EDITOR’S NOTE

UNCTAD XI:  Seeing the Fruit, Missing the Tree

It has been 40 years since the United Nations Conference on Trade and Development’s (UNCTAD) first session and with what progress for developing countries? Admittedly, there has been technological progress, progressive tariff concessions, and shifting domestic trade policy domain to multilateral policy in the World Trade Organisation (WTO). Yes, changes in many aspects, except in the status of a large number of poor developing countries.

While there has been a classification of a handful of developing countries to developed country status (including South Korea, Mexico, the Czech and Slovak Republics), sub-Saharan Africa (SSA) has largely remained developing, or slipped to least developed.

It has not helped that the past 20 years of SSA’s non–diversified economies founded on an eroding foundation of primary or partially processed commodities have seen a decline in exports. Could UNCTAD reverse these conditions?

The discussions at the UNCTAD XI conference held in Sao Paulo, Brazil, from June 13 to 18, 2004, focused on the problems faced by developing countries in exporting their products while having to compete with subsidised farm exports abroad. This conference served as a platform to review deliberate dependence-forming policies of the International Monetary Fund (IMF) and the World Bank, of opening up markets to cheap imports at a time when most developing countries were not ready at conditionalities for loans.

There are supposed to be gains in trade. The question is: Where are these gains if SSA’s poverty rose from 41 percent in 1981 to 46 percent in 2001, while GDP per capita decreased by 14 percent?  Should those countries that have not realised these gains, despite several years of trial, continue supporting a system that produces no results for the greater majority?

UNCTAD, in its 2004 report: Trade Preferences for LDCs:  An Early Assessment of Benefits and Possible Improvements, says the world's 49 least developed countries (LDCs)  see only limited benefits from preferential trade arrangements with the leading traders because the agreements do not cover all products exported by the poor nations. This has resulted in only US$4.9bn out of US$11.5bn worth of exports from least developed countries to enter the so-called Quad group of countries – the United States, the European Union, Japan and Canada.

If developing nations cannot trade fairly with developed ones, then south-south cooperation is the answer. UNCTAD estimates that trade among developing nations is increasing by 11 percent per year, compared with 4.5 percent globally.  If these nations agree to reduce average tariffs by 50 percent, they would generate an additional US$15.5bn in trade.

Identifying the heavy-handedness of developed countries, the UN Secretary General, Kofi Annan, in the opening remarks of the conference on June 13, 2004, stated, “Policies ought not to give with one hand and take away with the other... Rules designed to liberate ought not to create new barriers”.

Appropriately, UNCTAD XI closed with the adoption of declarations entitled the “São Paulo Consensus” and the “Spirit of São Paulo”. While the Spirit of São Paulo recognises that most developing countries,  especially African and LDCs, have remained on the
margins of the globalisation process, the São Paulo Consensus carried the ‘soul’ of São Paulo in its focus on four topics : development strategies in a globalising world; building productive capacities and international competitiveness; assuring development gains from the international trading system and trade negotiations; and partnership for development.

From the São Paulo Consensus, the decision to establish an international task force on commodities to study mechanisms for recuperating and stabilising commodity prices was encouraging.  And so was the proposal to set up a fund to help countries reliant on single or dual commodities to diversify exports. 

ACTIVITY REPORT

Official Launch of the Study Report: Investment Policy in Zambia: Perceptions and Performance

Consumer Unity & Trust Society-Africa Resource Centre (CUTS-ARC) officially launched its investment for development study report entitled “Investment Policy in Zambia: Perceptions and Performance” and its advocacy document entitled “Investment Policy in Zambia; An Agenda for Action.” The launch, which was held on September 14, 2004 at Pamodzi Hotel, drew a total attendance of 56 participants, drawn from the academia, the media, business community, and inter-governmental agencies, among others.

The guest of honour, the Permanent Secretary in the Ministry of Commerce, Trade and Industry (MCTI), Mr. Davidson Chilipamushi, elucidated on the successes and pitfalls of the many policies undertaken by Zambia in the past.  Nevertheless, Mr. Chilipamushi  expressed optimism that with the launch of the study report would help unlock some of the difficulties Zambia had been facing in promoting investment.

Professor Oliver Saasa, of the University of Zambia made an even stronger argument that certain balanced levels of industrial protection, ironing out corruption, increasing economic diversification, addressing hidden costs of doing business, developing a good capital market and addressing the supply side in skills training and ensuring a stable political landscape, are keys in attracting FDI in Zambia.

Chris Sealy of the Private Sector Development Programme (PSDP) emphasised making right the psychological environment, because attracting investment is not entirely a rational activity and is never based on purely economic considerations.

Zambia Investment Centre representative A.C. Mwitwa highlighted the ‘ground reality’. He turned the spotlight on the fact that investment pledges have reduced drastically. He cited corruption, procedures, and high costs of doing business, among other reasons, as the cause of reduced investment pledges in the country. He further pointed out that ever since the Centre was established, there had been no policy on investment to guide it, thus the Centre was governed by an investment act, which he said was inadequate to address all the problems and was undergoing a structural review.

Professor Vikantesh Seshamane said that the cost of doing business in Zambia was too high, infrastructure was in a deplorable state and companies charged exorbitant rates for services – this more so in the tourism sector than anywhere else. Participants also questioned the qualifications of the manpower that was appointed to handle the privatisation process, especially considering that the performance of the privatised companies had been suboptimal.

