SOUTH BULLETIN Published by the South Centre ● www.southcentre.int ● 30 June 2014, Issue 80 Major issues on world economy and WTO, FTAs, IPRs debated at South Centre Conference

North’s policies The South Centre Board and affecting Council Hold Meetings in South’s Geneva  Pages 2-5 economies Dr. Yilmaz Akyuz at the South Centre conference.  Pages 9-11

Africa’s acute problems with EPAs

 Pages 19-20

The post-Bali agenda at the WTO The Council of Representatives of the Member States of the South Centre.

 Pages 20-23 Strong resistance to FTAs & new issues Tribute Seminar for  Page 23 Gamani Corea Addressing the commodities issue  Pages 29-30  Pages 24-25 Paradigm shift taking place in thinking Book on IPRs  Pages 25-27 Launches

Climate change and indigenous rights  Pages 5-7,  Pages 27-28 18 The Board and Council of the South Centre Hold Meetings in Geneva The month of March saw the South Centre organising a series of Board also agreed to nominate two events centred around the 32nd meeting of its Board and the new Board members. They are Dr. XVth meeting of its Council of Representatives, and included a Omar El-Arini from Egypt, former reception for the Member States and a holding of a South Con- Chief Officer of the Multilateral Fund for the Implementation of the Montre- ference on the global economy and the state of multilateral ne- al Protocol and current Senior Advisor gotiations. A book launch of trade expert Mr. Chakravarthi to the government of Egypt in the area Raghavan’s book The Third World in the Third Millennium CE of environment and elected member of and a special tribute seminar in commemoration of the life and the Board of the Green Climate Fund, intellectual legacy of Dr. Gamani Corea, former Chair of the representing Africa for the period 2012 Board of the South Centre, also took place. In addition, the -2015, and Mr. Yang Wenchang from South Centre bade farewell to Prof. Deepak Nayyar, Vice Chair China, current President of the Chi- of the Board, as his term finishes. nese People’s Institute of Foreign Af- fairs and former Vice Foreign Minister of China (1998-2003), former Commis- sioner of the Ministry of Foreign Af- fairs of China in the Hong Kong Spe- cial Administrative Region and former Ambassador of China to Singapore. They also agreed to extend Dr. Charles Soludo’s term as a Board member for another three years.

The African Union (AU) Trade Commissioner, H. E. Mrs. Fatima Ha- ram Acyl, paid a visit to the South Centre during the Board meeting and gave a talk on the AU’s view on trade. The South Centre decided to have stronger cooperation with the AU. The Board meeting in progress. A reception was hosted by the Board meeting and reception work plan for 2014. The Board also re- South Centre at its office on 17 March. viewed the Centre’s financial status and It was attended by the Board mem- Under the chairmanship of the South approved its budget for 2014. The bers, ambassadors and senior officials Centre Board Chair H. E. Mr. Benjamin William Mkapa, former President of the United Republic of Tanzania, the Board of the South Centre held its 32nd meeting on 17 and 18 March 2014 in Geneva. The Board is the governance body of the South Centre that is tasked to review and approve the work pro- gramme and the annual budget of the South Centre, and report on these to the Council of Representatives of the Member States of the South Centre which serves as the highest policymak- ing body of the organisation.

At its 32nd meeting, the Board re- viewed the Centre’s activities that were undertaken in 2013 and approved the

Page 2 ● South Bulletin ● Issue 80, 30 June 2014

H. E. Mr. Benjamin W. Mkapa, Chair of the Board of the South Centre (left), Vice Chair of the South Centre Board Prof. Deepak Nayyar (centre) giving making a speech at the reception. his farewell speech during the reception.

Guests at the South Centre reception. Vice Convenor Ambassador Dilip Sinha of India (centre) speaking at the reception. from the permanent missions of the its Member States and other developing The AU Trade Commissioner also Member States of the South Centre and countries in enabling the South Centre spoke at the reception and said that other developing countries, and of in- to carry out its mandate to strengthen after the liberalization of Africa, the ternational organisations and NGOs South-South solidarity and unity in struggle now is economic, and there based in Geneva. At the reception, today’s global context. Chairman Mka- what we are really talking about is Chairman Mkapa stressed the crucial pa expressed his appreciation for the trade. She said that Africa has very importance to the South Centre of the work of the Board and of the Secretari- huge challenges ahead, particularly continuing support being provided by at. the negotiations, for example, the Eco-

The South Centre reception was held in March 2014 in Geneva in conjuction with its 32nd Board meeting and XVth meeting of the Council of Representatives.

Page 3 ● South Bulletin ● Issue 80, 30 June 2014 nomic Partnership Agreements, the bilateral investment treaties, the WTO and post-Bali and that as developing countries, we need to stand together, speak with one voice and really mean it, and ask ourselves how do we fight and ensure our interests are preserved. She also expressed appreciation for the help the AU as well as the African countries are receiving from the South Centre. They are very proud of the Centre’s work and look forward to working more with the Centre includ- ing in other areas such as mining, in- vestment, and intellectual property rights. The South Centre’s XVth meeting of the Council of Representatives was held in March 2014 at the Palais des Nations, Geneva. During the reception, a book launch of The Third World in the Third Millenni- Meeting of the Council of Many representatives of the South um CE, The Journey from Colonialism Centre’s Member States spoke in ap- Representatives Towards Sovereign Equality and Justice by preciation of the Centre’s work and its The 15th meeting of the Council of Rep- Chakravarthi Raghavan, Editor Emeri- activities during 2013, particularly in resentatives of the Member States of the tus of the South-North Development terms of the assistance provided by South Centre took place on the after- Monitor (SUNS) and trade expert, was the Centre to developing countries in noon of 18 March at the Palais des Na- held (see next article in this bulletin). negotiations at the WTO, WIPO, tions, and was attended by the ambas- UNCTAD, UNFCCC, WMO, and on Prof. Deepak Nayyar, Vice Chair of sadors and senior officials of the Mem- issues relating to the global economy, the South Centre Board, had come to ber States. It was chaired by the Con- the global financial crisis, sustainable the end of his term. The South Centre venor of the Council, Ambassador Ab- development, health and the right to bade him farewell and expressed its dul Minty of South Africa. development. The research output of gratitude to his service during the re- the Centre was appreciated by the ception. Prof. Nayyar served at the The Council heard the report of Mr. representatives for their quality, use- South Centre Board for nine years, his Martin Khor, Executive Director of the fulness, and ability to provide devel- last three years as Vice Chair. Chair- South Centre Secretariat, on the Cen- oping country perspectives on global man Mkapa conveyed that he was a tre’s activities and financial situation. issues. The Member States also appre- very diligent member of the Board and The Convenor and the Chairman of the ciated that the Centre’s financial situa- that as Vice Chair he had made his Board encouraged all Member States to tion had improved, with an increased tasks lighter. Prof. Nayyar was in ensure their continued financial sup- operational surplus in 2013 following charge of the Finance Committee and port to the Centre as the best means for on from the operational surpluses gen- the Chair articulated that he had done strengthening the Centre’s ability to erated in 2009-2012. Among the Mem- very well in that job. He also empha- support the South in various multilat- ber States whose representatives sised that Prof. Nayyar was a great eral forums. thinker – a South, economic, and social thinker. Prof. Nayyar expressed that serving at the Board of the Centre has been a source of great joy and satisfac- tion. He said that the last five years, in retrospect, was incredible, in restoring the confidence in the South Centre of the stakeholders and that this was a product of teamwork. He is leaving with a sense of comfort that this institu- tion has grown stronger.

The South Centre also bade farewell and conveyed its thanks to Board mem- ber Minister Li Zhaoxing, who was also very instrumental for the organisation. The Council of Representatives of the Member States of the South Centre.

Page 4 ● South Bulletin ● Issue 80, 30 June 2014 Clockwise from upper left photo: Ambassador Marion Vernese Williams of Barbados (third from left); Ambassador Walid Mahmoud Abdelnasser of Egypt; Ambassador Mazlan Muhammad of Malaysia (second from right); and Ambassador Edi Yusup of Indonesia (right) giving their statements at the meeting of the Council of Representatives. spoke were Algeria, Barbados, China, The Chairman of the Board then the Board’s nomination of Dr. Omar-El Cuba, Ecuador, Egypt, India, Indone- put forward for the consideration of Arini and Mr. Yang Wenchang to sia, Iran, Jamaica, Malaysia, Pakistan, the Council of Representatives Dr. serve on the Board of the South Cen- South Africa, Tanzania, Venezuela and Charles Soludo’s second three-year tre. These were unanimously ap- Zimbabwe. term of membership of the Board and proved by the Council. Launch of Raghavan’s new book By Kanaga Raja associated with the South Centre long before the South Centre was even born. he South Centre on 17 March T launched the publication ‘The He noted that Mr. Raghavan had Third World in the Third Millennium brought to the attention of the then CE', written by Mr. Chakravarthi South Commission, whose Secretary- Raghavan, Editor Emeritus of the General was Dr. Manmohan Singh at South-North Development Monitor the time (and who is the former Indian (SUNS). Prime Minister), that something was going on in Geneva called the Uruguay The launch took place during an Round. evening reception at the Centre, which was attended by some South Centre Mr. Khor recalled that Mr. Board members as well as ambassadors Raghavan had written a 20-page paper and other officials. on this subject that was later publicised by the Third World Network. The book, subtitled ‘The Journey Chakravarthi Raghavan’s book The Third World in the Third Milennium CE was launched during a reception from Colonialism Towards Sovereign (The paper was later expanded into hosted by the South Centre in March 2014. Equality and Justice', is the first of two the book ‘Recolonization: GATT, the volumes and is published by the Third Uruguay Round & the Third World´.) Referring to Mr. Raghavan's book, World Network. He went on to say that Mr. Mr. Khor said that this is the first vol- At the South Centre reception, Mr. Raghavan has been writing about mul- ume of a compilation of the many pa- Martin Khor, the Executive Director of tilateral negotiations, not only the pers that Mr. Raghavan had written the South Centre, introduced Mr. GATT and the World Trade Organiza- over the past 20 to 30 years. Raghavan to the assembled audience, tion (WTO), but also on many other He noted that the foreword to the saying that Mr. Raghavan had been issues. book was written by Mr. Rubens Ricu-

Page 5 ● South Bulletin ● Issue 80, 30 June 2014 Prof. Deepak Nayyar (centre, with microphone) speaking about Mr. Chakravarthi Dr. Yilmaz Akyuz (left, with microphone) speaking during the book launch at Raghavan (extreme left) during the book launch at the South Centre reception. the South Centre reception. pero, a South Centre Board member the world of multilateral trade negotia- truth, to tell it clearly and to tell it and a former Secretary-General of the tions. firmly'. UN Conference on Trade and Develop- "In this world of internet and the Prof. Nayyar said that Mr. ment (from 1995-2004). information explosion, it's hard to rec- Raghavan in that sense is very unusu- In launching the publication at the ognise that this made an enormous al, noting that standards (in the world reception, Professor Deepak Nayyar, difference," said Prof. Nayyar. of journalism) "have slowly but surely Emeritus Professor of Economics at deteriorated" in terms of morality, Prof. Nayyar then said that he had Jawaharlal Nehru University and a beliefs and convictions, but that the first met Mr. Ricupero soon after he Member of the South Centre Board, journalist's task is much more difficult came to Geneva as Brazil's Ambassa- said that he had known Mr. Raghavan because it is about writing contempo- dor to the GATT, and Mr. Ricupero longer than has Mr. Ricupero (who had rary history. had told him - as have many of his col- been originally slated to launch the leagues who were ambassadors such as In this context, Prof. Nayyar noted book at the reception but had to excuse Ambassadors S. P. Shukla and Bhagi- that the historian Eric Hobsbawm, himself on account of being unwell on rath Lal Das - that Mr. Raghavan was who passed away not so long ago, that day). in a sense a ‘tutor' to all the ambassa- used to write the history of his own Prof. Nayyar said that he has known dors to the GATT. times. Mr. Raghavan for close to 30 years, According to Prof. Nayyar, this was "In many ways, I think Raghavan's adding that he had first met Mr. because Mr. Raghavan had a kind of perceptive writings over the years - Raghavan in the early eighties when accumulated knowledge and internal- and I'm sure these volumes will bring Prof. Nayyar had chaired some ised understanding which professional it to light - have had a kind of clair- ‘contentious' committees on services in diplomats who had just arrived in Ge- voyant contact because they foresaw Geneva during the Uruguay Round. neva found a wonderful reservoir to some things to come." "May I say that Mr. Raghavan is a draw upon. "For that, I think much credit is most unusual person. He is a person "And he was a fantastic support to due," said Prof. Nayyar, adding, how- who has a belief system and a courage all of them," observed Prof. Nayyar, ever, that this is not the credit Mr. of conviction, and a moral strength that noting that Mr. Ricupero had also Raghavan will get. is increasingly difficult to find these pointed that out in his foreword to the days in almost every walk of life but The credit he will get, as Mr. Ricu- book. particularly in the world of journal- pero says (in his foreword), is the es- ism," he said. Prof. Nayyar also recounted a story teemed gratitude and admiration of which he said he had not told Mr. those friends or professional col- Prof. Nayyar said he remembered Raghavan till now, when both he and leagues who have known him for a vividly the early days when Mr. former US Trade Representative Clay- lifetime, for the person that he is, not Raghavan had started the SUNS - and ton K. Yeutter (1985-1989) were at a just for his professional qualities but as Mr. Ricupero has said in the fore- small brainstorming session some- for his human qualities (as well), said word to the book - "it was an idea in where in Austria, where Yeutter had Prof. Nayyar. the head and a typewriter in hand" in a said to him over a drink in the evening small cubicle in the Palais des Nations He ended with an epitaph from Mr. that ‘you know, I hate Ambassador (the UN's European headquarters in Ricupero's foreword to the book in Shukla's guts. He's a real nuisance to Geneva) where his office was. that Mr. Raghavan "has helped us res- me, but I would give twenty of my best cue knowledge from the world of in- He recounted that Mr. Raghavan people to have one Shukla on my side.' formation and wisdom from the world was banging away at the typewriter Prof. Nayyar recalled Yeutter as of knowledge because he is able to see producing column after column of rig- also saying about Mr. Raghavan that ‘I the wood from the trees." orous analysis and authentic infor- hate Raghavan's guts. He is a real nui- mation about what was happening in Dr. Yilmaz Akyuz, Chief Economist sance but he has a capacity to tell the

