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Abstract:
On May 13th, senior officials of the International Monetary Fund (IMF), World Bank and World Trade Organization (WTO) will meet in Geneva
ostensibly to promote greater "coherence" amongst their policies. There are good reasons to be concerned.
PRESS RELEASE
For immediate release: 12 May 2003, 15:00 GMT
IMF-World Bank-WTO Close Ranks Around Flawed Economic Policies
On May 13th, senior officials of the International Monetary Fund (IMF), World
Bank and World Trade Organization (WTO) will meet in Geneva ostensibly to
promote greater "coherence" amongst their policies. There are good reasons to
be concerned. Over the past decades, the IMF and the World Bank have
systematically promoted controversial policy reforms in developing countries.
Typically these include liberalization of trade and financial flows,
deregulation, privatization and budget austerity. Strategies for this purpose
have required many developing countries to break with past policies and to
pursue closer and faster integration into the world economy. As a result, the
economies of developing countries have been characterized by slow and erratic
growth, increased instability, and rising income gaps. With the WTO, such
misguided and failed policy reforms are being progressively locked-in through
trade law backed by the threat of economic sanctions through its dispute
settlement mechanism.
Shefali Sharma from the Geneva office of the Institute for Agriculture and
Trade Policy (IATP) said, "technical assistance is being used as a political
tool to win support for a 'development agenda' that is heavily disputed in the
WTO. No amount of technical assistance in implementing policies that, in
effect, handicap and shackle developing countries in the WTO can improve gains
towards development.
Food security. Over the decades, loan conditions of the IMF/World Bank have
forced developing countries to lower their trade barriers, cut subsidies for
their domestic food producers, and eliminate government programs aimed to
enhance rural agriculture. However, no such conditions are imposed on wealthy
industrial countries. Meanwhile, the WTO Agreement on Agriculture allows
wealthy countries to dump surplus foods at prices below the cost of
production, driving out rural production in developing countries and expanding
markets for the large transnational exporting companies. It also prohibits
developing countries from introducing new programs that may help their local
agriculture producers. As a result the agriculture sectors in developing
countries - key for rural poverty reduction - have been devastated.
Access to Essential Services ( health care, education, water, etc). The IMF
and World Bank have made loans conditional upon the liberalization and,
frequently, privatization of public service providers. Usually, the entry of
foreign corporations to supply these services and the introduction of
commercial pricing systems results in higher rates for poor citizens,
jeopardizing their access. The WTO is now negotiating rules that would lock-in
the liberalization and privatization of essential services through the General
Agreement on Trade in Services (GATS). The GATS also seeks to ensure that a
country's domestic regulations are the "least burdensome" to the service
provider, jeopardizing public policy and regulatory systems designed to
protect social development, labor and human rights, consumers and
environmental integrity.
Right of states to regulate foreign investors. Similarly, loan conditions of
the World Bank and IMF have long required borrowing countries to remove
measures that limit the operation of foreign investors in their domestic
economies - limits designed to ensure that the investments benefit the
domestic economy and protect the environment or worker rights. In 1994, the
WTO Agreement on Trade-Related Investment Measures (TRIMs) locked-in the
removal of several of these domestic regulations governing foreign corporate
investors. Current negotiating proposals of the European Union, Japan,
Australia and others in the WTO seek to create a completely liberal investment
and financial framework under the WTO that would leave governments vulnerable
to foreign corporations and susceptible to lawsuits if their domestic policies
undermined free movement of capital.
Governance of the IMF, World Bank and WTO
Instead of owning up to their policy failures and mistakes the WB, IMF and WTO
are now seeking to entrench their misguided approaches to economic growth and
development under the murky guise of "promoting coherence". Furthermore, in
doing so, they continue to operate in undemocratic and unaccountable ways,
which calls their legitimacy into question.
The voting structures of the IMF and World Bank are heavily biased towards
rich countries. Their heads are chosen through exclusive processes open only
to US and European citizens. Their Executive Board meetings are closed to the
public, minutes are not disclosed and loan documents are only available to
parliaments after Board approval, if at all. This secrecy undercuts the
participation by citizens and elected officials in borrowing countries. It
also undercuts the participation by citizens in donor countries since they are
unable to know what their Executive Board members are doing or saying in their
name and with their tax money.
"When you understand how much power the industrial countries hold in the
governance of the Bretton Woods Institutions, you realize why the trade agenda
supported by these institutions tends to be aligned with the negotiating
interests of those same countries within the WTO", said Aldo Caliari from the
Washington DC-based Center of Concern.
The WTO claims a more democratic structure than the IMF and World Bank. In
theory, all members of the WTO have an equal vote. However, secretive and
undemocratic processes routinely undercut this structure as well. Voting has
never occurred and, for weaker member states, it is not feasible to block
consensus in negotiations when they are dependent on rich countries' markets
and aid. This use of power politics is exacerbated by the institutional
practice of the WTO to leave decision-making and selection of leadership as
"flexible" through informal procedures.
Social Justice Advocates Condemn Coherence Agenda
Instead of promoting the wrong kind of coherence, there is an urgent need for
new policy options that should be designed and implemented by democratic and
legitimate institutions. At a minimum, the voting structures and leadership
selection processes of the World Bank, IMF and WTO should be democratized and
their institutional processes should be transparent and open to the public.
The rights of citizens and elected officials to participate in shaping the
trade and financial policies of their governments must be preserved. The
social, developmental and environmental concerns of nations are the
foundations on which trade and economic policies must be built. Therefore,
civil society organizations condemn any "coherence" agenda of the WB, IMF and
WTO that fails to take these foundations as a departing point.
Note:
The content of this press release is drawn from a longer statement that
has been signed by 40 Networks and NGOs. For the full document please go to
http://www.coc.org/resources/articles/display.html?ID=484
Contacts:
Aldo Caliari (Center of Concern, Washington). T: (202) 635 2757 x 123 E:
aldo@coc.org
Daniela Perez Gavidia (International Gender and Trade Network, Geneva). T:
(41) 22 320 2121 E: daniela.perez@igtn.org
Shefali Sharma (Institute for Agriculture and Trade Policy, Geneva). T: (41)
79 764 8658 E: ssharma@iatp.org
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