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March 2008

March 25, 2008

This volunteer experience is brought to you by Wal-Mart, Cargill, Pepsi-Cola…

IATP Senior Fellow Mark Muller is working in a volunteer program in Honduras through July. He is blogging periodically on his experiences there.

Anyone who has traveled in Latin America knows to expect to drink lots of soft drinks. Coke and Pepsi have woven themselves into the fabric of society amazingly well. Every family that we have visited here, including some that are very poor, have given us a glass of soda. As much of the available water has bacterial concerns, for most travelers visiting a home or in many restaurants, the healthier choice is the sugar-filled, carbonated option.

The distribution network developed by these companies is stunning. Coke and Pepsi trucks ramble down these horrible secondary roads to small villages that even many local Hondurans don't know exist. And more often than not, the little stores in these villages will have a large advertising sign, graced with a Coke or Pepsi emblem.

It has been several years since I've traveled in Central America, and what has surprised me this time is how often I am buying from multinational corporations in addition to Coke and Pepsi. Here in Choluteca, Honduras there are two supermarket-type stores. The fancier store, with air conditioning, is called Maxi-Bodega. It is located on the outskirts of town just off of the Pan-American Highway, next to the Pizza Hut and Wendy's. It has the look and feel of corporate, chain store ownership.

The second store, Dispensa Familiar, is located in the old part of town and does not have the same corporate feel as Maxi-Bodega. It is close to where we live, and seems to be the store of choice for the middle class of Choluteca. Unfortunately, these two stores are just two sides of the same coin - they are both owned by Wal-Mart. And in both stores one can readily by meat products from Cargill, cereals from General Mills, prepared foods from Kraft, etc.

To be honest, the presence of multinationals is one of the reasons we chose this location. We figured an occasional trip to Pizza Hut would help our kids cope with the radical transition we've caused in their diets. And as much as I like to eat local, I also love the opportunity to buy imported lettuce, cheese, apples and wheat flour. I expected to have some of my money go toward multinational corporations, but it is happening more than I anticipated.

To a surprising degree, the food dollar of the upper and middle classes of Choluteca are captured by multinational corporations. There certainly remains a thriving local market, particularly for the region's plentiful tropical fruits, meats, and other staples. But for many other necessities of life, the Wal-Mart supermarkets have become a preferred option.

I've been asking around to try to find out why so many people here shop at Wal*Mart. Just as in the United States, Wal*Mart has excelled at conveniently providing low-cost goods. Rather than wandering around the cramped public markets and buying from a half-dozen different vendors, the supermarkets provide shopping carts, parking lots, spacious aisles, competitive and set prices, and credit card sales.  For the wealthier people in town that have cars, Wal*Mart is much, much more convenient.

It raises the question of how much of the food dollar is actually staying in the community. I'm sure that as we slowly learn more about Choluteca, we'll find more local stores and get savvier with using the public market. Similarly, it took us a little while to get situated in Minneapolis and take advantage of the co-ops, CSAs and other opportunities to eat and shop locally.

How beneficial has globalization been for the Choluteca economy? They are dependent on selling tropical fruits, sugar, and shrimp into the global economy at wholesale prices (and many of these exporters are foreign-owned companies). In return, the local consumers are purchasing some of their food, much of their clothing, and all of their electronics from global markets at retail prices. The few products that have remained local tend to be the low-value commodities like corn and beans. Having access to computers and the like is a huge benefit, and the city of Choluteca has certainly benefited from being the region´s shopping hub. But overall, the trade patterns appear to leave the region further behind, particularly the rural communities that have few economic development opportunities.

Mark Muller

March 20, 2008

One month to go before UNCTAD XII

In 2008, the United Nations (UN) has chosen to hold its major trade and development conference in Africa. Ministers from all around the world will meet in Accra, the capital of Ghana, starting April 20. In addition to ministers, a crowd of 4,000 international civil servants, civil society activists, business representatives, and journalists is expected to descend on the usually discrete West African capital.

The World Trade Organization (WTO), its Doha “Development” Round and its highly publicized ministerial conferences have received most of the attention over the past ten years. But the UN has its own important forum on trade and development: UNCTAD (the UN Conference on Trade and Development). What’s the point? And what are the stakes of this year’s UNCTAD meeting?