Page 6 ● South Bulletin ● Issue 80, 30 June 2014 at the South Centre and a former chief met Mahatma Gandhi and spent 10 even in India." economist of UNCTAD, recounted that days with him at a camp in 1945 and Mr. Raghavan further said that he when he was at UNCTAD, he was fol- that had changed his entire outlook in lowing in the publication SUNS not life, and eventually led him to come to tried to connect the past with the pre- only what was happening in Geneva Geneva. sent and he did look up and as far as but also at UNCTAD, and that in his possible, provided footnotes so that As far as his book is concerned, Mr. writings, Mr. Raghavan often com- people can also look at it and see Raghavan said that the editors (at mented particularly on (UNCTAD's whether what he was saying was cor- Third World Network) had put togeth- flagship publication) the Trade and er "what we thought from all my writ- rect or whether he was just bluffing. Development Report. ings, things that may be of some more He had also tried to provide a dif- "And from time to time we could lasting value than the ephemeral daily ferent narration. He explained later find things which we didn't realise that reports of news and views." that there were two kinds of narration we [had] said," Dr. Akyuz said, adding of the past. One was a paternalistic He noted that most of the material that in discussions (among friends), it was typewritten and had to be digital- view of imperialism and colonialism was asked, ‘did we really say that? This ised, and that when this was done, it and the attempts of metropolitan pow- is quite interesting.' was found that there was a need to ers to "civilize", modernize and im- He said that Mr. Raghavan was tak- connect the past with the present, oth- prove conditions of people and bring ing the report and putting the natural erwise, it did not make any sense in them up to self-governance. The other consequences - "perhaps we were too merely reporting what had happened was the Niall Ferguson variety of justi- shy to do it being in the UN bureaucra- in Geneva or in New York between fication and praise of imperialism. cy" - and in this process, they learned a those years that were covered in the He said that he did what he could lot not just in terms of analysis and book. from a different perspective, merely in events but also in terms of the politics It was also decided that trade was to order to tell that it is not as if people in of the international system. be separated from everything else, be- the past have not lived through this Mr. Raghavan then spoke and in cause "trade itself is a peculiar animal, and "those who forget the past cannot thanking the audience, he remarked and we don't know what kind of an have a future or rather cannot influ- that fortunately God had given him a animal it has come from and where it is ence the future. That is the one partic- natural tan, hence, he could not blush. going to go." ular aspect of life we all need to re- member." "I don't think I have done anything Mr. Raghavan recalled that it took very extraordinary at least not very him quite a while to write the connect- He expressed hope that the audi- different from what people of my gen- ing history, asking ‘how do you write ence would enjoy his book and draw eration were taught or we learned," he what happened before the war', as he some benefit out of it. said, pointing out that he grew up in did not write before the war. In any event, Mr. Raghavan con- colonial India, in a place called Madras, He said that in India, he did not cluded, as the saying goes in his part where as he grew up he came into con- write under his own name, and that of the world: ‘if you are prepared to tact with some big personalities (of the the first time he wrote under his own discard what I have said [as] utter Independence movement). name was when he came to Geneva nonsense, then you should not hesitate Pointing out that he was a physics and that it was translated and pub- to say so.' graduate and that he did not know lished in Spanish. Kanaga Raja is a Geneva-based anything at all about economics and "And I suddenly became a very fa- journalist who writes for the South- was in fact trying to qualify in actuarial mous person in Latin America but not North Development Monitor (SUNS). science, Mr. Raghavan said that he had

The African Union Trade Commissioner, H. E. Mrs. Fatima Haram Acyl (right), asking Prof. Carlos Correa, Special Advisor on Trade and Intellectual Property of Mr. Chakravarthi Raghavan (left) to sign her copy of the book. the South Centre (left), and Mr. Chakravarthi Raghavan (right).

Page 7 ● South Bulletin ● Issue 80, 30 June 2014 South Centre Conference: The Global Economy and State of Multilateral Negotiations The South Centre convened its annual conference entitled “The Global Economy and State of Multilateral Negotiations”, on the 19th of March 2014 at the Palais des Nations in Geneva. The conference served as an opportunity to reflect on the state of the South and the world economy through two major sessions; one was dedicated to discussing the state of the global economy and another addressed trade and development issues, including the state of multilateral negotia- tions. Reports on the Conference written by Kinda Mohammadieh

Chairman Benjamin W. Mkapa’s Opening Speech

n behalf of the South Centre, I oping countries with multilateral ne- O welcome you to our confer- gotiations, and a review of some of ence, being held in conjunction with these negotiations is very topical. the meetings of the Council and We have assembled some eminent The Chair of the Board of the South Centre, H.E. Mr. Board of the Centre. Benjamin W. Mkapa, making his opening speech. experts of the South to address these The themes of the conference are issues, and we are very happy that in our view were not appropriate the global economy, which will be you have assembled here to discuss either for their own economies or for discussed this morning, and the state what they have to say. the global economy. Their policies of multilateral negotiations, in the The global economy has not really are hurting the developing countries. afternoon. recovered from the 2008 financial For example, due to their easy mon- We have chosen these topics crisis. Indeed, the South Centre pre- ey policies, a lot of speculative capi- because the Centre believes that the dicted that when the Western econo- tal went into the developing coun- global economic conditions and how mies begin their recovery, the devel- tries. This boom created problems they affect developing countries is oping countries would be in even big- including inflation, asset bubbles, and now a crucial issue that will be of ger trouble. Reality is now showing exchange rate appreciation that re- immense importance to our policy that our prediction has been correct. duced our export competitiveness. makers and political leaders. On the The developed countries have made Now that the US easy money other hand, the South Centre's bread policy choices during their crisis that policy is tapering or being reduced, and butter activity is to help devel- the reverse problems are evident. Capital is flowing out of developing countries back to the US and Europe, and currencies are depreciating, making it harder to service external debt. The balance of payments defi- cits of some countries are widening. The prospects for commodity prices are not bright. The GNP growth rate has reduced.

We are waiting eagerly to listen to our own South Centre chief economist, and to the many other experts in the first panel. Can devel- oping countries do anything to get the developed countries to correct their policies? Can developing coun- The first session of the South Centre Conference discussed the state of the global economy. tries do something to defend them- The conference was held on 19 March 2014 at the Palais des Nations in Geneva. selves if the misguided policies of

Page 8 ● South Bulletin ● Issue 80, 30 June 2014 the West continue? How will devel- I understand that in Geneva, the gotiations. oping countries be affected and what WTO negotiations have revived, and On the SDGs and post- 2015 devel- can they do? with this revival come many oppor- opment agenda, the South Centre has tunities and dangers. The most im- The second panel discussion is done a lot of work in this area, and I portant principle is that the devel- equally interesting. The crucial ne- look forward to listening to the dis- opment dimension and objective of gotiations now taking place are cussion on this, as well as on com- the Doha Development Agenda about trade, about intellectual prop- modities. must be respected and adhered to erty, and about the post-2015 devel- not only in rhetoric but in the out- I wish all of you good discussions opment agenda and the SDGs. We comes. Otherwise it is better to con- at this conference, which I now declare have eminent experts to address the tinue fighting for it, than to give in opened. Thank you. WTO's Bali outcome and the post- to the developed countries, just be- Bali agenda. We also have experts cause we want to conclude the ne- who will discuss the commodities issue, and the issue of climate change from indigenous peoples' perspec- tive. As for myself, I believe that the Economic Partnership Agreement which the EU is trying to get African countries to agree to, is the most critical trade and negotiations issue facing Africa. If the EU's model is accepted, it would cause immense damage to our agriculture, industry and development prospects. It will also make it very difficult if not im- possible to achieve effective eco- nomic integration within the African continent, which has been a dream of our political leaders since independ- ence. A view of the audience during the South Centre conference. North’s policies affecting South’s economies

stability. He reminded the participants ed. There is fear that the crisis is mov- that while his analysis indicated that ing to developing countries, he added. developing countries could benefit in Dr. Akyuz noted his concern in some respects in the short-term, nota- regard to the longer-term prospects bly from the policy of easy money, he for three main reasons. First, the crisis had highlighted that they would be and policy response aggravated sys- exposed to serious shocks in the fu- temic problems, whereby inequality ture. widened. Inequality is no longer only Dr. Akyuz noted that there is little a social problem, according to Akyuz, to add to what was previously said, but also presents a macroeconomic

Dr. Yilmaz Akyuz, chief economist of the South Centre, except that these arguments are no problem. Inequality is holding back giving his keynote speech during the conference. longer wild guesses or prognostica- growth and creating temptation to rely tions, but hard reality. He called for on financial bubbles once again in or- r. Yilmaz Akyuz, chief economist reassessing the situation and thinking der to generate spending. Secondly, D of the South Centre, delivered the of ways to respond to a renewed tur- global trade imbalances have been keynote speech of the first session. moil. redistributed at the expense of devel- oping countries, whereby the Euro Dr. Akyuz highlighted that the Dr. Yilmaz Akyuz commenced his zone - especially Germany - has be- world economy is not in a good shape, keynote presentation by noting that, come a deadweight on global expan- despite cautious optimism from the since the onset of the crisis, the South sion, Akyuz added. Third, systemic IMF. Six years into the crisis, which Centre has argued that policy respons- financial instability remains un- was declared recession at the begin- es to the crisis by the EU and the US addressed, despite the initial enthusi- ning of 2007, the US has not fully re- suffered from serious shortcomings asm in terms of reform of governance covered, the Euro zone has barely that would delay recovery and entail of international finance, and in addi- unnecessary losses of income and jobs, started recovering, and developing and also endanger future growth and countries are losing steam, Akyuz not-

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tion there are new fragilities added debt workouts and fiscal stimulus nor threat of deflation due to under- due to the ultra easy monetary policy. attempts to discuss what outcome consumption has been rising. Until could have resulted from such alterna- 2008, deflation was avoided thanks to Moreover, China is not only mov- tive interventions, he stressed. bubbles in the United States and the ing to slower growth but can also face European Union and several emerging Akyuz reviewed the situation in hard landing due to the debt overhang economies. These bubbles have led to various regions. According to him, the created by its response to fallouts from deepening fragility and crisis. Yet, situation in the United States has been the crisis, Akyuz added. According to what is witnessed today is a temptation better than other advanced economies. him, the situation of China is becom- to rely once again on asset and credit The United States dealt with the finan- ing a problem rather than a solution. bubbles for growth, Akyuz added. He cial but not with the economic crisis, Furthermore, Akyuz was of the opin- noted that Lawrence Summers and whereby recovery has been slow due to ion that developing countries have not Paul Krugman argue that there is a fiscal drag and debt overhang, he ex- responded to the situation properly, constant demand gap in the United plained. Akyuz noted that employment thus often failing to manage booms in States, which would face circular stag- is not expected to return to pre-crisis commodity prices and capital flows, nation without bubbles that have been levels in the United States before 2018. which made them vulnerable to finan- driving growth since the 1980s. cial shocks. As for the Euro Zone, Japan, and Akyuz addressed trade imbalances the United Kingdom, Akyuz noted that The policy response to the crisis has noting that they have not been re- all had second or third dips since 2008. been an inconsistent policy mix, in- moved, but redistributed. East Asian None of them have restored pre-crisis cluding fiscal austerity and ultra-easy surplus dropped sharply and Latin incomes and jobs, Akyuz added. The monetary policy, Akyuz explained. America and Sub-Saharan Africa Euro Zone has been struggling to turn While the crisis was created by fi- moved to large deficits, Akyuz noted. the corner from recession to recovery, nance, the solution was still sought Developing countries’ surplus fell from according to the IMF. Akyuz high- through finance, he cautioned. Coun- USD 720 billion to USD 260 billion. On lighted the prospects of seeing the Euro tries focused on a search for a finance- the contrary, advanced economies Zone heading into deflation. He high- driven boom in private spending via moved from deficit to surplus, whereby lighted the weak demand, which asset price bubbles and credit expan- the United States’ deficits fell and the stands at 5% below 2008 levels, includ- sion. Fiscal policy has been invariably Euro Zone moved from USD 100 billion ing 15% lower than 2008 levels in the tight. The ultra-easy monetary policy deficits to USD 300 billion surplus. created over USD 1 trillion fiscal bene- periphery countries. Financial stress fits in the United States, which was has eased in the Euro Zone, although Of three main surplus countries, more than the initial fiscal stimulus, there is still high fragility and more Japan started running deficits from mid Akyuz noted. The entire initial fiscal turmoil could be possible in 2014, -2013 while China’s surplus declined stimulus in the United States was lim- Akyuz noted. According to him, the sharply after 2007, Akyuz added. Ger- ited to USD 800 billion. recovery has been too weak to generate many replaced China with a surplus of jobs and the jury is still out on the situ- 7% of GDP. Unlike in China where Akyuz indicated that there was ation of the Euro. strong exports complemented buoyant reluctance to remove debt overhang domestic spending, in Germany ex- Advanced economies, including the through comprehensive restructuring ports offset sluggish domestic demand, United States, European Union, and (i.e. for mortgages in the United States Akyuz explained. The German surplus Japan have witnessed potential output and sovereign and bank debt in the has been falling against that of the Euro constantly falling below usual trends European Union). Thus, the focus was Zone periphery, Akyuz explained, but because of the lack of investment and on bailing out creditors, he noted. rising against the rest of the world. declines in labor participation, accord- There was also reluctance to remove Competitive disinflation (i.e. internal ing to Akyuz. mortgage overhang and no attempt to devaluation), lid on wages and domes- tax the rich and support the poor – He added that inequality has been tic demand, and deflationary bias are particularly in United Kingdom and widening, whereby the top 1% in the witnessed across the world economy the United States - where marginal tax United States captured the entire in- and not just in the Euro Zone, he add- rates are low compared to continental come gains in 2009, and wealth has ed. Europe, Akyuz added. There has been been further concentrated. Bank prof- Akyuz noted that until recently the resistance against permanent moneti- its soared and Wall Street bonuses have impact of easy monetary policy has zation of public deficits and debt, been back to historical highs, while the been felt mainly in asset markets, which according to Akyuz does not ‘too-big-to-fail’ banks are today bigger, stocks hitting historical highs without pose more dangers for prices and fi- Akyuz added. nancial stability compared to the ultra- much wealth effect, and in surges in easy monetary policy. In the Euro Zone, the periphery has capital flows and bubbles in emerging joined Germany in the trend of wage economies. But household borrowing Akyuz noted that the International suppression, Akyuz noted. Real wages in the United States has been rising Monetary Fund (IMF) and central in the United Kingdom are not ex- again, Akyuz noted, whereby the last banks have been releasing evidence pected to go back to pre-crisis levels quarter of 2013 saw the largest increase that without the ultra-easy monetary before 2020 even with accelerated in household debt in the United States policy the crisis would have been growth, he added. Downward trend in since 2007. deeper. Yet, there is no discussion of the share of wages has been accentuat- Ultra-easy monetary policy is still an alternative policy mix, including ed, Akyuz highlighted, whereby the

