12/19/2009

THE UNSEEN INJUSTICE IN WORLD TRADE

(Editorial of Daily Mirror 2009-12-19)
Just a few of us remember the historic Non Aligned Conference also called the Bandung Conference held in April 1955 - historic since it was the first time in the history of the world that leaders of Asian and African peoples met together in one of their own countries for a dialogue on matters of common concern.  The conference was the precursor of the non aligned movement. It was largely the initiative of President Sukarno of Indonesia and was co-sponsored by Burma (now Myanmar) Ceylon (now Sri Lanka) India and Pakistan.Perhaps the most important paragraph in the Final Communiqué of the Bandung Conference was a call for collective action to stabilize the international prices of primary commodities. Unfortunately subsequent international arrangements to do so have been scuttled by developed countries. The economy of almost all developing countries depend on the export of commodities such as rubber, sugar, tea, cocoa, coffee and coconut.

In the decades following the Bandung Conference, the need to resolve the low prices, the volatility in prices and demand for commodities was a major part of international economic discussions and initiatives.

A major part of the work of UNCTAD in its first two decades focused on hosting negotiations between commodity producing and consuming countries giving rise to several producer-consumer commodity agreements and the establishment of a Common Fund for commodities. 

However in the 1980s major developed countries, led by the United States and United Kingdom decided that these commodity agreements clashed with their new free market philosophy and withdrew their interest and support for these agreements.  By the end of the 1980s, the organization running these arrangements were unable to carry out their most important functions relating to the purchase and maintenance of stocks and the management of prices which were to remain within an agreed band. 

In December 2002 the United Nations General Assembly called on UNCTAD to convene a group of independent eminent persons to examine and report on commodity issues.  The report presented to the UN Assembly in October 2003 came up with several proposals including the following:

Developing countries are the victims of subsidy policies in the developed countries which harm producers of many agricultural commodities who are facing unfair competition from developed country farmers. The report called for the speedy resumption of negotiations leading to agricultural liberalization in the North.Unfortunately up till today the negotiations are deadlocked in the World Trade Organization (WTO).

There was no comprehensive and systematic consultative framework to share information and use expertise among key actors in reviewing the commodity situation. Efforts of all interested stakeholders should, therefore be put together and focus on breaking the cycle of poverty in which commodity producers are locked. Therefore UNCTAD adopted a decision to establish an international task force on commodities.

Compared to the enormous work done by UNCTAD in the 1960s to 1980s when initiatives to attain fair prices for commodities and maintain commodity agreements, the agenda for the international task force was mild and limited. However the decision to setup the task force was a major step forward given the absence of a venue or mechanism in the international system to discuss the problem, let alone address it.  But like several other international initiatives to promote the economic and commercial development of the Third World and reduce poverty, the task force has been largely ignored by the developed countries and the international community.  The “inequal exchange,” described at the Bandung Conference in 1955 continues today with developing countries having to sell their commodities at low prices to the World Market whilest having to import manufactured goods at high prices with declining terms of trade.

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