A cross-cutting mandate on trade and development

UNCTAD was created in 1964 out of concern that existing international institutions (the GATT and the Bretton Woods Institutions) were not adapted to the particular challenges faced by developing countries in a post colonial era. It was agreed, as developing countries demanded, that the UN needed a permanent forum to address trade and development issues in an integrated manner.

This cross-cutting mandate on trade and development is at the heart of UNCTAD’s value. It enables UNCTAD to critically assess the impacts of trade on various development objectives. Take, for example, the liberalization of trade in services: how does it impact people’s access to essential services (water, education, health…)? This is one of the many sensitive questions that UNCTAD addressed in 2007. At a time when the stalemate at the WTO represents countries’ discontent with the Doha Round of negotiations’ inability to accommodate their development concernssuch as the need to retain space to regulate their services sector, or to meet their food security, rural development and rural livelihoods prioritiesUNCTAD’s ability to make these linkages is particularly critical.

Also, as a UN body, UNCTAD can leverage other resources in the UN system, and draw on specialized agencies’ expertise. It takes into account the wide range of UN norms that countries have to respect, instead of looking at trade rules in isolation. 

In between conferences, UNCTAD works to support developing countries in making well-informed decisions as they define their trade policies. It does so by providing them with remarkable research and analysis, by facilitating intergovernmental debates on outstanding issues and subsequently through technical assistance.

A compelling context for UN Member States… 

From April 20-25 this year, Ghana will host the 12th session of UNCTAD. It will take place at crunch-time for the multilateral system: the world is facing major global challenges that call for collaborative action.

The crisis spreading throughout global financial markets in the wake of the sub-prime mortgage fiasco seems endless. Every week carries a new list of affected companies. For now, mostly those directly active in financial markets seem to be weakened. But as more banks lose confidence there is more and more concern that the crisis might spread to the “real” economy, first in the U.S. and then, as a result, to the rest of the world.

In addition, the risks entailed by climate change are becoming more concrete. According to the UN Office for the Coordination of Humanitarian Affairs, the unprecedented number of climate related disasters in 2007 is proof that “climate change is upon us.” There is no question that this is going to be a new constraint affecting countries’ development in the future. Questions around climate’s impact on food production are hitting the headlines as prices have experienced sharp increases in the past few months. Debates around the impact of international trade on climate change are heating up, as the Trade Ministers meeting in Bali last December showed.

And yet, the ability of the multilateral system to come up with collaborative solutions to new and other enduring challenges (such as the Millennium Development Goals) has been, up till now, a disappointment. International financial institutions (the World Bank and the IMF) have lost their credibility: developing countries are making every effort not to surrender to their conditionalities. Discussions on the linkages between trade and climate change are only just startingdespite the importance of the challenge, they sound like business as usual. Last but not least, negotiations at the WTO have been stalled for almost two years now. The world desperately needs fair multilateral trade rules, but does not seem to be able to find a way to craft them.

… But will they be up for the challenge?

The main theme of UNCTAD XII is: “Addressing the opportunities and challenges of globalization for development.” In their preparatory negotiations, Member States are grappling with all of the above mentioned issues. In his report to the Conference, the Secretary General presented some bold proposals in particular in the area of financial markets regulation.

Developing countries are striving for an ambitious outcome for the conference. Negotiating as a group called “G77,” they are putting bold proposals on the table for UNCTAD to take up and facilitate the design of development-friendly solutions at the international level.

Developed countries, however, are not showing the same enthusiasm. Arguably, their efforts in these negotiations are directed at reducing the role of UNCTAD and muting its critical voices. Ideally, they would like UNCTAD to stick to its technical cooperation projects and stop intervening in policy debates.

This is not a new situation. UNCTAD, under strong leadership, experienced two decades of high political standing in the 1960s and 1970s. It has been significantly weakened, though, in the past three decades, by developed countries’ shift towards new economic theories that support a more prominent role for markets and limited roles for governments. As a result, efforts have focused on neo-liberal institutions like the IFIs and the GATT/WTO, at the expense of UNCTAD.

But the failure of the current model of globalization and of the institutions that are associated with it is clear. Furthermore, developing countries have gained a voice in international debates that they did not have ten years ago. Will the UNCTAD XII negotiations be hampered by developed countries’ reluctance to acknowledge this new reality? If negotiations continue on the same track, yes. Can the month left in the run-up to the conference open the way for renewed multilateral efforts on trade and development? Here are a couple of benchmarks that will help us find out.