Page 10 ● South Bulletin ● Issue 80, 30 June 2014 Akyuz noted. Many portfolio (carry- trade) investors in emerging econo- mies are leveraged, he added, all of which are highly susceptible to swings in the United States’ monetary policy. Several deficit developing coun- tries with asset, credit, and spending bubbles are particularly vulnerable, Akyuz stressed. Countries with strong foreign reserves and current account positions would not be insu- lated from shocks, as seen after the Lehman crisis. When a country is inte- grated in the international financial system it will feel the shock one way or another, although those countries Dr. Yilmaz Akyuz (extreme left) making his keynote presentation at the conference. with deficits remain more vulnerable, Akyuz stressed. on, Akyuz stressed, whereby interest during pre-crisis expansion, thus allow- rates are still unchanged. He clarified ing to shift focus to domestic demand. In regard to policy responses in the that tapering is not tightening or exit- case of a renewed turmoil, Akyuz However, developing countries have ing from the ultra-easy monetary poli- called for avoiding business-as-usual, lost steam as recovery in advanced cy. Exiting this policy would mean including using reserves and borrow- economies remained weak or absent reducing and normalization of the Fed- ing from the IMF or advanced econo- due to the fading effect of countercycli- eral Reserve’s balance sheet and short- mies to finance large outflows. The cal policies and the narrowing of policy ening maturity of assets held by the IMF lends not to revive the economy, space, Akyuz explained. He also added Federal Reserve. Yet, there is still un- he noted, but to keep stable the debt that China could not keep on investing certainty about normalization of the levels and avoid default. He also ar- and doing the same thing. Another fac- Federal Reserve’s balance sheet. Akyuz gued against adjusting through re- tor contributing to the change of context stressed that it would be difficult for trenching and austerity. in developing countries has been the the Federal Reserve to exit without dis- weakened capital inflows that became Akyuz called for finding ways of ruption, or to maintain its policy with- highly unstable with the deepening of bailing-in foreign investors and lend- out creating bubbles. The longer the the Euro Zone crisis and then Federal ers, and using exchange controls and ultra-easy monetary policy is kept the Reserve’s tapering. Several emerging temporary debt standstills. Akyuz more abrupt the exit would be, Akyuz economies have been under stress as stressed that the IMF should support noted, which creates a dilemma for markets are pricing-in normalization of such approach through lending into emerging economies. monetary policy even before it has arrears. Akyuz highlighted that as tapering started, Akyuz pointed out. More importantly, Akyuz under- comes to an end and the Federal Re- Akyuz added that the external fi- lined, the Federal Reserve is responsi- serve stops buying further assets, the nancial vulnerability of the South is ble for the emergence of this situation attention will be turned to the question linked to developing countries’ integra- and should take on its responsibility of exit, normalization, and the expecta- tion in the global financial markets and and act as a lender of last resort to tions of increased instability of finan- the significant liberalization of external emerging economies, through swaps cial markets for both the United States finance and capital accounts in these or buying bonds as and when needed. and the emerging economies. This exit countries. These include opening up These are not necessarily more toxic will also create fiscal problems for the securities’ markets, private borrowing than the bonds issued at the time of United States, he added. For as bonds abroad, resident outflows, and opening subprime crisis, Akyuz noted. He was held by the Federal Reserve mature up to foreign banks. While developing of the opinion that the United States and quantitative easing ends, long- countries did not manage capital flows has a lot at stake in the stability of term interest rates will rise and fiscal adequately, the IMF did not support in emerging economies. benefits of ultra-easy monetary policy this area, tolerating capital controls only would be reversed. Akyuz also called for addressing as a last resort and on temporary basis. systemic issues, including governance In regard to the South, Akyuz noted Akyuz added that while sovereign of international finance, which was that the initial resilience of developing debt in emerging economies is leveled addressed in the Outcome Document countries could be associated with off as proportion of GDP, foreign pres- of the 2009 UN conference on the three main reasons, including: the ence in local credit and bond markets World Financial and Economic Crisis quick recovery of capital flows; the have been increasing. Private borrow- and its Impact on Development. Chinese massive investment package ing abroad has been massive in China, Akyuz called upon developing coun- that gave a boost to commodity export- India, and Brazil, while corporate bond tries to put this issue on the Post-2015 ers; and the countercyclical response in issues and interbank borrowing have agenda. developing countries that was made been at record levels in these countries, possible by improved fiscal balances

Page 11 ● South Bulletin ● Issue 80, 30 June 2014 Effects of crisis & recovery on South countries r. Deepak Nayyar, emeritus pro- the underlying factors are different, D fessor of economics at Jawaharlal Nayyar cautioned. Yet, there is little Nehru University and member of the doubt that initial conditions, policy South Centre’s board, addressed the responses, and domestic demand situation of developing countries in the shaped resilience, Nayyar added, while aftermath of the financial crisis, while prudence in deregulation and liberali- focusing on their real economy varia- zation of financial sectors made a dif- bles. He noted that developing coun- ference along with fiscal space availa- tries on the whole have fared better ble to governments. than industrialized and transition econ- The significant increase in the share omies in the aftermath of the crisis. Yet, of developing countries in world in- some high-income emerging economies Prof. Deepak Nayyar (centre) giving his speech come and trade meant that there were at the South Centre conference. that depend on exports to the United external resources and markets availa- States and the European Union were Union have been challenging factors, ble to them, other than the industrial- hard hit, Nayyar noted. In contrast given that exports to those markets ized countries. some large developing countries did were critical for China. not fare badly. For example, the growth This performance of several emerg- However, the slowdown in other performance of Sub-Saharan Africa and ing economies led some analysts to the larger developing countries is attribut- some least developed countries has wrong conclusions, whereby they pro- able significantly to their own mis- been robust. posed that these countries could drive takes, Nayyar stressed. Macroeconom- the recovery in the world economy, Dr. Nayyar explained that the im- ic policies are back to being pro- Nayyar cautioned. Yet, the pact of the global crisis was less ad- cyclical, high interest rates have stifled ‘decoupling’ theory does not hold, verse due to four factors, including the investments, attempts to reduce fiscal Nayyar stressed. It is clear that these robust initial conditions before the cri- deficits have curbed public spending

countries cannot turn into engines of sis, specifically macroeconomic stabil- and domestic demand, strong ex- growth for the world economy, and ity, moderate inflation, and large for- change rates to sustain portfolio invest- none of these countries could provide eign exchange reserves combined with ment flows have effected export per- resources for development, finances for economic growth. All of these factors formance, and the dependence on investment, or needed technologies as provided for structural stability at mac- these inflows of capital is currently Britain did in the 19th century and the ro and micro levels, Nayyar noted. greater. Nayyar pointed out that given United States did in the 20th century, he Other factors include the fact that the this reality, it is not a surprise that the added. Thus, the prospects and pace of financial liberalization was somehow announcement of the phase-out of recovery in the world economy de- restrained in many developing coun- monetary easing in the United States is pends on the pace and nature of recov- tries, safety nets for the poor and vul- having such strong impact on these ery in the industrialized world, particu- nerable were in place, and domestic economies. larly in the United States. consumption was helpful in many of Again, these recent developments the large economies. Nayyar noted that recovery has have led some analysts to hasty conclu- been slow, uneven, and fragile, and Professor Nayyar noted that the sions. In August 2013, Morgan Stanley prospects uncertain. It would seem that economic recovery of most developing presented Brazil, Indonesia, South Af- the problem has been compounded by countries was faster for three reasons. rica, Turkey, and India as the ‘fragile the return to orthodox economic poli- First was the fact that they adopted five’ economies, for they were too de- cies everywhere, he added. The United expansionary countercyclical macroe- pendent on foreign capital inflows to States and Japan seem an exception, conomic policies, which have been un- finance their current account deficits whereby there is a recovery in output usual till then in the developing coun- and support their growth. Soon after, but not much in employment. In the tries. Their response to the crisis was an asset management firm in Boston European Union countries, decisions to effective and fast. Second, the size of called ‘Fidelity’ coined the term sharply reduce fiscal deficits are being the home market made a difference, ‘MINTs’, standing for Mexico, Indone- implemented. Nayyar noted that he and the increase in demand came from sia, Nigeria, and Turkey. According to sees those approaches as possibly turn- segments of the population with a high ‘Fidelity’, the ‘MINTs’ are emerging ing out worse than the problem. propensity to consume. Third, the fi- economies with a promising future nancial sectors were less fragile and Many of the large developing coun- since the BRICS (i.e. Brazil, Russia, more regulated than elsewhere, and tries, and the so-called ‘emerging econ- India, China and South Africa) were did not absorb scarce resources from omies’ such as Argentina, Indonesia, running out of steam. Interestingly, stimulus packages or bailouts. Easy Turkey, China and others have experi- Indonesia and Turkey feature in both monetary policies in these countries enced slowdown in growth attributed groupings. It is clear that such thinking meant lending to the real sector, to the great recession in the developed is shaped by the conjecture and framed Nayyar underlined. economies, Nayyar explained. For Chi- in the shorter-term perspective, na, the slow recovery in the United Nayyar stressed. Generalizations are difficult when States and recession in the European In the medium-term perspective Page 12 ● South Bulletin ● Issue 80, 30 June 2014 such thinking is inappropriate, if not high proportion of young people constraint on growth in the future. misleading, Nayyar stressed. He point- means that the increasing workforce is They must ensure that benefits of eco- ed out that in contemplating the future conducive to growth provided educa- nomic growth are distributed more of the world economy, it is essential to tion spreads across society. Further- equally among peoples across and focus on a larger group of developing more, their wages are significantly low- within countries. countries and a longer-term perspec- er than the rest of the world, which is Nayyar cautioned that economic tive rather than the next quarter or next an important source of competitive- growth could not be sustained in the year. The time horizon to consider ness. long-term if it does not improve the should be 2025 instead of 2015, accord- In practice, the developing world living conditions of ordinary people. ing to Nayyar. will not be able to realize this potential This is the only sustainable way for- Nayyar underlined that there is due to constraints that may differ ward because it will enable them to much that developing counties can do across space and time, Nayyar cau- mobilize people for the purposes of in terms of correcting their policies; tioned. There are some general con- development and reinforce the process they could redefine macroeconomic straints such as poor infrastructure, of growth through a virtuous cycle of objectives and policies to make em- weak institutions, inadequate educa- cumulative causation, recognizing that ployment and growth the central objec- tion, unstable politics, and poor gov- there is an interaction between the sup- tives rather than focusing on managing ernance. There are constraints that may ply and demand sides. Wages could be inflation. They could also recognize arise from the process of growth such seen as costs on the supply side, which that external markets are at best com- as economic exclusion, social conflict, is what orthodoxy chooses to focus on, plements rather than substitutes to do- and environmental stress. There are Nayyar noted. But wages are also in- mestic markets. They could also begin other constraints that are external, such comes on the demand side that could to correct market fundamentalism and as worsening terms of trade, inade- drive growth, Nayyar stressed. He recognize the role of the state as critical quate sources of external finance, re- called for combining economic growth for recovery and sustained growth. stricted market access, possible crisis in with human development and social the world economy, in addition to oth- progress. In regard to the future prospects for er country specific constraints. larger developing countries, assuming In this process the real checks and that these corrections are introduced, Nayyar stressed that developing balances come from political democra- Nayyar noted that there is potential for countries need to introduce correctives cies. Nayyar concluded that in contem- growth but with real constraints. The in the management of their economies, plating the future of developing coun- determinants of potential growth in although this is easier said than done. tries, there is need to concentrate on a developing countries are a source of The biggest challenge lies within, be- larger group of developing countries good news, according to Nayyar, and yond policies and institutions that are and not only emerging economies, in principle these countries could sus- the focus of conventional wisdom, think of longer-term horizons, and tain high rates of growth for some time. Nayyar noted. shift the focus from short-term equilib- These determinants include their popu- rium to longer-term growth and from Nayyar called upon developing lation size that is large and income lev- the financial sector to the real sector of countries to address problems of rising els that are low. Thus, possibilities of the economy. inequalities that could be the dominant growth are greater. Moreover, their Four scenarios on world economy He was worried that policy makers in tion of slow growth, driven by efforts the South have been slow to register to rebalance private sector balance the kind of changes in the global econo- sheets and continuance of fiscal austeri- my and systemic weaknesses that have ty in advanced economies. This is likely been documented by Dr. Yilmaz to be a world of sluggish investment Akyuz. UNCTAD over the last few and persistently high inequalities, con- years has been critical of the ‘de- tinuing to hold back economic poten- coupling mythology’, as he called it, tial. This would come with a vague which developing country policy mak- hope that somehow the ‘confidence ers themselves have bought into. fairy’ will return to the private sector Dr. Richard Kozul-Wright (right) speaking at the UNCTAD has been warning that there and reinvigorate private demand in a South Centre conference. are hard choices to be made in macroe- way that could keep the recovery on r. Richard Kozul-Wright, director conomic policies and strategies in the track; coming years. D of UNCTAD’s division on Global-  The second scenario is of unsus- ization and Development Strategies Kozul-Wright explained that tainable economic growth, essentially (GDSD), commenced his presentation GDSD’s work identified four broad faster growth driven by the build-up of by underlining the likelihood of a scenarios facing the world economy: debt in the private sector, in which much more difficult macroeconomic housing booms would be a most likely  The first scenario is a ‘muddling- environment that could face the econo- source of expansion. Injection from mies of the South in the medium-term. through’ scenario, which is a continua-

