Trade

United Nations Secretary-General Ban Ki-moon’s first meeting earlier this week with President Obama comes amidst a deepening global economic crisis. The two pledged a new era of international cooperation and the pointed to the work jointly to find solutions.

President Obama said:

We talked about the economic crisis and how that’s affecting not only developed countries, but very poor countries around the world, and the potential threat to food supplies if it continues to worsen, and the need for international coordination.

The UN Secretary-general, who has said we also need to be concerned not only with Wall Street or Main Street, but those who have no streets,” emphasized that:

Leaders of G20 should not lose sight of the challenges and plight of hundreds of hundreds of millions of poorest people of the developing countries who have been impacted by this economic crisis. The leaders of industrialized countries should keep their commitment on Millennium Development goals and official development assistance, and help developing countries overcome food security and also help them to adapt and mitigate climate change.

His visit comes on the heels of more bad news about the crisis. According to a World Bank study prepared for next Saturday’s meeting of the Group of 20 finance ministers and central bank governors in London:

The global economy is likely to shrink this year for the first time since World War Two, with growth at least 5 percentage points below potential. World Bank forecasts show that global industrial production by the middle of 2009 could be as much as 15 percent lower than levels in 2008. World trade is on track in 2009 to record its largest decline in 80 years, with the sharpest losses in East Asia.

This is especially troubling for those least responsible for the crisis — the extreme poor. The study goes on to warn of financing shortfalls of anywhere between $270-700 billion as commodity prices continue to decline, global trade collapses, trade finance and private capital flows dry up and remittances drop.

And according to IMF Managing Director Dominique Strauss-Kahn, “The worst of the crisis is still to come,” specifically in Africa. The poorest countries lack the social safety nets to deal with the crisis and are becoming increasingly dependent on overseas development assistance.

Unfortunately even before the financial crisis hit, rich countries were falling short of their commitments by about $39 billion a year. At least in the U.S., the President’s budget (PDF) goes against the tide. It designated $51.7 billion for the State Department and other International Affairs Programs, a $4.5 billion increase from fiscal year 2009.

As the situation continues to spiral download, some people are looking to the April 2 G20 summit in London to provide a more pro-poor response. Both the UN Secretary-general and President Obama will participate in the G20 meeting.

-Anita Sharma, UN Millennium Campaign

Cadbury’s UK announced their intention this week to convert approximately 20% of their chocolate range to Fair trade, joining Divine Chocolate on a journey we started 10 years ago.

Seventy percent of the world’s cocoa comes from West Africa. Big chocolate companies such as Cadbury’s have been sourcing from the region for a century. While Ghana cocoa has developed a global reputation for its quality, cocoa farmers remain poor and unable to access the true value of what they create.

Divine is delighted that Cadbury is joining us in saying that the current way of working is neither sustainable nor fair. Together we can create a step change, where the very least companies should do is pay a Fair Trade price for the ingredients they buy, and that anything less is just not acceptable.

Today is the 52nd anniversary of Ghana achieving independence from colonial rule. We wonder whether this anniversary marks another historic moment for West Africa. Is this the new era of fairness in the chocolate industry, of real partnership between chocolate brands and the cocoa farmers who help make chocolate great?

We believe that it will be so – with your support.

My challenge to you is this:

1. If you’re planning on purchasing chocolate, use your purchasing power to support Fair Trade for cocoa farmers. You can find a full list of Fair Trade chocolate brands at www.fairtradecertified.org
2. Ask for Divine Chocolate and other Fair Trade products whenever and wherever you shop.

And – I invite you to join in our celebration of this new age of fairness for cocoa farmers. Enter to win a gorgeous Divine Chocolate basket. Share it with your friends and family and ask them to join in and to make trade sweet for cocoa farmers!

-Erin Gorman, Divine Chocolate

Continuing correspondence from ONE staff currently traveling through Ghana and Nigeria to see firsthand some of the extreme poverty and development issues currently taking place in Africa. Today Jennifer Hoerl talks about the West African Trade Hub. Click here to read more about this ongoing series on the ONE Blog.

The West African Trade Hub (WATH) works with West African business owners to export their products internationally, acting as an honest broker between the region and global markets in six sectors – cashews, fish/seafood, shea butter, apparel, home décor, and furniture. The WATH is one of four trade hubs created by the African Global Competitiveness Initiative (AGCI) to assist African producers in navigating the U.S. business arena including understanding U.S. customs laws, finding buyers, and getting assistance with pricing and marketing. The trade-hubs cost little to operate and since 2005 have generated an additional $60 million in exports to the U.S.

Today we met with Vanessa Adams and Elitza Barzakova of WATH, and they showed us two businesses in Accra that were benefiting from the relationship they have with WATH.

