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JOHANNESBURG WATCH: WHY TRADE AND FINANCE GROUPS SHOULD GET INVOLVED IN THE WORLD SUMMIT PROCESS

Dear friends and colleagues

As you know, the World Summit on Sustainable Development (WSSD) process is at a complex and difficult stage, as the last preparatory committee (Prepcom) meeting in Bali (27 May to 7 June) ended in deadlock with the draft Plan of Action still full of disputed text.

The most contentious negotiations at Bali involved finance and trade issues. The section in the draft Plan of Action on these issues, under the heading ”Means of Implementation” still contain mainly disputed text.

Citizen groups involved in trade and finance issues should therefore be aware of the debates that went on in Bali, and will most likely continue between now and the Johannesburg Summit (starting at the end of August).

Below is an account and analysis of the controversies surrounding these issues at the Bali meeting, which has been written by Third World Network researcher Celine Tan.

For official information on the WSSD, including the draft Plan of Action and other official documents, check the website www.johannesburgsummit.org

Third World Network has also produced more documents and papers on sustainable development issues and on the WSSD process.  Check this out at the TWN website: www.twnside.org.sg

We hope the report below will be of use to your ongoing work.

With best wishes
Martin Khor
Director, TWN


 

JOHANNESBURG WATCH: WHY TRADE AND FINANCE GROUPS SHOULD GET INVOLVED IN THE WORLD SUMMIT PROCESS

Celine Tan, Third World Network
July 2002
twnkl@po.jaring.my

1.      Introduction

The World Summit on Sustainable Development (WSSD) will be taking place in Johannesburg, South Africa, from 26 August to 4 September this year. Country delegations, along with representatives of major groups, will meet to endorse a plan of action implementing the commitments made by governments at the Earth Summit in Rio in 1992.

Over the past six months, delegations have met in New York, and recently, at Bali, Indonesia, to finalise a draft implementation programme aimed at creating mechanisms to enable the conditions for sustainable development. This would mean drafting a plan of action which will frame national and international development policies in light of a sustainable development agenda - ie taking into account the social and economic needs of the population and balancing it with ecological sustainability and environmental protection.

For most part of the preparatory process, there has been a marked absence of groups who work on issues relating to debt, trade and finance and groups monitoring the international financial institutions, such as the World Bank and the IMF. Understandably, many organisations may not have felt the need to expend the resources to monitor a process they may have assumed to be focused on areas outside their remit. The general assumption is that debates on the WSSD centre on the traditional ‘green’ (deforestation, biodiversity, animal conservation, fisheries) and ‘brown’ (access to health, water and adequate sanitation) environmental issues best left to the environmental teams and conservation groups. 

These issues remain crucial for the WSSD but, as the results of the Fourth (and final) Preparatory Committee (Prepcom IV) indicate, there is a real and pressing need for the monitoring of the trade and finance issues emerging from the draft texts for the WSSD Plan of Action. As it turns out, Johannesburg may turn out to be less about the technicalities of environmental protection and sustainable use of natural resources than about the trade and financial mechanisms helping or hindering these objectives. 

Negotiations at Bali stalled as a result of disagreements over critical issues pertaining to the current patterns of globalisation and their linkages to sustainable development. The bulk of the final ‘Draft Plan of Implementation’ (also referred to as the ‘Draft Plan of Action’ or the ‘Chairman’s Text’) still in brackets (indicating delegations’ proposals for text deletion) and bold (indicating disagreement over language) are those relating to issues of trade, finance and debt. 

Talks were deadlocked because developed countries, particularly the US-led Juscanz group (Japan, US, Canada, Australia and New Zealand), refused to commit to crucial paragraphs spelling out the relationship between globalisation and sustainable development and language firmly committing developed countries to concrete action on debt, financial contributions and fair trade.

It is critical that trade and finance groups begin monitoring the WSSD process and advocate for better language on trade and finance issues to be inserted into the Draft Plan of Action. Johannesburg will be a chance to rectify the concessions made at the UN Financing for Development (FfD) conference in Monterrey in March this year, and at the WTO Ministerial Conference in Doha last November. While the WSSD Plan of Action may not have the binding force of a WTO agreement or a multilateral environmental agreement (MEA), the programme of action will be endorsed by heads of government and by the UN, representing an expression of political will and commitment on the part of all UN member countries.