Page 13 ● South Bulletin ● Issue 80, 30 June 2014 those asset booms of demand into the G20 promised to deliver when it was re as currently practiced it offers a seri- global economy would allow some -established in 2009/2010. ous alternative, Kozul-Wright noted. economies to contemplate export-led Kozul-Wright underlined that such a Dr. Kozul-Wright stressed that the recoveries based on which they would scenario of coordinated recovery has onus is much more on developing be able to revive their growth possibili- been far from what has been seen in country policy makers to rethink their ties. This would be a world in which practice. It is possible to attribute some policies and pursue more selective and global imbalances are likely to grow success to the G20 in regard to prevent- strategic policies, including better mo- and financial fragilities are likely to re- ing a spiral down of the crisis, and bilization of domestic resources. He emerge; bringing stability to the financial sys- added that in the case of Latin Ameri-  The third scenario is an instabil- tem. But there has been no sign that the can and African economies that have ity scenario in which the recovery G20 operated effectively to bring about been heavily dependent on external would be derailed by unruly unwind- a broader effective recovery, he flows, there is clearly a need to re- ing of the monetary stimulus, which stressed. orient policies to focus on internal would likely lead to recurrence of fi- markets as drivers of demand. This situation begs the question on nancial shocks and to a combination of why this kind of coordinated response Dr. Kozul-Wright stressed the im- currency and banking crises. This has failed to materialize. UNCTAD at- portance of limiting dependence on would present serious policy challeng- tributes that to four reasons, Kozul- external markets, while increasing es in emerging economies, with highly Wright explained. First factor is the wages as engines for growth. In this contagious possibilities. The role of the persisting dominance of unregulated regard, Kozul-Wright made reference Federal Reserve of the United States finance in shaping the larger policy en- to interventions such as minimum and the way it proceeds is pivotal in vironment. Most reforms to the finan- wage legislation and income policies. this kind of scenario; cial system have been cosmetic and in He also stressed the importance of  The fourth scenario would be a many instances non-existent. Second raising public spending and public coordinated recovery scenario, in factor is the heavy reliance on monetary investment, and the ongoing need for which a combination of monetary and policy of unconventional nature, which industrial restructuring, along the fiscal measures would be used to stim- restricted the policy options necessary need to revisit technology policies, ulate demand and to generate more for a balanced and coordinated re- and the role of development banks as expansionary response to economic sponse. Third factor is the continued an important source of credit expan- adjustments. This would be a scenario dominance of the US dollar at the same sion for longer-term affordable credit. time that the US has essentially forfeit- in which strong financial regulations Dr. Kozul-Wright underlined that ed its leadership role in the global econ- are used to reorient the nature of the the Post-2015 agenda does open up omy. Fourth factor is that South-South financial system from asset speculation real possibilities to articulate such cooperation, which has been flagged as towards boosting productive capacities kind of strategies in the multilateral a new hope for development in terms of in the real economy. Redistributive context. Yet, he argued that at this coordinating efforts in the global econo- measures would be used to deal with stage developing countries have a lot my, has yet to provide a meaningful inequalities that could hold potential of homework to do in order to ensure alternative, both in terms of policy coor- destructive implications for the world that these issues galvanize their posi- dination in the South and in terms of a economy. Such kinds of policies are tions in New York, since many of wider model for global policy coordina- viable and would have win-win conse- these issues are still not on the radar of tion. Despite the optimism that many quences for all parts of the global econ- developing countries’ negotiating po- have in regard to South-South coopera- omy. This was the scenario that the sitions in that forum. tion, it would be naïve to consider that The Latin American situation r. Humberto Campodonico, pro- Dr. Campodonico noted that in a D fessor at the National University globalized world one cannot speak of of San Marcos in Peru, commenced his complete decoupling. What it essential- presentation by noting the lack of a ly means, he added, is that a group of unified macroeconomic response to the economies move from dependence on crisis by developed countries, leading other economies, and have new en- the world to face the prospects of an- gines of growth different from the old other financial and economic crisis. engines. He noted that the consequenc- Dr. Humberto Campodonico (centre) speaking at es of the lack of unified response to the the South Centre conference. Dr. Campodonico tackled the ‘de- macroeconomic crisis and the implica- coupling thesis’ that was put forward hegemony from one economic power tions left on the BRICS countries and in 2006/2007/2008, including by the anymore. The world has witnessed others is a clear demonstration that de- IMF, which assumed that the newly such hegemony in 1944, when the Bret- coupling has not been the case. industrialized countries (i.e. the BRICS) ton Woods system was created, could take the relay when the devel- In regard to the role of the United Campodonico noted, and the world oped countries were faltering. States, he noted that today there is no economy functioned with this drive

Page 14 ● South Bulletin ● Issue 80, 30 June 2014 during 35 years. Yet currently the glob- interest rates rise, the outcome could be considered successful in their policy al context reflects a lack of such hege- problematic. He explained that the choices. He discussed the cases of Bo- monic forces. On the political side, problem would be limited in the case of livia and Costa Rica that he considered Campodonico referred to the cases of mining companies or other companies have fared very well. Dr. Campodoni- Ukraine, Syria, and the drive of China, trading in international currency com- co explained that Bolivia undertook which according to him reflect a lack of pared to the case of companies selling important reform with oil and gas such hegemonic force. He also referred in the local markets, whereby the mis- companies over the last two or three to the economic arena, where he re- match will be very hard to cover. There years. Real GDP has been growing flected on the situation at the WTO and is very little data on these aspects given (6.7% in 2013) and the overall fiscal in the Doha Round. He noted that that the debt is in the private sphere, balance improving, at a consistent when there were disputes between the Campodonico added. pace, and without current account defi- BRICS countries and the United States, cits. In Costa Rica, policy has been ori- Dr. Campodonico noted that gov- European Union, and Japan at the ented towards attracting innovation ernments in Latin America considered WTO, the move was towards free trade technology companies. Costa Rica has that current account surpluses and sol- agreements where WTO-plus rules explicitly stated that they do not want id fiscal positions would help them be have been pushed, including for exam- to depend on raw materials for their shielded against systemic risk. Yet, ple the Trans-Pacific Partnership (TPP) growth. these surpluses could evaporate very and Trans-Atlantic Trade and Invest- quickly, he stressed, especially that Dr. Campodonico summarized that ment Partnership (TTIP). Yet, this can- some of them are not current account the revenues gathered in recent years not be a solution on the longer term, reserves but borrowed money, includ- from natural resources have mostly Campodonico stressed. ing cash reserves accumulated at been already spent. There has not been After the 2009 UN Conference on banks. inter-temporal funds or pension funds, the World Financial and Economic Cri- like in Norway, and most of the reve- Dr. Campodonico added that Latin sis, the policy proposals addressed nues have been spent quickly in infra- America has witnessed improvements there have not been fully taken on, structure and current flows. So the bo- in terms of trade like nothing seen Campodonico cautioned. The US is not nanza has already passed and has not since twenty or thirty years ago, in ad- giving the IMF support in order to as- been sufficiently taken into account, dition to an increase in financial flows sume the role of lender of last resort. because the main framework of appre- since 2003. The question he raised was ciation was expecting these trends to Campodonico discussed the context about the way in which these improve- last many years. In the meantime, in- in Latin America, where he highlighted ments have been used. dustrial policies were not instituted. the divide between the free trade and The degree of utilization of these market policies adopted by the coun- Dr. Campodonico concluded by inflows in order to have structural re- tries of the Pacific Alliance (Chile, Co- referring to the technological revolu- form and in order to diversify the pro- lumbia, Mexico, and Peru) in compari- tion that the world is witnessing. He ductive base has not been very strong son to what are called ‘Atlantic poli- questioned whether these trends in in Latin America, Campodonico ex- cies’ involving Venezuela, Brazil, Ar- technological innovations could create plained. In this regard, the United Na- gentina and others. The latter adopted long-term cycles of economic growth tions Economic Commission for Latin more development-focused policies and whether they would leave positive America and the Caribbean (ECLAC) directed towards domestic markets and long-term implications on the econom- considered that Latin America has lost South-South trade, he explained. This, ic situation. the decade. Latin American countries according to Campodonico, is a con- have been mostly very complacent frontation that extends beyond eco- about this super cycle. nomic policies and involves geo- political aspects. He also called for distinguishing between export-led growth that in- Another issue raised by Dr. volves a big component of industriali- Campodonico was the growing debt of zation and state intervention, such as private corporations. He noted that the practice in South East Asia and Chi- Latin America’s problems during the na, compared to export-led growth in 1980s were mainly due to external pub- Latin America that has been orthodox- lic debt. Yet today, numbers show that based and focused on natural re- private corporate debt is very high. He sources. The statistics show a de- referred to new data released by the industrialization of Latin America. Financial Times, which shows for ex- UNIDO’s statistics show that Latin ample that Peru’s external private debt America diminished it values-added in has grown from 7% of GDP to 14.2%, manufacturing of developing countries which is bigger than external public from 35% in 1992 to 17% in 2010. debt. That is the case in other Latin American countries. Besides cautioning of potential diffi- culties ahead, Dr. Campodonico point- Campodonico noted that if tapering ed out that Latin America cannot be of the US ultra-easy monetary policy seen in one case or scenario and he ad- begins, and financial flows falter, and dressed a few country cases that he

Page 15 ● South Bulletin ● Issue 80, 30 June 2014 Countries’ policies are based on self-interest r. Charles Soludo, member of the flects coordination and harmonization. D South Centre’s board and former In the end, every country resorts to self- governor of Nigeria’s Central Bank, help approaches, Soludo noted. indicated in a general comment that in Dr. Soludo added that precisely at terms of the response to the crisis and the time that the global system might lack of coordination, what has been need slightly inflationary policies to witnessed is what one expects in the ensure speedy recovery, what we are real world. This is despite what one getting is the reverse. This, he ex- would ideally wish for. Yet, he called plained, is driven by domestic politics. for searching and identifying the coun- tries and sectors where opportunities Besides few cosmetic changes, neo- lie. liberalism is still alive and well, and Dr. Charles Soludo (left) giving his speech at the South Centre conference. dominates policy making everywhere, Dr. Soludo’s first point was that we Dr. Soludo underlined. Recovery re- er party, he noted, some countries are live in a multi-polar world, and the mains fragile and a new crisis remains prepared to sell their regions and the categories of developing and advanced probable or imminent, Soludo cau- entire coordination mechanism among countries are no longer useful. Most tioned. It is a race to the bottom as each them would then collapse. problems, including that of unemploy- country seeks self-insurance, he ex- ment and lack of jobs, poverty, climate Dr. Soludo cautioned that African plained. Part of this self-help is sought change, energy, and inequality are countries could suffer from intensified by the United States through the TPP faced by every country; the difference levels of poverty and inequality in the and by the European Union through the is a matter of the degree of the prob- next few years if their coordination vis EPAs, which represents a bail out lem. -a-vis the EPAs falls out. This will lead sought from the African countries and to wiping out the limited manufactur- Dr. Soludo explained that although ACP. ing capacity in the region. He under- categories are still needed, it is im- Soludo underlined the importance lined that the aid promised to African portant to realize that there are even of China’s economy to many other de- countries is not additional and in fact least developed countries that have veloping countries. He noted that China has been declining. He added that been achieving significant progress, for has been considered as the new market, Europe has its own crisis, and cannot example seeing growth rates exceeding especially for countries dependent on support others. 7% over several years. There are coun- commodities and oil, where much of tries getting by, while others are being In conclusion, Dr. Soludo noted their exports have been directed. Yet, left behind, he noted. that in a world with a dominant re- the old model that propelled China’s serve currency, where policy makers In regard to interconnectedness growth seems to be going out of steam. are most of the time preoccupied with and intensifying spillovers, Soludo not- The question is for how long can this domestic welfare and hardly deal with ed that trade as a share of GDP has approach continue, Dr. Soludo noted, global welfare, future crises happen to gone up to around 35%, while capital and what would happen to a lot of be almost an inevitable feature of the flows intensified more than 4 times these countries if China slows down. global economy as it is currently de- compared to 1995. Yet, the mechanisms Soludo was of the opinion that Chi- signed. However, Dr. Soludo stressed, of cooperation globally are limited, Dr. na may indeed need to live on bubbles not everyone will suffer in the same Soludo cautioned. for an extended period of time, espe- way. Increasingly, policy choices are cially for poorer developing countries serving narrow domestic interests and that shifted their dependence to China not designed taking into consideration to be able to continue to live. Other- the collective interests in a global con- wise, the greater and more devastating text. Less than one percent of policy threat could be resulting from a slow- makers’ attention is focusing on issues down in China. Dr. Soludo referred to we wish them to focus on such, as in- that situation as the ‘threat from within’ terconnectedness and spillovers, Dr. in the context of South–South integra- Soludo noted. tion. Dr. Soludo referred to an IMF cal- In terms of the outlook for coun- culation that showed that greater de- tries that are increasingly left behind, grees of harmonization between the Dr. Soludo referred to what he called main economies of the world would the ‘paradox of poverty’. He explained lead to an increase in the global GDP of that poor communities often have around 3% in the long run. Yet, reality greater incentives to bond together, but is that democracies and domestic pow- also have greater resentment among er bases in these countries make it im- them. So if some money trickles down The aid promised to African countries is not possible to respond in a way that re- or gets promised from the EU or anoth- additional and in fact has been declining.

Page 16 ● South Bulletin ● Issue 80, 30 June 2014 Attempts to further constrain South’s policy space

global imbalance and the international ization and interdependence are driven constraints that limit the policy space by Global Value Chains, and the only for the developing countries to identify way for any country to secure its share their priorities”. As an example he in the Global Value Chains is through mentioned the case of a developing extensive trade liberalization”. Howev- country that would like to formulate er, he added, “this approach neglects industrial policy to enhance its produc- the reality that the global imbalances tive capacity in an infant industry. He made the distribution of shares in considered that such a country could Global Value Chains entirely asymmet- be challenged by its international com- rical”. Ambassador Abdelnasser (second from left) making his mitments stipulated in the multilateral speech at the South Centre conference. Ambassador Abdelnasser recalled trade agreements that often shrink the UNCTAD’s breakdown of the distribu- policy space required for development gypt’s Ambassador in Geneva, tion of the global valued-added in 2013 needs. E H.E. Mr. Walid Mahmoud Ab- using OECD-WTO database, which delnasser, agreed with previous Ambassador Abdelnasser added shows the following: 67% accrue to speakers about the weakness of the that the attempts to further constrain OECD countries, 8% from Newly In- international economy, which he saw this policy space are incessant. The de- dustrialized Countries I (Singapore, still suffers from global imbalances and veloped countries are trying to estab- Hong Kong, Taiwan, Korea), 3% from structural complexities. Several years lish norms that go beyond the develop- Newly Industrialized Countries II after the onset of the financial crisis, ment priorities of the South, he noted. (Malaysia, Thailand, the Philippines), Ambassador Abdelnasser noted, the Those attempts are clear in the multi- 9% from China, 5% for other BRICS world economy remains in a state of lateral negotiations in all issue-areas, (India, South Africa, Brazil, Russia), 8% disorder. The burden of adjustment of including trade, climate change, intel- for all other developing countries and the global imbalances, which contrib- lectual property, investment, among LDCs. Those indicators clearly demon- uted to the outbreak of the financial others. In this context, the norm setting strate the structural constraints faced crisis, remains with the developing in various regimes focuses on establish- by the small players within the Global countries. In 2008 and 2009, there have ing global rules and high standards Value Chains, Ambassador Ab- been calls and willingness worldwide without paying a real attention to the delnasser stressed. for urgent reforms of the international various developmental needs of the Ambassador Abdelnasser conclud- monetary and financial system, how- developing countries, Ambassador ed that the global economy needs sys- ever, the issue disappeared from the Abdelnasser cautioned. international agenda, he recalled. temic reform to address the global im- For example, in the area of intellec- balances. Furthermore, development Ambassador Abdelnasser was of tual property, the focus remains on the must be placed at the core of the multi- the opinion that the outlook for the protection and enforcement of intellec- lateral negotiations in all issue-areas. global economy and for the interna- tual property and not on the technolo- tional environment enabling develop- gy transfer and the equitable benefit ment continues to be highly uncertain. sharing. It is ironic that some develop- The expansion of the world economy, ing countries, such as India, are being though favorable for many developing criticized for formulating development- countries, was based on unsustainable oriented intellectual property policy, global demand and financing patterns, Ambassador Abdelnasser stressed. In he added. Within this state of uncer- the climate change area, Ambassador tainty and volatility of the internation- Abdelnasser recalled the backtracking al economic environment, the develop- on the previously well-established ing countries that adopted the export- principle of ‘common but differentiated oriented growth model began to suffer responsibilities’, whereby the develop- due to unilateral economic measures ing countries are being asked to pay for taken by some developed countries, he the historical mistakes of the others. added. In the area of trade, the Doha Devel- Ambassador Abdelnasser stated opment Agenda has not yet been im- that “development is not properly ad- plemented after 13 years of stalemate, dressed in the international economic and there is no certainty that the previ- context”. He added that “there are at- ously expected developmental gains tempts to divert the responsibility re- will be harvested, Ambassador Ab- garding development from the interna- delnasser noted. He stated that tional scene to be confined only within “instead, the narrative that is being North-South relations are key to multilateral the national levels, while ignoring the promoted in trade policy is that global- negotiations.