Some benchmarks for UNCTAD XII

UNCTAD Conferences serve two related objectives: first and most importantly, their outcome is a reflection of the consensus, at the international level, on trade and development issues. The ambition of this outcomeor on the contrary its emptinessreveals whether countries have been able to agree on most issues or whether opinions remain far apart. Second, UNCTAD Conferences define the organization’s mandate for the following four years. Here the fight is on the margins, where the secretariat is asked to address issues identified as key by member States. Much of this also depends on funding, that comes at a later stage, making it difficult to assess at the end of the conference whether the mandate will actually be implemented.

At the time of writing this article, virtually all the issues on the negotiating table are controversial. Compromises will likely be identified in the last weeks of negotiations and at the Conference itself. We chose to highlight three particularly sensitive subjects, the treatment of which will be a test-case for the relevance of UNCTAD XII.

- Globalization and countries’ policy space. UNCTAD XI had initiated a debate around the impact of globalization, and trade liberalization in particular, on countries’ ability to regulate and implement domestic policy measures. In light of widespread popular discontent over the impacts of trade liberalization on livelihoods, this debate is of utmost importance. Developing countries are calling on UNCTAD to further the debate on this issue, including through a proposed Commission on Globalization, but developed countries would rather ignore the subject.

- Ever since its creation, UNCTAD has been the pre-eminent forum for debate, analysis and policy-formulation with regard to commodity issues in the context of development. UNCTAD XII happens at a time when the world is experiencing historically high commodity prices, which bring both opportunities and challenges to developing countries. And yet, the treatment of this issue in the negotiations falls short. Developed countries would like to focus on national governments’ responsibility to deal with their commodity sectors. The food security and environment challenges associated with high prices are absent from the text.

- UNCTAD produces remarkable research and analysis on trade and development through numerous reports like the Trade and Development report, the LDCs report, the Economic Development in Africa report, etc. They help countries assess the best options for their development strategies, and provide interested stakeholders with critical analysis and proposals for how to make globalization work for development. These publications, however, do not always please all members. Developed countries want to require the ability of member States to comment on draft reports prior to publication. This would be a blow to the organization’s independence and credibility.

There is no question that the stakes are high and that UNCTAD XII is timely. Its mandate is very relevant to the current crises, and it has an unquestionable expertise on some of today’s key challenges. However, unless Member States decide to engage in a genuinely collaborative way instead of fighting an old-fashioned North-South battle, UNCTAD XII will fall short. 

Anne-Laure Constantin

March 17, 2008

NAFTA takes the spotlight: It's about time

“We're seeing the strongest opposition to free trade expansion in recent memory. NAFTA has become symbolic of the fears and apprehensions of globalization in general.Eric Farnsworth, Council of the Americas.

Almost 15 years after it was ratified, the North American Free Trade Agreement (NAFTA) is increasingly in the spotlight. The U.S. public has a growing understanding about the link between trade and the economic and social challenges currently surfacing. Presidential candidates are being called on by the public to answer to NAFTA and the economy.

Over the years, there have been different views on how NAFTA has affected the environment, the downward wage spiral and loss of jobs, and rural development. And, while NAFTA is not responsible for all the woes in North America, it has clearly not fulfilled its promise to create good jobs, increase wealth and decrease migration.

During NAFTA, wealth increased only for a select few in each of the three countries. The gap between rich and poor has widened. And that gap is driving forced migration from Mexico into the U.S. Today, over 500,000 people cross into the U.S. from Mexico every year. The U.S.-Mexico border is the world’s highest immigration corridor. Remittances (money sent back to Mexico from migrants) were at $25 billion in 2007, coming in only second to oil as a source of Mexico’s foreign revenue. These remittances are not creating development in Mexico. Rather, they are a desperate attempt to ease poverty that has become so dire. Overall, NAFTA has worsened the economic divide between the U.S., Mexico and Canada.

IATP has argued for years that NAFTA-style deregulation is the wrong form of integration. A closer look at agriculture helps us understand just what is so problematic with the NAFTA model.

To prepare for NAFTA, the Mexican government dismantled its domestic support for agriculture, including land allocation laws, the grain reserve, programs for rural sector development, and tariffs on basic foods such as certain varieties of corn, beans, and dairy products. Decreased spending on agriculture in Mexico and tariff cuts combined with U.S. exports being dumped at below the cost of production. The result has been devastating for small farmers and contributed to unemployment and migration from the countryside. Over two million people have been forced off their land in Mexico since NAFTA, many migrating to urban centers within Mexico and the United States. IATP outlined some of the links between NAFTA, the U.S. Farm Bill, and Immigration in our Farm Bill series last year.