James Chansa of CUTS-ARC briefly outlined the interactive nature of the methodology used in conducting the study, which included the involvement of National Reference Groups (NRGs), the civil society survey and the extensive desktop survey.

The executive director of the Zambia Competition Commission (ZCC), Mr. George Lipimile felt that public monopolies simply transformed themselves into private monopolies. He said Chilanga Cement was taken over by the biggest international cement producing company – Lafarge; Zambia Sugar Company was taken over by Ilovo and Cadbury Schweppes merged with Coca Cola, etc.

Mr. Kasote Singogo eloquently stressed “the link between investment Policy and National Development Strategy.” He emphasised the need to mobilise natural links, such as those occurring between Zambians and Malawians, and Zambians and Congolese. He also recommended synergy between the various investment related ministries like the MCTI and the Ministry of Finance and National Planning.

Other recommendations stressed the need to restrict ‘warehouse’ investing and embracing one project at a time. It was also agreed that the country should increase value addition at every stage of crops, especially, cotton, instead of the current scenario where commodities were being exported in their unprocessed form.

Sajeev Nair of CUTS-ARC outlined the way forward, feeding the information thus gathered into the discussion on national investment policy. He also expressed the need for the creation of a National Investment Council as a forum where important investment information, as was expressed in the study report, could be utilised. He said that there was need to form strong partnerships not only among civil society organisations, but also with government and inter-governmental organisations.

(For  details mail to: cutsarc@zamnet.zm
lusaka@cuts.org)

NEWS BRIEFS

Textile Doom for Africa Finds Lifeline in AGOA

The elimination of Textile and Clothing quotas scheduled for January 1, 2005 as per the WTO rules have raised concerns of ramifications on smaller textile producers, especially African, where it is estimated that the transformation of the WTO trade regime could cause a plunge in textile and garment exports by 70 percent. An international trade expert in the Ministry of Trade and Industry, Noko Murangi, contended that the elimination of the WTO quotas on Textiles and Clothing would have ramifications for Namibian textile companies. However, he was quick to add that the African Growth and Opportunity Act (AGOA) arrangement with some African countries, including Namibia, signalled that the American market would not fully lift the veil, or wholly open up its own market just yet. (Source: New Era : 21.10.04)

Paris Club Nations Agree to Cancel US$758mn Debt

The Paris Club of mainly western creditor nations has agreed to cancel US$758mn of Ethiopian debt to help cut poverty and stimulate growth. The debt write-off is part of the Heavily Indebted Poor Countries initiative (HIPC), launched in 1996 to ease the burden on the world's poorest countries.   The Paris Club said in a statement issued in the French capital that Ethiopia's outstanding debt now totalled US$153mn.. The African Development Bank also agreed to wipe out US$339.5mn in Ethiopian debts.

(Source: UN Integrated Regional Information Networks, 19.10.04)

Violently Intent on  Keeping Africa in Poverty

The North-South economic and political divide is the overriding concern in international trade relations, with the rich North creating conditions that allow for the pillaging and primitiveness of the poor South. Combined, the International Financial Institutions (IFIs) and the WTO adopt a coherent and comprehensive neo-liberal paradigm for trade and economic management, and this free trade ideology is imposed on developing countries. There are serious deficiencies in this ideology. The North uses the free trade ideology as a means of domination over the resources and livelihoods of the people of the South. Militarily, the colonisers were kicked out of African countries after bloody and horrific struggles. Neo-liberalism replaced military colonial occupation and ensured that resource flows from the South to the North continued. Instead of rule by the gun, it became: rule by trade policy. Free trade was used as the ideology to continue to maintain colonial economic relations with the South.

(Source: Pambazuka & Choike: 20.10.04)

EVENTS AND ANNOUNCEMENTS

Information-based Advocacy, Networking and Capacity Building on NEPAD in Zambia

Consumer Unity & Trust Society-Africa Resource Centre (CUTS-ARC) in conjunction with Participatory Ecological Land-use Management (PELUM) is launching a programme to undertake advocacy, networking and capacity building in Zambia in order to understand and generate debate on the New Partnership for Africa’s Development (NEPAD), especially on its link with trade and poverty. The project will endeavour to bridge gaps between the sector stakeholders, civil society, academics, business and policy makers with the objective of increasing awareness of the issues raised in NEPAD, and how these connect between trade policy, trade partnerships and poverty reduction through improving the living conditions of the poor.

(For details mail to cutsarc@zamnet.zm
lusaka@cuts.org)

Seminars/Workshops

CUTS- Centre for International Trade, Economics & Environment, Nairobi, in partnership with Friedrich Ebert Stiftung, will be holding a regional seminar: “Can Africa trade her way out of poverty?” in Kenya on October 25- 26, 2004.  The seminar’s main theme will be Pro-poor Trade Policy for sub-Saharan Africa. It will draw participants from Africa and Asia, and will serve as a platform for South-South dialogue on lessons and experiences of trade liberalisation and its impact on the poor.  Hence, the main issues planned for discussion at the meeting are including the linkages between trade and poverty, distribution of wealth and social standards.

(For details mail to cutsarc@zamnet.zm
lusaka@cuts.org)

Contact Us:

Africa Resource Centre
Suite 4.11, Main Post Office Building,
Cairo Road, P.O. Box 37113, Lusaka, Zambia
Ph: (00) 260-1-224992
Email: cutsarc@zamnet.zm
lusaka@cuts.org

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