Page 17 ● South Bulletin ● Issue 80, 30 June 2014 Book Launch: Catch Up A book launch of Catch Up, Developing Countries in the World Economy by Prof. Deepak Nayyar, Emeritus Professor at Ja- waharlal Nehru University, New Delhi, India and Vice Chair of the Board of the South Centre, was held in conjunction with the South Centre Conference held on 19 March 2014 in Geneva. Be- low is an abstract of the book.

he object of this book is to analy- The book explores the factors un- T ze the evolution of developing derlying this fall and rise to discuss countries in the world economy, si- the ongoing catch up in the world tuated in a long term historical pers- economy driven by industrialization pective, from the onset of the second and economic growth. Their impres- millennium but with a focus on the sive performance, disaggregated ana- second half of the twentieth century lysis shows, is characterized by une- and the first decade of the twenty- ven development. There is an exclu- first century. It is perhaps among the sion of countries and people from the Deepak Nayyar’s book Catch Up, Developing first to address this theme on such a process. The catch up is concentrated Countries in the World Economy wide canvas that spans both time and in a few countries. Growth has often space. not been transformed into meaning- Comments on the book ful development that improves the In doing so, it highlights the wellbeing of people. overwhelming significance of what are now developing countries in the Yet, the beginnings of a shift in the `Essential reading for anyone world until 200 years ago to trace balance of power in the world econo- who wants to get a balanced their decline and fall from 1820 to my are discernible. But developing understanding of the history 1950. The six decades since then have countries can sustain this rise only if witnessed an increase in the share of they can transform themselves into of the world economy. It of- developing countries not only in inclusive societies where economic fers a breath-taking historical world population and world income growth, human development and but also in international trade, inter- social progress move in tandem. sweep. A masterpiece. ´ national investment, industrial pro- Their past could then be a pointer to -Ha-Joon Chang, University of duction and manufactured exports their future. which gathered momentum after Cambridge, author of Kicking 1980. Away the Ladder and 23 Things They Don’t Tell You About Capita- lism

`Nayyar analyzes lucidly the ongoing change and dis- cusses forcefully the pros- pects for this great transfor- mation, how it will be brought about, and what it will imply for the world order which will emerge.´ -Joseph Stiglitz, University Profes- sor, Columbia University, New York, and Nobel Laureate in The book Catch Up by Deepak Nayyar was launched during the South Centre Conference held in Economics March 2014 in Geneva.

Page 18 ● South Bulletin ● Issue 80, 30 June 2014 Africa’s acute problems with the EPAs

Ambassador Nathan Irumba (left) giving his speech at the South Centre conference.

mbassador Nathan Irumba, exec- A utive director of SEATINI, said The second session of the South Centre Conference discussed trade and other development issues, that the greatest challenge facing Africa including the state of multilateral negotiations. at this moment is the negotiations of Application - Frontier Traffic - Customs and India in regard to Africa’s raw Economic Partnership Agreements Unions and Free Trade Areas’, the materials, the Ambassador noted. Af- (EPAs) with the European Union (EU). question arises on what constitutes rican countries insist that they need EPA negotiations have been going on ‘substantially all trade’ on which duties export taxes. Yet, on the question of since 2002. and other restrictive regulations of com- agricultural subsidies, the EU insists Ambassador Irumba highlighted the merce shall be eliminated for a free that this issue should be discussed interface among EPAs, the multilateral trade area to be considered compatible within the WTO and should not be trading system, and regional integra- with Article XXIV. discussed within EPAs. tion. He explained that the relation of Ambassador Irumba said that the Another contentious aspect high- the African, Caribbean, and Pacific EU Commission has taken advantage of lighted by Ambassador Irumba is the (ACP) countries with the EU was gov- the negotiations and Article XXIV of the most-favored nation (MFN) principle, erned by the Lome and Cotonou con- GATT to pursue the ‘Global Europe’ whereby he explained that the EU in- ventions, whereby the ACP countries agenda, whereas one would have ex- sists that any preferential treatment enjoyed non-reciprocal trade prefer- pected the negotiations to be confined offered by African countries to emerg- ences. The relationship was based on to minimum provisions that conform to ing developing countries, such as In- three pillars: dialogue, development the principles of the WTO. The ap- dia or Brazil, should be offered to the and finance, and trade. The Cotonou proach under the ‘Global Europe’ agen- EU as well. Yet, under the WTO, trade Agreement was judged to be incompat- da extends beyond the WTO require- among developing countries was sup- ible with the WTO rules. At the Doha ments. posed to be covered by the Enabling Ministerial Conference, the EU and Clause (1979), he highlighted. ACP countries were granted a waiver The EU Commission defined with a view to making the agreement ‘substantially all trade’ as requiring At all these levels, there is an at- WTO compatible. The negotiations on liberalization up to 80% of trade by tempt to go beyond what the African that track started in 2002. ACP countries, while the EU offered countries offered in the WTO and liberalization of 100% in return. That is what the WTO requires. Ambassador Irumba explained that considered quite deep liberalization, Ambassador Irumba also discussed the objectives of the partnership be- Ambassador Irumba underlined, and the question of the ‘rendezvous tween the EU and ACP countries in- wondered whether it will be in the in- clause’, whereby the EU requires part- clude ensuring sustainable develop- terest of African countries to undertake ner countries to commit to discussions ment, smooth integration in the global such liberalization. economy, and eradication of poverty. on issues like intellectual property and Principles enshrined in the partnership It was noted by Ambassador Irumba trade facilitation. So far, there are no are sustainable development, reciproci- that under the WTO negotiations on substantive negotiations on these are- ty, and special and differential treat- non-agricultural market access as, but the EU insists on a timetable in ment (SDT). As the negotiations (NAMA), least developed countries this regard, Irumba explained. emerged, tension was revealed among (LDCs) and most African countries are In regard to duty free quota free these principles, specifically the princi- not expected to undertake reductions (DfQf) market access, Ambassador ples of reciprocity and SDT, Ambassa- under the proposed formula. Irumba noted that this preference is dor Irumba noted. Another aspect highlighted by Am- offered under the Cotonou agreement. In terms of reciprocity, which is one bassador Irumba is the whole question As an interim measure, the EU in 2002 of the necessities of Article XXIV of the on the EU’s demand for prohibition or established a regulation that allows General Agreement on Tariffs and limitations on export taxes. The EU is African countries to continue access- Trade (1947) that addresses ‘Territorial worried about the appetite of China ing DfQf as negotiations evolve. Yet,