It is also imperative that groups monitoring the Bretton Woods institutions to keep a close eye on developments at Johannesburg as the emphasis on market-based, private sector financing of the summit’s programmatic outcomes reflects an implicit endorsement of the neoliberal policy prescriptions imposed by the World Bank and the IMF in their lending programmes. The stress on private sector participation in the delivery of services in the five priority areas of the Plan of Action - water, energy, health, agriculture and biodiversity (WEHAB) - will, for example, lend credibility to the World Bank’s Private Sector Development Strategy and increase its role in the financing of projects in these areas.

The shift towards private-public partnerships in both the Type I (obligatory) and Type II (voluntary) agreements of the WSSD represents part of wider abdication of responsibility on the part of developed countries to fulfill their commitments to facilitate sustainable development in the south. Plus, allowing northern-controlled agencies, such as the World Bank, to initiate the implementation of crucial programmes, including through its role as lead agency of the Global Environmental Facility (GEF), once again limits the policy choices of developing countries in their attainment of sustainable development.

Johannesburg will thus serve as a test of the political will of northern countries, both to accept the weight of their present and historical contribution to depletion of natural resources, and to assume primary responsibility for the costs of rebalancing the earth’s ecosystems for the benefit of the world’s peoples. This responsibility will involve not only the contribution of substantial financial resources to aid developing countries in bearing the adjustment costs of sustainable development, but a commitment to reorienting current unsustainable production and consumption patterns and reforming the global economic system which form the basis of the present ecological devastation and human misery.

2.   Stalling sustainable development

Out of the 27 percent of the Chairman’s Text still in disagreement, most of the contentious paragraphs can be found in Section IV: Sustainable Development in a Globalising World’ and in Section IX on the Means of Implementation.

In Section IV, eight of out 16 paragraphs and sub-paragraphs remain bracketed and bolded. Section IX, which spells out the means of implementation for the proposed plan of action, contains 13 key paragraphs on trade, debt and finance, all of which are bracketed and bolded. In addition, almost every contentious paragraph in the section includes at least one proposed alternative formulation.

The final text of the Bali Prepcom to be transmitted to Johannesburg for further consideration contains over 200 brackets. These brackets, read in conjunction with reports from the negotiating process, are indicative of the North-South divide in the area of trade, finance and debt, with developed countries staunchly opposed to positive language and constructive solutions in favour of the south.

Proposals put forward by the Group of  77 and China  to address the systemic flaws in the international financial architecture and global trading system were consistently objected to by developed countries, especially by the US-led Juscanz group (Japan, US, Canada, Australia and New Zealand). The G77 argue that these problems, including the debt burden precipitated by declining terms of trade, volatile global capital flows, and iniquitous multilateral trading rules, must not be decoupled from attempts to resolve the ecological degeneration faced by the world’s populace.

These arguments were countered strongly by the Juscanz bloc which refused to incorporate any committal language on these issues in the Chairman’s Text. In particular, the Juscanz countries were opposed to references to specific institutional solutions to the problems, such as stronger language on debt relief, debt restructuring and arbitration; calls for the establishment of an international mechanism for the stabilisation of commodity prices, and the explicit commitment to achieve the 0.7 percent of GNP as official development aid (ODA) to developing countries.

There was a concerted push by Juscanz countries to keep the language on debt, trade and finance vague and general , and thus non-committal. The US and Canada were particularly adamant that the WSSD Plan of Action should not go beyond the Monterrey Consensus nor the Doha Ministerial Declaration and that there should be no attempts to renegotiate the provisions therein.

The G77 - which had realised they conceded too quickly on crucial issues at Monterrey - had pressed for a more progressive and comprehensive action plan that would reference the Monterrey Consensus and the Doha Ministerial Declaration where it contained specific commitments but  to go beyond these two texts where these documents fell short of concrete action-oriented language facilitating sustainable development.

Norway was the country that appeared the most supportive of the G77’s proposals on debt-related issues, and on concrete ODA commitments. Whilst the US position was “hard line”, the EU attempted a “compromise” with the G77.  At a ministerial meeting between the EU and the G77 on the last day at the Bali Prepcom, the EU put forward its version of a new draft on finance and trade issues.