Tekura Home Furnishes

Tekura is run by Kweku and Josephine, a husband and wife team that produce incredible wood products, such as masks, tables, and bowls. With the assistance of WATH, Tekura is able to sell its beautiful items to such companies as Target, TJ Maxx, and Pier One. Depending on the order sizes, they employ anywhere from 30 to 100 employees – carvers, sanders, and painters from the local area. Josephine told us that they are truly “a success story, but it wasn’t easy.” Businesses like this have many problems getting started with little or no collateral, difficulty dealing with banks, finding buyers, product development, and maneuvering through the rules associated with export.

Kente Cloth Weavers

Kente is an Accra business run by Bob Dennis and his brothers. Their Kente clothes are Ghana specific, although the thread is both bought in Ghana, and imported from India, China, and Europe. Using such thread as cotton, rayon, silk and the newly added tencil, Bob and his employees create absolutely beautiful fabrics. Their skills at weaving are seen in the intricate details of their place mats, table runners, and blankets. They once produced 50 bedcovers for an Australian company which took them about 1 year. They started their business in 1999 in their basement, and today they employ about 21 weavers, which demonstrates their personal determination and entrepreneurship that were able to come to fruition with some assistance from WATH.

Meeting Josephine, Kweku, and Bob, we could see the pride they had in their businesses, and what their efforts – and a little assistance – can produce.

-Jennifer Hoerl

On Tuesday, the Transatlantic Taskforce on Development released their first-ever report. The Taskforce – the only one of its kind – brings together individuals from the United States, Canada, and Europe, representing governments, NGOs, and the private sector, to discuss global development issues. The Taskforce was assembled by the German Marshall Fund (GMF) of the United States and the Swedish Ministry of Foreign Affairs; ONE’s Executive Director, Jamie Drummond, is a member of the 24-person Taskforce.

The Taskforce’s report presents policy ideas on which North America and Europe can collaborate in order to pursue a broad development agenda, even in the face of the current global financial crisis. The authors laud past moments of international consensus around development – like the Millennium Development Goals (MDGs) – but are adamant that without spurring economic growth in developing countries, and meeting Official Development Assistance (ODA) and trade commitments, recent gains in combating poverty are likely to be reversed.

Meeting the funding commitments previously made to developing countries – and demonstrating that aid does work – is particularly essential in light of the global financial crisis and the threat of decreased development assistance. As the report notes, “It will be increasingly vital to continue to demonstrate that aid actually works, and to show results and impact. A clear message of how the development agenda is linked to the interests of those in developed countries must be repeated and reinforced.”

The Taskforce report provids policy recommendations in four areas in which transatlantic cooperation is necessary for achieving global development goals. It emphasizes that the policy environment in which development takes place must be based on trust and inclusion among developed and developing countries, and encourages policy coherence between North America and Europe. The following is from the GMF press release on the Taskforce meeting:

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Hey, if you’re already planning to buy any chocolate, flowers, or wine for Valentines Day, consider buying Fair Trade. Check out this note we got from TransFair USA below.

-Margaret McDonnell, ONE NGO Partnership Coordinator

This Valentine’s Day, it is easier than ever to show someone you care with gifts that benefit farming communities around the world. Fair Trade Certified flowers, chocolate and now wine are available in retailers nationwide and online.

Fair Trade Certified flowers are already helping ensure that flower workers like Nancy Segovia of Agrogandera, a flower plantation in southern Ecuador, receive fair wages, a safe work environment, paid vacation, maternity and sick leave and access to child care.

Fair Trade Certified cocoa is helping the farmers of the Kavokiva cooperative in the Ivory Coast to fund scholarships and school supplies for members children, build a healthcare center and establish a women’s literacy program.

Fair Trade Certified wine is helping wine producers like Marie Malan to move from her previous position as a domestic servant to the esteemed position of Farm Manager at Stellar Organics, an award winning organic vineyard in South Africa.

By choosing Fair Trade Certified products you are directly supporting a better life for farming families through fair prices and just labor conditions, direct trade, community development and environmentally sustainable farming practices.

This Valentine’s Day, pledge to make all of your purchases Fair Trade Certified and encourage your family and friends to do the same. As a special bonus, our friends at 1-800-Flowers are offering 15% off your next purchase of a Fair Trade Certified bouquet to everyone who takes the pledge. Forward this message to family and friends and they can receive the gift too. To take the Fair Trade Valentine’s Day pledge and forward a beautiful Valentine’s Day eCard to your loved ones, click here.

To find out more about where you can find Fair Trade Certified flowers, chocolate and wine in stores and online please visit our beautiful “Fall in Love with Fair Trade” website.

