its role must be development-centered, and not tied to the liberalization goals of other institutions.

This issue is critical, because in the constellation of global economic agencies and rule-making bodies, UNCTAD is one of the only institutions that includes promoting development at its core. It has a long and proud history of advancing systems of international trade that recognize the various levels of development of different countries, such as the Generalized System of Preferences (GSP) that countries still use; the concept of Special and Differential Treatment (SDT) that is under attack at the World Trade Organization (WTO); and the international commodity agreements, the abolition of which has had a tremendously negative impact on developing countries' trade balances.

The WTO hijacked the global rule setting space when it was founded 21 years ago. It has an entrenched seat at the big boys' global economic deciders' table, along with institutions like the International Monetary Fund (IMF) and World Bank, the G20, and the Organization for Economic Cooperation and Development (OECD, the rich countries' private club) from which UNCTAD is often excluded.

But over the years, while public efforts to reform the balance of power among countries in the IMF have yielded small results, UNCTAD has seen its efficacy eroded by the attempts to shrink its mandate, limit its international participation, and stack it with pro-neoliberal developed-country leadership.

Nevertheless, the institution makes invaluable contributions beyond just trade capacity building, on issues of regional integration, structural transformation, policy space, global tax policy, international debt sustainability, and other issues. And it should play a much larger role in determining the future of trade negotiations, be they at the WTO or in regional or bilateral agreements.

The letter from CSOs makes specific policy recommendations on the mandate draft document, noting that:

[t]rade and investment agreements do not support development without the right policy environment, which necessitates policy space, an effective and developmental state able to sustain its own resource base responsible for safeguarding people's human rights, and a more coherent, inclusive and representative global architecture for sustainable development. (Paragraph numbers referring to the draft mandate have been removed for ease of reading.)

The letter addresses the full range of developmental issues which have been affirmed by member states as crucial to UNCTAD's mandate, but which developed countries are attempting through the drafting process, to diminish, including on key issues of tax and debt. It highlights that the outcome of the conference "must continue and strengthen UNCTAD's mandate on curbing tax evasion and aggressive tax avoidance including in commodities markets and through investment policies." It further notes that "UNCTAD's work on debt workout mechanisms and responsible lending and borrowing has been uniquely useful and should be strengthened, including by supporting further work on these issues at the UN General Assembly level."

The issues highlighted in the CSO letter all refer to provisions from a leaked version of the draft text, which exposed the positions of various governments. From this leaked version, it was clear that developed countries in two blocks -- the EU and the so-called "JUSCANZ (JZ)" representing Japan, the United States, Canada, Australia, and New Zealand -- had moved to strike any reference to UNCTAD working in any arena in which it has actually made positive contributions to the global debates and rule-setting in favor of developing countries' interests.

Instead, the EU and JZ supported replacing development mandates with mandates for UNCTAD to simply encourage developing countries to implement free trade agreements (FTAs) and investment deals, whether or not those agreements were in the interests of the developing countries. For example, regarding UNCTAD's role on investment, the letter noted:

Given UNCTAD's long history encouraging developing countries to sign International Investment Agreements (IIAs) and the negative impacts developing countries have experienced, particularly due to the Investor to State Dispute Settlement (ISDS) mechanisms, UNCTAD's mandate should be intensely invested in helping developing countries craft investment policies that will contribute to development, rather than just "balance the interests" of investors and development; as well as to unwind and reform these agreements.

The CSO letter also made recommendations regarding UNCTAD's mandate on the "integrated approach of UNCTAD to the evolution and management of globalization and on the interdependence of trade, finance, investment and technology as they affect the growth and development prospects of developing countries", as many developed countries have objected to the superlative work of the Globalization and Development Strategies division in particular, for its integrated critiques of finance-led globalization, IIAs, and its encouragement of developing country participation rule-setting on the global level.

The letter also addresses issues of LDCs; promoting regional integration; monitoring the role of the private sector rather than promoting Public Private Partnerships (PPPs); advocating technology transfer; and on the importance of UNCTAD's leadership in the Financing for Development (FfD) process that supports the implementation of the Sustainable Development Goals (SDGs) agreed to by governments through the UN last year.

The letter concludes:

We believe that the further UNCTAD moves toward seeing developing countries mainly as engines to increase trade -- and thus deviating from its mission to support the use of trade for development -- the more it risks redundancy and irrelevancy. As civil society organizations deeply committed to human rights and social justice, the achievement of the SDGs and sustainable development for all, we urge you to adopt the above positions and ensure that UNCTAD continues and strengthens its role in trade, finance, investment, macroeconomics, and technology as they affect the growth and development prospects of all developing countries.

By Friday, July 22nd, it will be clear if developing countries were successful in securing a mandate that promotes development, or if developed countries won out in their efforts to convert UNCTAD into yet another institution promoting pro-corporate policies that further entrench the chasm of inequality between and among developed and developing countries.

And if the correct mandate is affirmed, the letter makes a final plea: "there is a need to scale up the international financial and human resource support of member governments towards UNCTAD and its overall mandate."

The letter was coordinated by the International Steering Group of CSOs towards the UNCTAD 14, which includes: ActionAid International, Asian Peoples' Movement on Debt and Development (APMDD), Center of Concern, European Network on Debt and Development (EURODAD), FEMNET, Financial Transparency Coalition, Global Alliance for Tax Justice, Jubilee USA, Latin American Network on Debt, Development and Rights (LATINDADD), Our World Is Not For Sale network (OWINFS), Public Services International (PSI), Regions Refocus, Society for International Development, Southern and Eastern Africa Trade Information and Negotiations Initiative-Uganda, Tax Justice Network Africa (TJN-A), and the Third World Network - Africa.

Deborah James facilitates the Our World Is Not for Sale (OWINFS) global network of NGOs and social movements working for a sustainable, socially just, and democratic multilateral trading system. She is the Director of International Programs at the Center for Economic and Policy Research in Washington, DC.