Page 19 ● South Bulletin ● Issue 80, 30 June 2014 the EU with full support of the Europe- an Parliament had lately announced that by the first of October 2014 any The post-Bali agenda at the WTO country that has not signed and ratified the EPA will be denied access and ben- finding a permanent solution on this efit from DfQf, Ambassador Irumba issue; and second is a due restraint underlined. provision that would apply in the in- terim until a permanent solution is Some countries like Kenya are pres- agreed. sured to sign. Yet, SEATINI is advising governments to consider the anatomy While the decision has some posi- of their exports to the EU before taking tive elements that are considered as a decision in regard to EPAs. Most considerable improvement over the exports by African countries to the EU draft text sent for the Bali Ministerial are primary commodities that are cov- Conference, Das noted, however there ered by the Generalized System of Pref- Mr. Abhijit Das (right) speaking at the South are additional conditionalities included erences (GSP), since the EU needs Centre conference. in the text at Bali that are likely to pre- them. The only two products that will vent developing countries from resort- be affected are flowers and fish, Am- r. Abhijit Das, head of the Cen- ing to the interim mechanism. Mr. Das bassador Irumba explained. In the case M tre for WTO Studies at the Indi- explained that the main assurance of fish exports, Mr. Irumba argued for an Institute of Foreign Trade, ad- gained in Bali, and which was missing prohibition of fish exports due to the dressed the outcomes of the 9th WTO in the text transmitted to the Ministeri- threat of depletion. Ministerial Conference held in Bali. The al, was that the interim due restraint first key outcome he discussed was the will remain in place until a permanent Furthermore, Ambassador Irumba binding agreement on trade facilitation solution is achieved. tackled the question of how the EPA (TFA). Mr. Das noted that the agree- negotiations affect regional integration. Apart from that, the Ministerial ment is a significantly diluted version He noted that although African coun- conference in Bali took a decision on in terms of binding commitments com- tries are supposed to gradually phase tariff rate quotas (TRQs), with the ob- pared to what was on the negotiating in tariff reductions, they would likely jective of making TRQs more transpar- table around nine months before the end up narrowing down the regional ent and ensuring they are filled at conference in Bali. That was possible markets for African products, which higher rates. In respect to cotton, the only because of stiff resistance and op- would end up having to compete with mandate given in the Hong Kong Min- position by developing countries, he EU products. Another issue highlight- isterial Declaration required countries noted. Yet, the TFA as finalized at Bali ed by Ambassador Irumba is accumu- to address this issue ambitiously, expe- does have a large number of difficult lation. African countries want to be ditiously and specifically. There has and onerous obligations that develop- able to cumulate with South Africa, as been no tangible progress towards re- ing countries have to implement, Mr. part of the regional integration among ducing cotton subsidies under this Das added. the Common Market for Eastern and mandate, Das explained. Under the Southern Africa (COMESA), East Afri- The agreement envisions a phased- Bali Ministerial Declaration, a transpar- can Community (EAC), and the South- in approach for implementation. It ency and monitoring mechanism in ern African Development Community gives WTO Member countries some relation to trade-related aspects of cot- (SADEC), yet the EU has been oppos- flexibility to self-designate, on individ- ton would be established, however the ing this process. ual basis, the provisions a country will core problem remains unaddressed, implement upon the TFA’s entry into Das noted. Ambassador Irumba called for pro- force, which would be considered tecting the space for Africa’s regional In respect to duty-free quota-free ‘Category A’ commitments. Countries integration. He cautioned that the Unit- (DfQf) market access, the Bali Ministe- have the right to choose amongst the ed States (US) is monitoring the EPA rial decision does not even match the remaining obligations which ones to negotiations and has gotten interested relevant decision taken at Hong Kong implement over what phasing period, in seeking a trade and investment in 2005, Das argued. The Bali decision Mr. Das noted. That is a significant agreement with East African countries. is considerably diluted as it merely flexibility that developing countries Whatever African countries offer to the requires countries to “seek to improve” should take advantage of. There would EU would be demanded by the US, their existing DfQf coverage, he ex- be pressures expected on countries to Ambassador Irumba noted. He stressed plained. limit their phase-in periods, but devel- that the next few months are critical as oping countries need to insist that the Mr. Das concluded that the Bali far as African countries are concerned Bali text offers flexibilities that should Ministerial Conference did not come with EPA negotiations. He called for be made use of, Das stressed. up with anything concrete apart from concluding lessons from the experience the TFA and food security decision. of the CARIFORUM countries that The second decision taken at Bali have signed EPAs yet did not achieve that Mr. Das addressed was that on There is one area where the Bali much gains so far from the agreements. public stockholding programs for food Ministerial Conference is very relevant security purposes. The decision has for the next twelve months, Das noted. two parts; the first part is a commit- The Trade Negotiations Committee ment to set a work programme towards (TNC) has been directed to prepare, Page 20 ● South Bulletin ● Issue 80, 30 June 2014 within the next twelve months (i.e. by legal grounds to argue that even if the sider the December 2008 text as a set- the end of 2014), a clearly defined work TFA gets incorporated into the WTO tled document and continue negotia- programme for the post-Bali phase. acquis of agreements, it can be imple- tions based on it. If that happens, then However, it is not clear whether the mented on a provisional basis. It needs the possibilities for improvements in work programme will result in cherry to be borne in mind that for more than the area of Green Box subsidies (i.e. picking of a few issues from the Doha four decades GATT itself was imple- the Green Box under the Agreement mandate or whether all Doha Round mented on a provisional basis. If some on Agriculture that is considered to issues will be addressed, Das cau- developing countries want to take such encompass non-trade distorting subsi- tioned. a stand, there are legal arguments that dies) will be lost, Das pointed out. could support such approach, Das un- While there is a mention of the While the initial mandate did not derlined. "work programme on the remaining talk on reducing Green Box subsidies, Doha issues", the intent appears to fo- In regard to the issue of public stock- it did mention the need to clarify and cus the work programme on a few is- holding programs for food security pur- improve the criteria of the Green Box sues, Das added. The work programme poses, Mr. Das recalled that the draft subsidies to ensure they are not trade is mandated to build on the decisions modalities of December 2008 had an un distortive or have minimal impact on taken at the Bali Ministerial Confer- -bracketed paragraph that would have production, Das explained. Good pro- ence, particularly on agriculture, devel- given considerable flexibilities for de- posals have been put forward by the opment and LDC issues. In addition veloping countries. That paragraph said G20 (i.e. coalition of developing coun- there is a mention of "all other issues that government stockholding pro- tries at the WTO pressing for ambi- under the Doha mandate that are cen- grams for food security purposes with tious reforms of agriculture in devel- tral to concluding the Round". Yet, the the objective of supporting low-income oped countries with some flexibility language keeps a window open for or resource-poor producers would not for developing countries) in 2007-2008 cherry picking of a few issues instead be considered part of the Amber box on the subject, but the group appears of addressing all remaining issues, Das (i.e. the box under the Agreement on to subsequently have lost steam on highlighted. If, indeed this is the case, Agriculture that usually covers trade this issue. then developing countries need to care- distorting subsidies). That should be Das cautioned that if the Green Box fully consider whether their interest the starting point of negotiations to- support is not disciplined, WTO mem- lies in abandoning the Single Undertak- wards a permanent solution for public bers would be missing out an oppor- ing concept, Das stressed. stockholding programs for food securi- tunity to have a close examination of ty purposes, Das noted. Das argued that if the post-Bali this area and to establish disciplines in work programme departs from the If that does not work, then WTO this area, especially given that the bulk Single Undertaking, such a step would Member countries can go back to one of of the agriculture subsidies by devel- raise serious questions in regard to the the alternatives proposed by the G33 oped countries have shifted from the WTO jurisprudence. He explained that (i.e. a coalition of developing countries Amber to the Green Box. some of the key landmark dispute cas- at the WTO pressing for flexibility for In agriculture, tariff simplification es have been decided on the basis that developing countries to undertake lim- was another area tackled by Mr. Das. WTO agreements have been negotiated ited market opening in agriculture), one He explained that while most devel- as part of a Single Undertaking. Ac- of which is to pursue further elabora- oped countries’ tariffs are on ad val- cordingly, Das questioned what would tion of Article 18.4 of the Agreement on orem basis, there are still a high num- happen to the jurisprudence if the post- Agriculture (AoA), which talks about ber of tariffs that are not on ad val- Bali work progamme departs from the giving due consideration to the implica- orem basis, but take the form of specif- Single Undertaking. tions of “excessive rates of inflation”. ic duties and compound duties. In the When it comes to trade facilitation, The G33 proposal proposes deflating case of the EU, many tariffs are based Das called upon developing countries the administered price and comparing on very complex matrixes, he added. to take fullest advantage of the flexibili- it with the 1986 to 1988 price, or taking The text on the table is rather liberal ties provided in the agreement in terms the other way around through inflating and would not result in big improve- of deciding which obligations to kick in the 1986-1988 price based on inflation ments in this area, Das noted. upon entry into force of the agreement indexes and comparing that to the ad- In the area of export subsidies, and which to phase in later. Develop- ministered price. If the December 2008 strict implementation of what was ing countries need to put resources into text is not found to be generating con- decided in Hong Kong could give de- mapping what they have of existing sensus, then the consideration of Article veloping countries some assurance trade facilitation capacities and what 18.4 of the AoA could be one way to go that export subsidies would be phased additional steps will be required on forward, but certainly this would be a out, Das underlined. He highlighted their part for implementing their obli- difficult issue, Das noted. that the Bali Decision provided that gations, Das underlined. This is neces- If the approach to the post-Bali work countries will ‘exercise utmost re- sary so that they can seek thereafter programme ends up to be a cherry pick- straint’ in using export subsidies, and technical and financial support. ing process, Das added, then develop- that is a fairly strong language. He A larger question that Mr. Das ing countries should identify the areas called for holding WTO Member posed was whether the TFA should be of key interest to them. countries accountable to that strong implemented on a provisional or defin- language. In agriculture, the dilemma before itive basis. Das noted that there are negotiators is whether they should con- Another issue highlighted by Mr. Page 21 ● South Bulletin ● Issue 80, 30 June 2014 Das was special safeguard measures tries, in the area of renewable energy, be updated in order to take account of (SSM). That is a new right that develop- are resorting to domestic content poli- this phenomenon, arguing that an in- ing countries were trying to acquire to cies. So it is just justifiable that devel- creasingly larger share of world trade counter surges in low priced imports. It oping countries should not be forced to is taking place through GVCs. These resulted in stringent conditionalities abide by disciplines on local content, countries could ask for negotiating being imposed on developing countries Das stressed. new rules on this issue. Such new rules wanting to use such SSM. There is a could include zero tariffs on products In the area of the agreement on Sub- need to ensure that if the SSM is final- that are covered by GVCs, very deep sidies and Countervailing Measures, ized it be devoid of such stringent con- liberalization in services that centre Das highlighted that one of the imple- ditionalities, Das stressed, so that it around GVCs, and prohibition of rem- mentation issues to be considered becomes a practical tool which can be edies on products that are covered by could be giving a certain flexibility to implemented whenever the need aris- GVCs, Das noted. It could also imply developing countries in offering export es. stringent investment protection rules credits. and restrictions of governments’ ability In the area of non-agricultural mar- In the area of the TRIPS agreement, to provide support to state-owned en- ket access (NAMA), the key challenge an area of possible interest to a large terprises, as well as a push towards for developing countries is sectorals, number of developing countries could upward harmonization across coun- according to Das. Sectorals were sup- be the links with the Convention on tries. It could also imply something on posed to be non-mandatory, yet there Biological Diversity (CBD), Das noted. labour standards, which was alluded have been pressures especially on There are quite a few proposals argu- to in the report of the panel set up by emerging economies that they must ing that in the case of a patent based on the previous director general of the join sectorals. Das acknowledged that traditional knowledge, there must be WTO, Pascal Lamy, which was entitled some emerging economies might catch full disclosure and prior and informed “The Future of Trade: The Challenges up with developed economies, but consent from the holder of the tradi- of Convergence” (24 April 2013). Many highlighted that such a catch up would tional knowledge as well as benefit of these issues, which developing happen in too far a future. So develop- sharing. Such proposals galvanize large countries have previously rejected, ing countries taking on obligations by support from developing countries and could come through the back door un- joining sectorals at this juncture would hold significant commercial der this approach. amount to taxing their future gains, value for developing countries. One Das concluded. The other challenge in Das cautioned that GVCs have a study, highlighted by Das, estimated this area is the request-offer approach, large number of asymmetries; the sig- that out of 111 plant-based drugs, 74% Das added. Instead of negotiating us- nificant portion of incomes in GVCs was estimated to have been in prior use ing a formula, the current approach essentially accrues to the lead firms by indigenous communities. Another appears to be shifting into a request- that are based in developed countries. study concluded that by using tradi- offer approach, whereby developing There are studies that clearly indicate tional knowledge as a ‘lead’, bio- countries will be exposed to huge that developing country firms are ef- prospectors could increase success ratio amounts of bilateral pressure. fectively prevented from undertaking in trials from 1 in 10,000 to 1 in 2. Clear- functional upgrading, which in turn Das also spoke about some im- ly such an implementation issue has a limits the possibility of increasing their portant positive agenda items for de- commercial value, Das stressed. incomes. GVCs might be a reality, Das veloping countries, to focus on in the Das underlined that the Doha man- noted, but he questioned whether area of ‘implementation issues’. These, date has strong language on trade policy measures are preventing he explained, have receded from the ‘implementation issues’, which notes countries from participation in their radar and countries have not been ad- that utmost importance shall be at- GVCs. He rejected this assumption, dressing them. He tackled three im- tached to these issues that shall be ad- highlighting that policies other than portant areas that could be of interest dressed on priority. Lots of work has trade policy are hindering developing to developing countries; been done between 2002 and 2005, after country participation in GVCs, calling In the area of the Agreement on which these issues became quite for addressing those issues first. Trade-Related Investment Measures dormant. Das stressed that the man- On climate change, Das noted that (TRIMS), one implementation issue date on addressing these issues exists, what could happen is the demandeurs was that developing countries shall yet what is required is for developing could seek flexibility whereby unilat- have another opportunity to notify ex- countries to take these issues as priori- eral trade measures taken pursuant to isting TRIMs measures which they ty. He underlined the importance of provisions of Article 3.5 of the United would then be allowed to maintain till reigniting coalitions among developing Nations Framework Convention on the end of a new transition period. An- countries to work on some of these is- Climate Change (UNFCCC) would not other issue in this area was that devel- sues. be challenged under the WTO's Dis- oping countries shall be exempted from Das went on to discuss issues be- pute Settlement Mechanism. That the disciplines on the application of yond the Doha mandate, whereby he could pose another barrier for exports domestic content requirements by noted that the most complex 21st centu- from developing countries, according providing for an enabling provision in ry issue is global value chains (GVCs). to Das. Articles 2 and 4 of the Agreement to Under the GVC narrative, he ex- this effect. It is clear from the work in Das concluded by stressing that the plained, some countries are expected to the subsidies committee and the TRIMS 21st century issues might seem demand that WTO agreements need to committee that even developed coun- (Continued on page 23)

Page 22 ● South Bulletin ● Issue 80, 30 June 2014 Strong resistance to FTAs and the new issues

know whether negotiations will really Ricupero added that developed resume in seriousness and whether they countries are forcing onto the negotia- will be conducted with a sense of ur- tions table issues that are not purely gency. trade matters like intellectual proper- ty, the unjustified expansion of patent Ambassador Ricupero alluded to owners’ rights beyond any reasonable what was discussed by Mr. Das and limit. They are trying to deepen liber- supported his points. However, Ricu- alization of financial services irrespec- pero highlighted that on selected areas, tive of the disaster that the deregula- such as on agricultural safeguards, ex- tion of financial services brought to porting developing countries would the US and to the countries that fol- Ambassador Ricupero (right) giving his speech find difficulties in granting safeguards lowed the US model in this area. De- at the South Centre conference. without any kind of conditionalities. veloped countries are trying to further Ambassador Ricupero noted that promote the ability of transnational mbassador Rubens Ricupero, most of the international interest in corporations to litigate against sover- board member of the South Cen- A trade negotiations lately has focused on eign states, Ricupero added. These tre, former minister of finance in the Trans-Pacific Partnership (TPP) ne- matters that are extra trade mainly Brazil and former Secretary General of gotiations or the Transatlantic Trade reflect the interests of big corporations UNCTAD, was of the opinion that and Investment Partnership (TTIP) ne- that want to expand their rents, Ricu- countries are facing a sort of ‘no man’s gotiations, and not on the post-Bali pro- pero stressed. land’ in terms of WTO negotiations. On spects or even on the WTO. He added one hand, they are no longer in the pre- Ambassador Ricupero positively that there is very scant interest in WTO Bali phase where there was enormous noted the rise of public awareness and matters outside Geneva. uncertainty whether the WTO would opinion on these issues. He highlight- be able to conclude the trade facilita- Regarding those two macro negotia- ed the refusal of US senators to grant tion agreement (TFA) and whether it tions (i.e. TPP and TTIP), it has been Fast Track authority because they are could survive as a viable negotiating interesting that contrary to the initial aware that such kind of extra-trade forum. expectations that these negotiations agreements will cost jobs and will ag- would be concluded in a few months, gravate the situation of inequality. The international community be- the actual prospects are much more Ricupero stressed that inequality is the lieved that it could not afford a failure subdued and resistance is growing, basic problem that is becoming the of the WTO, so there was a special ef- Ambassador Ricupero highlighted. unifying theme in building the re- fort made to reach a sort of success. What seems particularly new and inter- sistance against these kinds of negotia- What was achieved was a very relative esting is that the resistance is growing tions. People see that those negotia- and modest success, Ricupero stressed, inside the main proponents of the nego- tions will bring more inequality and but in a way it provided what it was tiations, basically in the United States more concentration of wealth and re- expected to do, which is just to show and in some European countries. sources, Ricupero added. It is a com- that the WTO is still alive and should fort to see that experts like Paul continue. Ambassador Ricupero re- This situation brings back to mind Krugman and Joseph Stiglitz are final- minded participants that we are not yet what happened in the so-called multi- ly starting to say what UNCTAD has in the ‘promised land’ and do not lateral negotiations on investment un- been saying for forty years at least, der the OECD initiative, Ricupero re- Ricupero highlighted. Sometimes even called, where there was an enormous the IMF is beginning to see the light in WTO post-Bali agenda... build-up of expectations and then the some aspects, according to Ricupero. negotiations collapsed. The collapse (Continued from page 22) resulted from the resistance that started Ambassador Ricupero concluded by stressing that his message focuses to grow inside the countries that were more engaged in those negotiations. on the need to go back to basics; in- attractive, but he called upon develop- stead of continuously bringing new Ambassador Ricupero noted that the ing countries to assess the ramifications issues into the negotiations, there is a so-called free trade agreement negotia- of agreeing to negotiate these issues need to deal with the old and indis- tions are focusing mostly on negotiating pensable issues that have been long and to carefully study the likely out- extra trade issues and in reality there is forgotten, including agriculture, tariff comes and whether these outcomes very little trade in those negotiations. peaks and escalations, the problem of will be to their benefit. Das was of the The old issues addressed in the Tokyo cotton, along the long list of issues that view that if there is no mutual benefit, and Uruguay Rounds, such as agricul- wait for some degree of fairness in then it makes sense for developing ture tariff peaks and tariff escalations, international economic relations. countries to come together like they did remain unfinished business. Among other issues, these remain an agenda in Cancun and take a stand against that developed countries refuse to ad- these issues whenever they are raised. dress until these days.

Page 23 ● South Bulletin ● Issue 80, 30 June 2014 Addressing the issue of commodities

