Making the global economy work for the poor - Q and As
Are you in favour of protectionism/against free trade?
We are in favour of Trade Justice - fair rules regulating world trade that protect poor people and the environment.
Both the current economic crisis in rich countries and the longstanding economic crisis in poor countries were caused by misguided faith in the virtues of unfettered ‘free' markets, and the lack of transparency and accountability of financial institutions.
However, the rhetoric of ‘free trade' has only been used when it suits rich countries - for example to force developing countries to stop protecting emerging industries.
Meanwhile many rich country agricultural subsidies and tariffs continue to hurt poor countries.
What is wrong with the trade deals at the World Trade Organisation (WTO)?
The Doha trade talks collapsed because no deal was better than a bad deal for poor countries as major agricultural exporting countries put self interest above other considerations.
Central to the collapse was the failure to agree to a generous special safeguard mechanism, which would have enabled developing countries to impose or raise tariffs to protect their poor and vulnerable farmers from surges of agricultural imports.
These issues have not been resolved.
What is wrong with the trade deals at the EU?
The new trade deals that the EU is trying to secure with 34
countries in Asia, Africa and Latin America (Economic Partnership Agreements -
EPAs) under the destructive ‘Global Europe'
strategy could have disastrous impacts on jobs, livelihoods, human rights and
the environment for the developing countries that sign up.
Since
2007, the European Commission has been negotiating an agreement with a group of
Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua, with Panama as an observer), a region where 40 per cent of people
live on less than US$2 a day.
These deals could result in significant job losses amongst producers of manufactured goods, many of whom are women who would lose access to decent work opportunities, reduced government income from trade taxes to invest in decent public services like health and education, reduced access to cheap medicines for the poorest people and reduced access to financial services for low income communities and small businesses
What are the IMF and World Bank, and why do they need to be reformed?
The International Monetary Fund (IMF) and World Bank are two of the global institutions that oversee global financial flows. The World Bank has a specific mandate to support developing countries by providing grants and concessional loans to poor countries. The UK Government gives large amounts of money to both the World Bank and the IMF.
Unfortunately many World Bank and IMF decisions have not benefited poor countries, and some have actively harmed them. Particularly controversial are their ongoing forcing of economic conditions on loans and their funding of dirty fossil fuel projects.
The USA and Europe between them command around 50% of the votes at these institutions. Senior posts have been largely given to European and US American representatives including the post as head of the IMF and the World Bank. The combined vote of Sub-Saharan African countries however, is less than 5%.
What are tax havens, and how would
greater transparency help?
Tax havens are countries that offer low or zero taxation, and a veil of secrecy that undermines international regulation. They allow big companies and wealthy individuals to escape from their responsibility to pay tax.
Christian Aid has calculated that illegal tax evasion by multinational companies costs developing countries at least US$160bn (£98 billion) in lost revenue annually. Tax havens play a key role in enabling this money to be siphoned away from where it's
needed. If that money was allocated according to current spending patterns, the lives of 350,000 children under the age of five could be saved every year.
Greater transparency would make it much easier to see if companies and rich individuals were paying the taxes they owed, in the countries they were operating in.
A new international accounting standard is needed with country-by-country reporting.
It would require companies to reveal, for every country in which they operate, the name(s) under which they trade, the profits they make and the taxes they pay.
Also, all countries should automatically share basic tax information with each other, so suspicious activity can be investigated.
Why do we need a UK Commission
on Business, Human Rights and the Environment?
NGOs have documented a number of ongoing instances of UK businesses being complicit in human rights abuse and environmental mismanagement in developing countries.
For example, 750,000 people in 450 communities of the three countries were affected by the Baku-Tblisi pipeline, completed in 2005. Issues included inadequate compensation for compulsory confiscation of land; loss of livelihood through land degradation from construction work and the inability for people to access their land; as well as intimidation and violence against those protesting against the pipeline. BP was one of the organisations with corporate interests in this.
Currently, the gas flaring and water pollution caused by Shell in Southern Nigeria is very well documented.
The UK Government has a responsibility to ensure UK
companies do not continue to get away with violating human rights and damaging
the environment abroad. A new UK Commission on Business, Human Rights
& The Environment would provide guidance to companies on what standards
they must adhere to when operating abroad, and act as a forum for hearing and
resolving allegations of infringements.
What is the ILO, and what are Decent Work Country Programmes?
The International Labour Organization (ILO) is a part of the UN that brings together governments, employers and workers of its member states in common action to promote decent work throughout the world.
Decent Work Country Programmes assist governments, employers and employees in achieving national development strategies and promoting decent working conditions.