Many of those former farmers, unable to make a living in Mexico, have been absorbed into the agricultural sector in the U.S. Raul Delgado Wise, Executive Director of the International Network on Migration and Development, refers to this phenomenon as the “Mexicanization of U.S. agriculture.” In the U.S., most migrant workers in agriculture take seasonal jobs and are paid low wages by the hour for the amount of work done. According to the USDA, between 2.2 and 3.1 million undocumented immigrants work in three agri-food sectors: farming and fishing, meat and fish processing, and food service. Most of these workers come from Mexico. Once here they face incredible challenges, including the potential for death crossing the border to get here, poor wages, poor health care and housing.

While policymakers and the media are focused on the need for immigration reform in the U.S., they consistently fail to make the connection to NAFTA and to the systemic causes of forced displacement. Oscar Chacon, the Executive Director for the National Alliance for Latin American and Caribbean Communities, talks about the fact that in most cases undocumented immigrants are victims of extreme poverty and hunger in their country of origin and then again in the U.S. as they struggle to survive and evade deportation. And, while migration is not new, the number of undocumented migrants coming to the U.S. from Mexico has doubled since NAFTA came into force.

NAFTA hasn’t been good for U.S. farmers either. From 1992 to 2002, the U.S. lost over 200,000 farmers. The 1996 Farm Bill deregulated farm commodity programs leading to grain overproduction and 10 years of price collapse, until the recent ethanol boom. Cheap grains have indirectly subsidized the meat and processed food industry, whose operations have consolidated and whose profits have grown. From 1999 through 2006, Cargill’s overall profits went from $597 million to $1.73 billion. Meanwhile, the consumer has seen an increase in food prices since NAFTA.

Our neighbors in Canada share a similar story. The National Farmers Union in Canada reports that agri-food exports have increased substantially since NAFTA, as have corporate profits. Conversely, realized net farm income has gone down, farm debt has more than doubled, there are less farmers today, and food prices in Canada have risen.

With an eye toward a new Congress and President in 2009, the political opportunity is here to make a change.

On March 5, IATP co-organized a conference in Washington, D.C., entitled Linking Agriculture, Development and Migration: A Critical Look at NAFTA Past, Present and Future, to promote an alternative vision for this region among legislators and civil society. One major outcome was that Canadian MP Peter Julian (Burnaby-New Westminster), U.S. Congresswoman Marcy Kaptur (D-OH) and the Honorable Yeidckol Polevnsky (senator for Mexico State and vice-president of the Mexican Senate) announced their joint commitment to call for the renegotiation of NAFTA. Civil society groups in the U.S., Mexico and Canada have outlined concrete suggestions for what renegotiation would entail.

Perhaps the most encouraging outcome is that legislators and civil society were able to speak frankly about our moral responsibility to one another in this region and elsewhere. Economic integration could make sense, but not as we have seen it. Recognizing the fundamental errors with the NAFTA model, we must change our course so that integration is about regulated investment and managed trade in support or people, the environment and infrastructure, healthy and accessible food, a higher standard of living, and regional citizenship. What we are talking about is respect for communities, people and the environment, not just the profits of multinational corporations. Renegotiate NAFTA? Lives depend on it. And so does the stability of the region.

Alexandra Spieldoch

March 14, 2008

Good Jobs, Green Jobs... for everyone!

IATPers Jim Harkness, Lindsay Dahl and I are all at the "Green Jobs, Good Jobs" conference in Pittsburgh today and it has been a very powerful and uplifting experience. Organized by the Blue-Green Alliance, which brings together the United Steelworkers and the Sierra Club, this is the first national conference to focus not only on the global warming and environmental challenges we face, but more importantly, on how we need to restructure our economy and create jobs to address these challenges.

Yesterday was a great start, with multiple speakers and panels on issues ranging from public policy and investment to the role of green chemistry and energy in rebuilding rural and urban economies. Carl Pope of the Sierra Club gave a stirring speech to help open the conference and place it in context, by asking the essential question: how do we ensure, as we move into a green jobs economy, that poor people, people of color and rural communities aren't left out? The response from Lou Schorsch, CEO of Flat Caron America and ArcelorMittal North America, the world's largest steel company, was emblematic of the problems we face: "I'm a business guy, so that's a hard question for me." 