they can benefit from the multilateral be kept in mind as issues influencing trading system. what happens in the multilateral trad- ing system, Mchumo explained. More- Mchumo called on developing over, among the issues that require countries to stand firm against the in- more national attention and wider in- troduction of new issues or non-trade ternational cooperation are adding issues, including the Singapore issues value to commodities and diversifica- that were previously rejected (except tion, Mchumo added. for trade facilitation). According to Ambassador Mchu- With regard to the process of nego- mo, there are three major concerns on Ambassador Ali Mchumo (left) making his tiations, Ambassador Mchumo empha- commodities that should be addressed speech at the South Centre conference. sized the importance of inclusivity and within the multilateral trading system; transparency, so that developing coun- mbassador Ali Mchumo, former tries take full role in the decisions tak- First, trade distorting measures in A Managing Director of the Com- en. He highlighted the importance of commodities’ trade that adversely im- mon Fund for Commodities and for- being creative during the post-Bali ne- pact the producers, such as tariff peaks mer Ambassador of Tanzania to the gotiations in order to allow issues that and escalations as well as market ac- UN and WTO, said that in the post-Bali are important for development to be cess and domestic support, and this of period at the WTO, developing coun- negotiated first. course is part of the negotiations on tries face the challenge of following up agriculture; Ambassador Mchumo discussed on the decisions taken in Bali, especial- also the issue of commodities, which he Second is the question of value ly the unfinished areas of the negotia- stressed remains a major issue that chains, which remains imbalanced. It is tions. In regard to the Trade Facilitation needs to be addressed. The importance common to see that only few multina- Agreement, Ambassador Mchumo of commodities for the economies of tional corporations control the procure- highlighted the need to address the gap developing countries - as a source of ment of commodities; for example in reflected in the lack of financial re- food and employment, as a source of the area of cocoa, only three multina- sources necessary to implement the foreign exchange, and as one of the tional companies deal with the pro- agreement and to ensure it results in main goods that many of the develop- curement of 60% of cocoa production. positive outcomes for developing coun- ing countries sell to the global markets In coffee trade, which is worth more tries. Otherwise, as it stands, the agree- - cannot be emphasized enough, ac- than USD 90 billion, less than USD 5 ment would help the main exporters cording to Mchumo. billion accrue to producers. Ambassa- rather than developing countries, dor Mchumo called for addressing this Mchumo noted. While commodities play such a ma- imbalance in the multilateral trading jor role in the economies of developing In regard to the future of the negoti- system and for empowering the com- countries, they remain marginally con- ations, Mchumo called on developing modity producers and developing sidered under the multilateral trading countries to emphasize the centrality of countries in order to have a bigger bar- system and in the WTO, Ambassador development in interpreting and im- gaining power in the multilateral trad- Mchumo highlighted. In fact, it is only plementing the WTO agreements. He ing system. in the Hong Kong declaration (2005) stressed that the preamble of the WTO that commodities were mentioned for Third is the issue of price decline agreement clearly emphasizes that the the first time as an issue of concern to and price volatility, which remains the main objective is to ensure that devel- the WTO. biggest and most long-standing prob- oping countries and peoples of the lem that needs to be addressed by the world have better living standards. One of the issues to be addressed in multilateral trading system in regard Accordingly, Mchumo added, the this regard is how to ensure that the to commodities. Ambassador Mchumo question of development should be at producers of commodities benefit from recalled the thesis of Prebisch and the center of all endeavors at the WTO. the multilateral trading system post Singer on this issue, who have high- Bali. According to Ambassador Mchu- Ambassador Mchumo was of the lighted that the prices of commodities mo, there are many elements in the opinion that the post-Bali negotiations in the long-term would decline com- commodities problematique; some should focus on completing the Doha pared to manufacturing. This is still could be addressed by national govern- Development agenda, and whatever true in the long-term cycle, Mchumo ments, and could require a wider has been achieved in Bali should only noted. But in the short-term cycles framework of international coopera- be part of a long process to fulfill this there could be price rises as have been tion. These include supply side prob- agenda. Mchumo emphasized the im- witnessed during the past few years lems, assisting in infrastructure in or- portance of giving concrete content to due to the increasing demand for com- der to ensure commodities reach the the special and differential treatment modities, including by China and In- market, irrigation, and storage. These (SDT) provisions in favor of develop- dia, Mchumo added. However over are issues that are not expected to be ing countries especially LDCs, so that the long-term, the prices of commodi- addressed within the WTO, but should ties will continue to decline vis-à-vis Page 24 ● South Bulletin ● Issue 80, 30 June 2014 industrial goods, according to Mchu- mo. Ambassador Mchumo added that Paradigm shift taking place in the question of price volatility is no longer a North-South issue, as there are major developing countries that play thinking on IPRs an increasing role in the export and import of commodities. Early attempts, standards that the US considers to be during the 1960s, to address price de- clines and volatility have failed. Mchu- appropriate in relation to IP. The case argues against India’s granting of a mo recalled the attempt to establish an international commodity agreement to compulsory license and attacks Sec- tion 3(d) of India’s patent act. Conse- address the supply and management of quently, India is facing the threat of commodities. He also noted that UNCTAD’s work on management of loosing trade preferences in the Unit- ed States that are estimated to be stocks in order to achieve price stabili- around 4 billion USD of exports. Dr. zation was another attempt. However, Dr. Carlos Correa speaking at the South Centre Correa noted that this action has been during the 1980s, the interests of devel- conference. prompted by business associations, oped countries on price stabilization decreased. including the pharmaceutical indus- r. Carlos Correa, special advisor try. Ambassador Mchumo called for on trade and intellectual proper- D According to Dr. Correa, there are thinking of a mechanism that allows ty of the South Centre, addressed cur- developing countries to have a say in rent trends related to the protection of two ironies in this situation. The first irony is that the United States has how to manage price stability and vola- intellectual property (IP) and made a granted the largest number of compul- tility. One of the causes of price decline few references to negotiations in this is the mismatch between supply and area. He recalled that during the last sory licenses in the world, amounting to thousands, including for pharma- demand, and accordingly there has twenty-five years, the trend in IP has been consideration of various supply been inclined towards expansion and ceuticals. In contrary, India has grant- ed one compulsory license for an anti- management schemes. The African increasing protection. The Trade- cancer drug because its price was ex- group in the WTO suggested in 2006 related Aspects of Intellectual Property that there should be a system whereby Rights agreement (TRIPs) had a very orbitant. A second irony is that there is no complaint submitted before the countries can negotiate how to estab- important role in globally increasing WTO claiming that India is violating lish supply management schemes us- this protection, Dr. Correa noted. In ing provisions of Article XXXVIII of the addition, the World Intellectual Prop- WTO rules. India is being judged un- der the rules that the United States GATT 1994. But this proposal has not erty Organization (WIPO) adopted been pursued since then. Mchumo also two treaties in relation to copyright considers unilaterally as best for the United States’ companies. If there highlighted the attempts to establish law that incorporate new standards in were violation of the TRIPs agreement compensatory finance mechanisms, this area. Furthermore, free trade which he considered to be an area that agreements contain substantive chap- by India, then there would be a case in front of the WTO. Consequently, Dr. could be revisited. ters on IP that incorporate a large number of TRIPs-plus standards, Correa noted that such action by the Ambassador Mchumo concluded by which increase the terms of protection United States is undermining the legit- highlighting the growing mood against for patent holders. This, according to imacy of the WTO system. He recalled the existence of institutions that would Dr. Correa, has been part of a trend a statement made by the South Centre manage commodity trade. In many towards expanding protection of intel- on March 4, 2014, whereby the Centre advanced countries, he noted, there is a lectual property rights. calls on WTO Members to respect the feeling that commodity institutions rights of other Members to avail them- should not be pursued and that the Dr. Correa explained that this trend selves to WTO flexibilities. markets should play their role in this has been strongly supported by unilat- regard. Japan, for example, recently eral action from developed countries. Dr. Correa questioned whether the trend towards expansion of IP protec- withdrew from the international coffee These actions have been mainstreamed tion is justified by evidence that such agreement. The Common Fund for through very different means, includ- Commodities is almost on its death ing intervention by Ambassadors, and protection would lead to more innova- tion and economic development. Ac- bed. In this situation, Ambassador efforts to make the case that these pro- cording to Dr. Correa the reply is that Mchumo stressed, think tanks should tections are important to increase ben- discuss how to revive the interest in the efits. there is no such evidence. On the con- trary, economic and academic studies, management of commodities so that Dr. Correa gave the example of the developing countries and LDCs that especially by American economists, pressures facing India in order to in- have been skeptical about the role that depend on these commodities could crease protection of IP. He explained intellectual property might play in fare better in the multilateral trading that an investigation was started in the promoting innovation. system. United States against India, arguing that the latter is not fulfilling the One of the studies recalled by Dr.

Page 25 ● South Bulletin ● Issue 80, 30 June 2014 Correa claims that such IP protection is do not think it is an accident that inno- According to Dr. Correa, these de- not promoting but might deter innova- vation has flourished in a society that velopments show that there might be tion. Dr. Correa quoted Scherer who is values an open, competitive economic some obstacles for further increase in a reputable Harvard professor. Scherer marketplace, nor where original inde- IP protection. has noted that “as economic studies pendent and free speech are enshrined Dr. Correa also demonstrated some have shown repeatedly, patents do not in law...Therefore our commitment to updates from selected developing play a particularly important role in vigorous competition, freedom of ex- countries where legislation were most fields of industrial innovation”. pression, and openness is a natural adopted or court decisions were taken Dr. Correa also referred to Gary Becker, product of the understanding of what that mitigate the effect of monopoly a Nobel prize winner, who has noted has helped our industry thrive, and rights conferred by intellectual proper- that “the current patent length of 20 what it needs to continue to do so”. ty. For example, through the amend- years (longer for drug companies) from These companies know that they are ment of its Patent Act in 2005, India the date of filing for a patent can be cut spending more money on lawyers than introduced a section that includes rig- in half without greatly discouraging they are spending on research and de- orous standards for the assessment of innovation”. velopment, according to Correa. They chemical and pharmaceutical inven- Furthermore, Dr. Correa recalled know that they could innovate better in tions, on which there is already a deci- Lerner’s work, who is a professor at an open system rather than in a system sion and interpretation by the court Harvard Business School. Lerner had based on strong appropriation of inno- that protects against ‘evergreening’ surveyed patent laws in over sixty vation. (The term ‘evergreening’ stands for countries and came to the conclusion granting patents for frivolous develop- Dr. Correa also highlighted the that strengthening patent rights result- ments that are acquired to block com- emergence of civil society involvement ed in an increase in filings from foreign petition by the generic industry.) in addressing the implications of an applicants with no effect on filings by increase in protection of intellectual More recently, Argentina adopted a local inventors. property, especially by organizations number of very specific guidelines for This paradigm shift about intellectu- working on issues related to the inter- pharmaceutical patents based on rigor- al property is growing so strong that net. Dr. Correa referred to the anti- ous standards in order to avoid prolif- two economists from the United States counterfeiting trade agreement eration of patents. Ecuador has also had published a study during 2013 (ACTA); he explained that there was an recently launched a comprehensive suggesting that public policy should attempt by the United States and a reform of its intellectual property sys- aim to decrease patent monopolies small group of countries to develop a tem, aiming at integrating intellectual gradually but surely, while the ulti- new agreement that would increase the property into its wider national poli- mate goal should be the abolition of enforcement measures in the area of cies. This, according to Dr. Correa, is a patents. intellectual property. This agreement good example of a country that is try- was negotiated in secrecy, and was put ing to integrate intellectual property as Dr. Correa stressed the importance forward for ratification by the group of an instrument within its national poli- of highlighting these trends because in countries that prepared it. Civil society cies and strategies and not an interven- Geneva the approach still insists on the organizations emerged against this tion that is developed in an isolated old argument that intellectual property agreement, taking into the streets in manner or copied from what is done in necessarily will promote innovation manifestation of opposing it. Many other countries. and economic development. Yet, what European countries, such as Poland, has been said and written as outcome South Africa was another example decided not to ratify this agreement. of investigations in developed coun- cited by Dr. Correa, where the govern- This movement was successful, and the tries is leading to a different approach. ment has announced the reform of the ACTA did not get the number of ratifi- intellectual property system, in partic- Another question raised by Dr. Cor- cations that was needed. It was rejected ular patents. South Africa is consider- rea concerned the possible limits or by the European Parliament by a vote ing the introduction of prior examina- changes to the upward trend in IP pro- of 478 against 39. tion of patents, in particular for phar- tection that has been witnessed during Another example given by Dr. Cor- maceuticals. Today, patents in South the last twenty-five years. On this issue rea relates to developments in the Unit- Africa are granted without examina- he noted that some elements may show ed States; there were two bills submit- tion, and consequently thousands of that maybe we are at a time where re- ted to Congress - one called ‘Stop patents are being registered for very lentless increase in intellectual property Online Piracy Act’ and another called minor developments. The government protection might to some extent be ‘Protect Intellectual Property Act’. of South Africa found that pharmaceu- stopped. Those bills would have allowed the US tical companies have been funding a Besides economists in the United government to block websites, even lobbying firm in order to derail its ef- States, concerns with the negative ef- foreign ones, on the ground that there forts to amend the patent system. fects of patents and IP in general are might be violations of intellectual prop- Dr. Correa referred as well to a de- increasing among businesses. For ex- erty. There was a very strong reaction cision taken by the Kenyan high court ample, the Computers & Communica- against these propositions, including a overturning the counterfeiting bill due tions Industry Association (CCIA) that number of street mobilizations. The to human rights considerations. He includes members such as Google, outcome was that these bills were not also noted other interesting court deci- Motorola, Microsoft, E-bay, and Yahoo adopted. sions in Ecuador and Argentina that had made the following statement: “we

Page 26 ● South Bulletin ● Issue 80, 30 June 2014 deny data exclusivity, which has been one of the demands of the US and the EU (data exclusivity refers to the pro- tection of clinical test data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug). Some governments, including de- veloped country governments, are in- creasingly becoming cautious about the upward trends of protecting intellectu- al property. For example, the Produc- tivity Commission in Australia has said that “an increase in intellectual proper- ty rights in a country which is a net Dr. Carlos Correa (extreme left) making his presentation at the conference. importer of technology is likely to ben- efit overseas rights holders dispropor- the first international treaty to estab- practitioners that more intellectual tionately compared with domestic lish an exception and not to increase property leads to more innovation and rights holders”. the levels of protection. economic development is not sustaina- ble. There are many ways in which In the UK, Professor Hargreaves’ To conclude, Dr. Correa underlined this assumption has been discredited, Report to the government indicated the possibilities for a paradigm shift in he added. Moreover, there is growing that “government should ensure that the international intellectual property skepticism about the positive effects of development of the IP System is driven regime. He stressed that there is a clear intellectual property, including in de- as far as possible by objective evidence. change in the way academics and gov- veloped countries. Dr. Correa called Policy should balance measurable eco- ernments think of intellectual proper- upon negotiators at WIPO and the nomic objectives against social goals ty, and which has impact on the way WTO to acknowledge that there is a and potential benefits for rights holders governments act and courts take deci- change in the way intellectual proper- against impacts on consumers and oth- sions. Also, the public is increasingly ty is addressed and thought of, and to er interests. These concerns will be of involved in trying to prevent the in- reflect this change in their negotia- particular importance in assessing fu- crease in the level of protection. The tions. ture claims to extend rights or in deter- academic community is strongly criti- mining desirable limits to rights”. cal of the intellectual property system, Dr. Correa ended his presentation both in developed and developing by referring to a proposal made by Dr. Correa also noted that some countries. Bolivia to declare living matters non- governments are being advised or are patentable, and a submission made by taking measures in order to avoid in- While some years ago there was Ecuador in connection to patentability creased levels of protection. For exam- some sort of policy monopoly on the of technologies that are sound for the ple, the Marrakesh Treaty that was re- IP discussion by IP experts or practi- environment. He called for looking at cently adopted in order to introduce an tioners, Dr. Correa was of the opinion these proposals in light of the shift of exception in the area of copyright for that this monopoly has been broken. paradigm on intellectual property. people with limited visual capacity is The simplistic argument made by the Climate change and indigenous rights

human rights and climate change, look at the lives of the peoples that are which according to her presents an most adversely affected. She high- enormous threat to a number of human lighted the case of the Philippines that rights, including the right to water, had suffered from typhoon Haiyan food, land and basic survival of peo- while climate change negotiations ples around the world. Climate change were taking place in Warsaw. She ex- usually affects the most vulnerable in plained that the Philippines is a mid- society, including the poorest commu- dle-income developing country, with nities, the indigenous peoples, and 7.6% GDP growth achieved in the first women. They are most affected by the half of 2013. Yet, the Philippines could impact of climate change even if they not cope with the devastation it faced. Ms. Victoria Tauli-Corpuz (left) speaking at the have not contributed significantly to It was estimated that a loss of 12 bil- South Centre conference. this problem, Ms. Tauli-Corpuz high- lion dollars resulted from the implica- lighted. tions of the typhoon. Those affected s. Victoria Tauli-Corpuz, execu- included 4.2 million people that were According to Ms. Tauli-Corpuz, the tive director of Tebtebba Foun- displaced and more than 300,000 peo- M human rights approach compels us to dation, highlighted the relationship of ple that are still living in shelters de-