However the differences between the EU and the Juscanz group in these areas should not be overplayed. After the Bali meeting, the EU is attempting to portray itself as an arbiter between the US-led Juscanz and the G77.  However this role which it is attempting to create for itself  should not be taken at face value. It would be inaccurate to paint the EU as a cheerleader of the developing world as the EU’s proposed language on trade and WTO matters does not  reflect the interests or the position of developing countries.  On contrary the EU has undermined developing countries’ interests at the WTO (see para below on the EU’s role at Doha).

Generalised references in the WSSD text to implement the provisions of the Doha Ministerial Declaration do not benefit developing countries as many aspects of the Declaration work against developing countries’ interests, particularly the commitment to begin negotiations (after the next WTO Ministerial Conference in 2003) on the ‘new issues’ of investment,  competition policy, transparency in government procurement and trade facilitation.  These new issues had been pushed very hard by the EU at Doha, against the wishes of most developing countries.  (Fortunately a saving clause was inserted, to the effect that the launch of any negotiations would have to be on the basis of explicit consensus).  

References in the Bali documents to meeting WTO deadlines and language alluding to the conclusions of negotiations by a certain date do not reflect developing countries’ opposition to the commencement of negotiations on the ‘new issues’ and their objections to the tight work programme being pushed by developed country members (which the developing countries are unable to cope with).

Furthermore, references to the Trade-Related Intellectual Property Rights (TRIPS) Agreement have been inserted into the draft plan of action against the interests of developing countries, and, more importantly, against sustainable development. In Bali, developed countries had proposed language “reiterating our commitment to the WTO/TRIPS Agreement” and to implement the TRIPS Agreement as part of the wider national and international action to address public health problems such as AIDS, TB and malaria.  (paragraph 88).  This proposed text would reflect the opposite of reality as implementation of TRIPS has led to medicine prices shooting up. 

The G77 correctly opposed this language and offered their own formulation, proposing that public health problems should be addressed through “reaffirming the rights of WTO members to use to the full the provisions of TRIPS that provide flexibility for this purpose” (paragraph 88).  How the different proposed texts will be negotiated will be one of the significant events to look out for at Johannesburg.

3.   Corporate influence over WSSD

A serious concern emerging from the preparatory process of the WSSD is the influence of big business in shaping the outcomes of the WSSD. Through the Business Action for Sustainable Development (BASD), transnational corporations are reprising the role they played at Rio through the Business Council for Sustainable Development (BCSD). Not only are TNCs (through the developed countries) blocking efforts to frame a regulatory mechanism to govern their activities within the WSSD official agreements, they are presenting themselves as viable partners in the delivery of sustainable development programmes, especially in the key areas of water, energy, health, agriculture and biodiversity.

Actively engaging in these partnerships are developed countries who have allowed their corporate lobbies to determine their priorities for negotiations during the Prepcoms. The Draft Plan of Implementation is sprinkled very liberally with language exhorting the virtues of  ‘public-private partnerships’ and calling for public-private partnership implementation of WSSD programmes.

The emphasis on promoting private sector delivery of essential services will validate programmes instituted by the international financial institutions in collaboration with industry. References to ‘efficiency’ of service delivery in sectors such as water, sanitation and health, can be expeditiously interpreted as stamps of approval for market-based service delivery, policies which have long been pushed by the World Bank and the IMF through their structural adjustment programmes and project lending.

The World Bank has maintained a high profile at the WSSD Prepcoms and it is significant that the Bank is currently in the process of finalising its Private Sector and Rural Development Strategies, both of which aim to reduce the role of the state in national economies and creating enabling environments for the participation of the private sector in, among others, essential services provision and agricultural development. An endorsement by country governments of private initiatives in these areas in the WSSD Plan of Action will only lend legitimacy to the Bank’s efforts to use its aid and lending projects as means to facilitate the privatisation of these sectors.

There is a danger here that the sustainable development agenda will be hijacked by corporate interests and there is a clear need to monitor the outcomes of these informal partnerships entered into prior to and during Johannesburg. Privatisation of water, energy and health sectors, and the inevitable imposition of user fees for services, will undermine access of consumers (especially the poor) to essential services. Private sector involvement in the agricultural sector invariably means the promotion of large agribusiness, leading to the displacements of large numbers of small-scale farmers and farming communities, and this will be accompanied by the push (especially by the US) for the promotion of genetically-modified food crops, with health and environmental implications.