Minnesota is the home of Dave Foster, the Executive Director of the Blue-Green Alliance, so it's not surprising that much of the work here has been highlighted. Minnesotan presenters included Minneapolis Mayor R.T. Rybak, Minnesota State Senator Ellen Anderson, and Piper Jaffrey's Lois Quam yesterday, with Senator Amy Klobuchar scheduled to speak today. While we know things aren't perfect back home and we still face many challenges in moving toward green and good jobs, it's clear that Minnesota has lessons and approaches that other states and regions can learn from, so a little "Minnesota-pride" is deserved!

For me, however, it is the focus on jobs, people and justice that has me most excited. Marko Trbovich of the United Steel Workers, gave a rousing speech to end yesterday's program, where he spoke directly to the connections between climate change and international trade. Some of the key points include:
- Climate change is the most pervasive form of globalization.
- Climate change is inextricably linked to international trade.
- To really make the policy changes we need to address global warming, we need to reform our trade system.

These connections with people and justice were brought into sharp focus this morning by an incredibly emotional and powerful speech given by Van Jones, Director of "Green for All" in Oakland, CA. Van spoke of the victories our movement has already achieved, shown most starkly in the fact that "polluters" are trying to sound just like us now on climate issues. But he emphasized that as we move forward politically and as a movement from the margins to the center, we need to make sure that we use this opportunity to bring all folks forward -- that the green economy isn't just about reclaiming "stuff," but more importantly a chance to reclaim thrown away children and lives. As Van said, those communities pushed down by a pollution-based economy need to be lifted up by the green economy -- we have the chance and obligation to create a green wave that can lift all boats and has a place for everyone. 

To create this "green pathway out of poverty," Van pointed to the need for the right policies, politics and principles. We need to create a green workforce to meet our new labor needs, but one that is open and accessible to our marginalized community members. Van then talked about some of the programs in Oakland that have offered training to the undereducated and formerly incarcerated, and how these opportunities -- including the chance to join a union -- are helping raise people out of poverty and bring them in from the margins. The Green Jobs Act of 2007, a part of the Energy and Security Act, can help us get there, through training 30,000 people a year in skills needed for our new economy.

Van also spoke to the need for a new politics, whereby we create a movement and the political will to truly address the problems we face - a "Green New Deal" that can provide the kind of governance we need at this critical time. And finally, we need the right principles, which means sticking up for the little people and not leaving anyone behind. As Van so eloquently stated, evoking the brutal abandonment of the poor in New Orleans after Katrina, and in the process the whole principle of climate justice: "We reject the politics of sink-or-swim in the time of floods." 

For me, Van and his work reflects the real challenges we face as we try to build this new green economy -- simply replacing an inequitable fossil fuel economy with a biobased or renewable economy based on the same power and political structures won't get us where we need to go. For the green economy to truly succeed, it is clear that it needs to start and end with justice for all. That means continuing to make sure that people of all classes and races are engaged in this work, and that we build the bridges and coalitions with farmers, inner city residents, indigenous communities, and others to make sure that the solutions put forward to our global warming and environmental crises are crafted to ensure that we move from hurting poor people and the planet to helping them both.

Jim Kleinschmit

March 03, 2008

A Makeover for Globalization

One of the most thoughtful trade publications out there is Trade Insight, published by the South Asia Watch on Trade, Economics and Environment (SAWTEE). Like nearly everyone, SAWTEE is exploring ideas on how to move forward and manage trade and development in the wake of the World Trade Organization's insistence in pursing a deeply unpopular agenda of further trade deregulation.

As the opening editorial states, "The increasing threat of climate change, inability of developing countries to benefit from international trade, widespread abuse of human rights, etc have put into question the adequacy and efficacy of existing global regimes to address such issues."

IATP's Carin Smaller takes on this question in her article in the same issue, "The Global System Needs a Makeover." She writes, "The past 60 years of multilateralism have been characterized by a deep disconnect between the international trade and investment regimes on the one hand, and the body of international norms that evolved out of the UN system on human rights, labour and the environment, on the other."

Carin argues that, "The World Bank, the IMF and the WTO must start cooperating with the UN processes in a meaningful way - and also vice versa. . the two systems cannot continue to operate in isolation of each other."

IATP will publish a series of papers this year on how a new global system can help us better tackle some of the most daunting challenges the world must face together, such as climate change, poverty, and hunger.

Ben Lilliston