Page 27 ● South Bulletin ● Issue 80, 30 June 2014 spite all the contributions provided to and yet making up 15% of the poorest decision taken in regard to gender and the Philippines. Ms. Tauli-Corpuz not- population of the world. Indigenous climate change. Ms. Tauli-Corpuz also ed that this case also affected the indig- peoples live on 22% of the land area of addressed the work on reducing emis- enous peoples of the Philippines. the world, which contains around 80% sions from deforestation and forest of the biodiversity of the whole world, degradation (REDD) specifically in- She underlined that developing she explained. Most of the remaining stalling safeguards to ensure the pro- countries have not contributed to the tropical rainforest today is found in tection of the rights of local indigenous climate change problem and the histor- indigenous peoples’ territory. Yet, the communities to the forest as well as to ical responsibilities do not lie with rights of indigenous peoples who live their traditional knowledge. Ms. Tauli- them. Yet, developing countries are in these areas are the ones most violat- Corpuz noted the agreement achieved being asked to carry the burden of ed. at the Warsaw Climate Change Confer- adapting and mitigating in the face of ence (2013) on an international mecha- climate change, without any support According to Ms. Tauli-Corpuz, the nism on ‘loss and damage’. This agree- from the countries that have caused rights-based approach will preset great ment reflects an understanding that these problems. potential in regard to getting human focus should not be limited on adapta- rights courts and bodies to treat climate This is the biggest tension in the tion when a country is subjected to change as an immediate threat, and to negotiations, Ms. Tauli-Corpuz short-term and long-term impacts of get governments to improve their com- stressed. She added that developing climate disasters. Some countries lost mitments and consider the extra- countries’ interests in these negotia- part of their territories and some is- territorial impacts of their actions. tions have been undermined by indus- lands are sinking as a result of climate trialized countries. Ms. Tauli-Corpuz reflected on a few change. This international mechanism successes within the climate change would address such cases. Ms. Tauli-Corpuz went on to dis- negotiations, which according to her cuss the situation of indigenous peo- Ms. Tauli-Corpuz concluded by include the integration of human rights ples in the world, noting that they are stressing that there is a lot of work that in the discussions held at the 2010 Unit- estimated to be around 400 million, needs to be done in terms of consider- ed Nations Climate Change Conference forming 5% of the world’s population ing human rights and climate change. held in Cancun. She also mentioned the Conclusions on the trade session r. Martin Khor concluded the veloping countries could bear the bur- M session by reminding partici- den of such a formula in a period pants of key messages highlighted by when their economies are under pres- various panelists. sure, many of which are facing balance Mr. Martin Khor (centre) concluding the South Centre conference. of payment deficits due to the global He stressed the case made that crisis. EPAs will damage domestic econo- will come back with the softening of mies, and that there is need to seek Mr. Khor also recalled the warning this price rise, calling for more work in alternatives, and protect flexibilities against ‘non-trade issues’, while the this area. that have been fought for at the WTO, issues demanded by developing coun- He also questioned whether issues such as the exemption provided for tries since before the WTO was estab- such as the commodity problematique LDCs from reducing their tariffs, and lished have not been addressed up till should be addressed at the WTO or the flexibilities fought for in the new today. Mr. Khor echoed Ambassador whether it should be addressed by trade facilitation agreement. Ricupero’s call for going back to basics UNCTAD, stressing that the multilat- in trade negotiations. Mr. Khor also reminded the partici- eral trading system is not only the pants of the need to continue negotia- Mr. Khor also recalled that the issue WTO but includes UNCTAD and many tions on a food security permanent of commodities was the main concern other institutions. solution post-Bali and to relook into for developing countries, and that On the issues of IP, Mr. Khor re- the criteria of the Green Box subsidies. UNCTAD excelled in bringing up the called that the judiciary in the United On the issues of NAMA, Mr. Khor re- commodities issues through the com- States is arguing that there is no case called the concerns about the new mo- modities agreements that were suc- for patenting of human genes, which is dalities that might be introduced in cessful at one stage. Yet, according to another example of the rethinking tak- NAMA. He also stressed that the old Khor, this work has been put aside ing place on the role of IP protections. modalities, such as the Swiss formula, under the pressure from the Reagan would have drastic impacts on devel- and Thatcher administrations that de- On the issue of climate change, Mr. oping countries that will come under cided they do not want to cooperate in Khor stressed that under a human- such a formula. He noted that the this area. While developing countries rights based approach developed coun- world has changed since these pro- became a bit complacent with the tries are required to take the lead in posals have been developed, and a lot boom in commodities prices that was cutting emissions and in supporting of lessons have been learned from the witnessed during the last few years, all developing countries through the pro- financial crisis. He asked whether de- the concerns related to commodities vision of finance and technology trans- fer. Page 28 ● South Bulletin ● Issue 80, 30 June 2014 Tribute Seminar for Gamani Corea On 20 March 2014, the South Centre organised a Special Tribute Semi- nar to commemorate the life and intellectual legacy of Dr. Gamani Corea of Sri Lanka, former UNCTAD Secretary-General (1974-1984), member of the South Commission (1987-1990) and Chair of the Board of the South Centre (2002-2003). This South Centre event was organ- ised with the support of the Permanent Mission of Sri Lanka and was held at the UNCTAD building in the Palais des Nations, UN Office in Ge- neva. Dr. Gamani Corea By Adriano Timossi of his accomplishment, having previ- A great contributor to the cause of the ously chaired the Expert Group of the South and to South-South cooperation, r. Gamani Corea passed away in Non-Aligned Movement on Third Dr. Corea was one of the twenty-eight Sri Lanka on 3 November 2013. D World Debt which served as the basis members of the South Commission Dr. Corea started his career at the Cen- for the HIPC initiative. He was a which functioned from 1987 to 1990 tral Bank in Sri Lanka where he later strong proponent of a New Interna- under leadership of the former Presi- became director of economic research. tional Economic Order (NIEO), and dent of Tanzania, Julius Nyerere, who He was also the Permanent Secretary to under his tenure, UNCTAD experi- was the Chair of the South Commis- the Ministry of Planning and Econom- enced one of the most active periods of sion and of the former Indian Prime ic Affairs, playing a key role on Sri its history. Minister Manmohan Singh, who was Lankan economic policy. In 1963 he the Commission’s Secretary General. was invited by Raul Prebisch to join the The Special Tribute Seminar of team involved in the preparation of the the South Centre Dr. Gamani Corea provided im- first UNCTAD Conference in 1964, an mense intellectual and personal sup- The Special Tribute seminar of the organisation which he served later as port to His Excellency Julius Nyerere. South Centre not only paid tribute to Secretary-General from 1974 to 1984. The Commission led to the report enti- this eminent South thinker but also tled “The Challenge to the South”, a Dr. Gamani Corea was also instru- focused on the intellectual thinking must-read report launched in 1990, mental in the establishment of represented and furthered by Dr. which led to the establishment of the the Group of 77 and later in the 90s, Gamani Corea’s legacy as many of his South Centre, and which described the South Centre, having previously ideas and thoughts continue to be rele- developing countries as existing on served as a member of the South Com- vant to current debates in search of the periphery of the North, and as mission (1987-1990) and a decade later alternatives to the developmental chal- mostly weak and powerless in the as a member and chair of the Board of lenges the Global South is facing to- world arena. The report emphasised the Centre (2002 to 2003). Dr. Corea day. the need for greater cooperation promoted domestic and international In his role as moderator of the among countries of the South. Dr. economic policies aimed at the benefit opening session, Mr. Martin Khor, Gamani Corea remained closely asso- of the poor and of the developing coun- Executive Director of the South Centre, ciated with the South Centre from its tries. He contributed to reinforce unity said that Dr. Corea, apart from his well inception in 1991 and for being one of among nations of the South and their -known role at UNCTAD, G77 and in the “founding fathers” of the Centre position in multilateral negotiations. Sri Lanka, was also very instrumental by providing it with policy and sub- Dr. Corea introduced the Integrated in the establishment and the opera- stantive guidance to its work, thus Programme for Commodities – com- tions of the South Commission and the assisting Mwalimu Julius Nyerere to monly known as the Corea Plan - one South Centre. gradually build the Centre into an of his finest achievements that had led institution with a global name and H.E. Mr. Benjamin Mkapa, Chair to the establishment of the Common standing and making possible its of the Board of the South Centre, Fund for Commodities. The influence transformation into an intergovern- called Dr. Corea, a statesman and one of Dr. Corea on the decision to estab- mental organisation of developing of the most eminent economists of lish the Highly Indebted Poor Coun- countries for promoting and safe- the developing and developed world. tries (HIPC) initiative is also another guarding their interests. In his message delivered to the seminar, Dr. Mukhisa Kituyi, Secre- tary-General of UNCTAD, called Dr. Corea an "embodiment of the confi- dent South." During his tenure in UNCTAD from 1974 to 1984, he ad- vanced key issues such as debt relief; the Common Fund; launching of the GSTP; negotiations on a code of con- L-R: Mr. Martin Khor, H.E. Mr. Benjamin W. Mkapa, H.E. Mr. R. P. Aryasinha, Amb. Rubens Ricupero and Mr. Richard duct for the transfer of technology Kozul-Wright (on behalf of Dr. Mukhisa Kituyi ) at the South Centre Special Tribute Seminar for Dr. Gamani Corea. Page 29 ● South Bulletin ● Issue 80, 30 June 2014 began; and the discussion on a new the UN with its “own budgetary pro- UNCTAD under Gamani Corea’s ten- international economic order. A man of cess and for all practical purposes, al- ure. brilliant diplomatic skills, Dr. Corea most completely independent from Mr. Gerassimos Arsenis, former had successfully managed North-South New York in administrative matters” Director of the Money, Finance and dialogue in a constructive direction. instead of it remaining a subsidiary Development Division of UNCTAD, He also recalled one of his “lasting con- body of the General Assembly which the first to lead the UNCTAD's Trade sequence(s)”, the UNCTAD`s Trade would keep UNCTAD “protected and Development Report, launched by and Development Report, launched by against the pressure of the powerful”. Gamani in 1981, spoke on Gamani’s Dr. Corea in 1981 and led by Mr. Mr. Chakravarthi Raghavan, Edi- role on global management, interde- Gerassimos Arsenis. tor Emeritus of the South-North Devel- pendence of money, finance and trade, H.E. Mr. Ravinatha Pandukabhaya opment Monitor (SUNS), provided a and the debt burden of developing Aryasinha, Ambassador of the Perma- detailed and insightful description of countries. nent Mission of Sri Lanka in Geneva, his extensive discussions with Dr. Mr. Jan Pronk, former Deputy Sec- highlighted key points of Dr. Corea’s Corea, the events and ideas shared retary-General of UNCTAD, spoke on career from Sri Lanka to the UN. Dr. over many decades of good friendship one of the most memorable concepts Corea played an “active role in rein- since the earlier times when he met him coined by Gamani Corea: The Devel- forcing unity among nations of the as a diplomat for Sri Lanka in New opment Consensus. “The motivating Global South and their position in mul- York. Mr. Raghavan said that “he had factors now are not only the political tilateral negotiations”. Dr. Corea’s an inner conviction and strength, and need to respond to the problems of “vision and active role in the promo- an outlook that was visionary, develop- newly-emerging nations or the human- tion of South-South and North-South mental and egalitarian”. itarian compulsion to alleviate poverty Cooperation remains an inspiration for and reduce the widening gap between all”. The intellectual legacy of Dr. Gamani Corea rich and poor countries. There is now Gamani Corea: life and work also the need for a framework of inter- The session on “The intellectual legacy national economic relations which pro- Noting the overwhelming participation of Gamani Corea” was moderated vides for the maximum utilization of of former colleagues of Dr. Gamani in by Professor Deepak Nayyar, Profes- mutually reinforcing and interacting the South Centre Special Tribute Semi- sor of Economics at Jawaharlal Nehru forces for growth and prosperity nar, Ambassador Rubens Ricupero, University. He said that Gamani’s con- throughout the world economy”. A former Secretary-General of UNCTAD tributions to the profession of econom- reflection that well defines today’s (1995-2004), said that “this is not some- ics, to the international community, to challenges. thing that happens every day and it is Sri Lanka, to development, to the cause in itself a tribute without words”. Dr. of the South, have made him a man of Mr. Michael Zammit Cutajar, for- Corea played a key role in the consoli- many parts. mer UNCTAD staff and former Execu- dation of UNCTAD “because he had tive Secretary, UNFCCC, brought an- the wisdom of understanding what Dr. Saman Kelegama, Executive other perspective of Gamani’s work, was behind the apparently arid legal Director of the Institute of Policy Stud- the environment pillar, a less well problem of the role of UNCTAD within ies of Sri Lanka (IPS), gave a compre- known work but which had equally the United Nations organisation”. Am- hensive overview of the approach of great impact. Gamani was a pioneer on bassador Ricupero referred to the peri- Dr. Gamani Corea to the Commodity the interface of “development and en- od when there was a temptation to turn Price Stabilization highlighting some of vironment”, later known as UNCTAD into a specialised agency of its successes and failures from the Inte- “sustainable development”. In fact, grated Commodity Programme to the Gamani was one of the very few devel- Common Fund, two of the most im- opment economists from the “South” SOUTH BULLETIN portant instruments of the commodity mobilised as a Special Adviser to Mau- price stabilization strategy advocated EDITORIAL COMMITTEE rice Strong during the preparations for at that time and considered by many the 1972 Stockholm Conference on the Chief Editor: Martin Khor the finest of his achievements. Human Environment. Managing Editor: Vice Yu Mr. Michael Sakbani, former Direc- Adriano Timossi is Programme tor of UNCTAD’s Divisions of Eco- Assistants: Xuan Zhang, Anna Bernardo Officer of the Global Governance for nomic Cooperation, Poverty Allevia- Development Programme (GGDP) of The South Bulletin is published by the tion, and Special Programs, spoke on the South Centre. South Centre, an intergovernmental the Monetary and Financial Issues in think-tank of developing countries.

South Centre website: (in English, French and Spanish) www.SouthCentre.int South Centre Tel: +41 22 791 8050 Email: [email protected] L-R: Mr. Michael Sakbani, Mr. Gerassimos Arsenis, Prof. Deepak Nayyar, Mr. Jan Pronk, Mr. Michael Zammit Cutajar and Dr. Saman Kelegama at the Special Tribute Seminar for Dr. Gamani Corea. Page 30 ● South Bulletin ● Issue 80, 30 June 2014