These Type II or informal partnerships will most likely be used by developed countries as substitutes for formal commitments on their part to improve the current abject situation in both environment and development spheres.  These so-called ‘partnerships’ and private sector projects are also likely to be driven by private corporations’ drive for profits rather than by the goal of meeting public interests.

The effects of these initiatives are compounded when privatisation exercise is conducted through large foreign firms in the areas such as energy, water supply, agriculture and biotechnology.  The increase in imports and in foreign profits repatriated abroad will lead to an increased outflow of foreign exchange from the developing countries.

There are also concerns that developed countries are unwilling to commit to multilateral financial resources in the official programme of action but are pressing for bilateral commitments to ODA in which they can determine conditionalities outside the WSSD framework. ODA can then be tied to economic reforms and the facilitation of private investment flows and creating the infrastructure within developing countries to service the interests of TNCs.

As an antidote to the domineering role of big business, a large group of NGOs have been strongly advocating for a “corporate free UN” as well as for “corporate accountability”, the latter through binding code of conduct and regulations for corporate behaviour.  Even if the NGO proposal does not eventually make it to the official texts coming out of Johannesburg, the process would have served a good purpose if it helps catalyse longer term NGO action aimed at getting governments to implement measures to regulate corporate behaviour. 

4.   North-South divisions come to the fore again

The process and results of the Bali Prepcom harken back to the original debates and controversies that dogged the Rio summit. The disjunction between the interests of the North and the needs of the South is once again manifest. Developing countries were fighting hard at Rio to force an acknowledgment of the historical debt owed to them by developed countries through a legacy of colonialism and the resource extraction which facilitated the rapid industrialisation of the north.

The outflow of resources from the South to the North by way of debt servicing and repayments, terms of trade losses, cheap resource extraction, and royalty payments mandated a reciprocal inflow of resources in the form of development aid, market access, debt reduction and relief, and technology transfer by developed countries to the South.

Ten years on, the South continues to fight the same uphill battles with steeper inclines. Instead of implementing Rio’s Agenda 21, and instead of moving forward, the WSSD preparatory process so far indicates that some countries (especially the US) would like to take the process backwards.  For example, the US has been attempting to dilute and reverse the commitments they made at the Earth Summit, including the two main principles of Rio- the ‘principle of  common and differentiated responsibility’ and the ‘precautionary principle’. In the context of developments in the global economy post-Rio, this places more onerous obligations on developing countries and may sound the death knell for sustainable development.

Developed countries were not adverse to resorting to strong-arm tactics to try to bulldoze through language favourable to them. The wheeling, dealing and bullying of the last 48 hours at Bali - when the G77 were forced into closed door negotiations with the US, EU, and Japan, and when US delegates began horse-trading with individual G77 country delegates - is reminiscent of the tactics employed at WTO negotiations.

Attempts by developed countries to shift the governance of international trade and finance away from the UN system towards the Bretton Woods institutions and the WTO, and efforts to transfer the responsibility of achieving sustainable development goals to private corporations through public-private partnerships will further limit southern governments’ capacity to determine their development paths, both nationally and internationally.

The refusal to consider the effects of current patterns of global economic integration on development choices in the south in the context of a wider political agenda for global sustainable development is an attempt by the North to decontextualise the issues of trade and finance.  In the context of the preeminence of the WTO in the multilateral system and the extensive control of the northern-controlled World Bank and the IMF over the economies and socio-political policies of developing countries today, any effort to shift the governance goalposts towards these institutions will invariably result in the severe confinement of democratic space in the global policymaking arena.

The WSSD process has not attracted the attention of many development groups and organisations monitoring trade and finance so far, but now is the time for them to get involved. As a multilateral summit on sustainable development, its outcomes will affect the work of all civil society groups. Drafting and implementing a global programme for poverty alleviation, nature conservation, environmental sustainability and economic and social development is an task that should not be left to governments (and governments of the north to be precise), and certainly not at all to business lobbies.

Civil society groups of all levels should contribute in monitoring, advocating and lobbying for a comprehensive plan of action to enable the fair and equitable sharing of the world’s resources between the rich and the poor, north and south; and to protect the earth’s ecology in order to safeguard the world’s future. After all, the document emerging from Johannesburg will be a blueprint of life itself. It will be a missed opportunity if we let life slip us by.

 


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