Thank you and Happy Valentine’s Day!

-James Guzzi, TransFair USA

Part of our ongoing Obama Transition series, examining different sectors of US global development policy. Check out the document we delivered to President Obama’s transition team, and be sure to follow the ONE Blog for further updates on the new administration’s work on global development:

One of the key elements of poverty alleviation in poor countries is the ability to earn resources that can be channeled into basic needs. By exporting their products locally, regionally, and globally, African producers, farmers, and entrepreneurs can earn a living, provide for their families, and contribute to economic growth. Currently, Africa has the lowest share of global trade – at approximately two percent. Now is the time for the Obama administration take action to make trade work for Africa by prioritizing trade policy that encourages development and levels the playing field for African producers.

One example of U.S. trade policy for Africa is the African Growth and Opportunity Act (AGOA), which lowers or eliminates tariffs on African products exported to the U.S. This special access to the U.S. market can help African businesses to take off. In order to better take advantage of AGOA benefits, programs like the four “trade hubs”, created by the African Global Competitiveness Initiative (AGCI), assist African producers in navigating the U.S. business arena including understanding U.S. customs laws, finding buyers, and getting assistance with pricing and marketing. Niche-market exports like flowers, shea butter, and specialized apparel, in particular have benefitted from both access to the U.S. market and technical assistance through the trade hubs. The trade-hubs cost little to operate and since 2005 have generated an additional $60 million in exports to the U.S.

In the short-term, the Obama administration can showcase their commitment to trade by initially providing a total of $65 million in fiscal year 2009 to these programs, an additional $20 million over the 2008 funding levels of $45 million. With an additional funding infusion of $30 million in fiscal year 2010, a total of $95 million will enable USAID to implement the trade hub program in Senegal, Ghana, Kenya, and Botswana, in addition to expanding the model to another three countries.

Trade policy must be well-integrated with development policy in order to fully utilize the power that trade has to unlock the economic potential in poor countries. Tariffs and subsidies hinder access to new markets, and poor countries need better infrastructure facilities, technology, and resources to meet the demands of the global market. We recommend that the Obama administration align trade policy with development goals, and fund a significant new trade and development initiative. More specifically, we are calling for the expansion of AGOA to cover all products and all African countries for another ten years, the creation of a $100 million small and medium enterprises (SME) fund that will ensure access to capital and technical assistance for entrepreneurs and small businesses in the developing world, and commit to a comprehensive aid for trade package that helps Africa meet the challenges of expanding to new markets.

A comprehensive approach to trade and development that will help Africans sell more products on the global market, address Africa’s supply-side challenges, and spur economic growth in the region, can make a significant impact on poverty in the developing world.

-Beth Adler

After heading back from the Financing for Development conference in Doha, ONE’s Berlin-based Policy Manager Andreas Huebers pulled together an analysis of what the final outcomes could mean for Africa and other developing countries. Some excerpts of his analysis are below and the full policy brief is available here.

Although the final outcome document from Doha was not as ambitious as ONE had hoped, the “Doha Deal” struck on the last day of the conference does contain some important language on ONE’s core issues and opens the way towards a strengthened follow-up-process for financing the Millennium Development Goals.

Some positive outcomes of the deal include the following:

• Aid promises: Pledges on aid quantity and quality were weakly reaffirmed. The historic commitments made in Gleneagles to increase ODA by $50 billion globally (with $25 billion of that increase dedicated to Africa) were repeated in a contorted way, by welcoming the Hokkaido-Summit declaration that the G8 are “firmly committed to working to fulfill these commitments”.
• Innovative finance: The outcome document mentions existing mechanisms such as Advanced Market Commitments (AMCs), IFFIM and the air ticket tax.
• Trade and investment: The final document recognizes that development assistance can play a catalytic role in mobilizing private flows. On trade, it reaffirms “special and differential treatment” of developing countries and urges countries to reach agreement by the end of the year on modalities for the Doha Development Round of trade negotiations. It also calls for timely and full implementation of aid for trade commitments as a complement (not a substitute) to the conclusion of the Doha Round.
• Tax evasion and capital flight: The outcome document requests that the UN’s Economic and Social Council make a proposal on this issue. The World Bank’s Stolen Asset Recovery Initiative (StAR) is mentioned in general language and the document calls for additional measures to prevent transfer of stolen assets from developing countries to accounts in the developed countries.
• External debt: The “Doha Deal” mentions a “debt restructuring mechanism based on existing frameworks and principles,” (which can be interpreted as the continuation of the debt negotiations in the creditor-driven Paris Club) and also speaks of “joint responsibility for debt sustainability.”
• Role of developing countries in shaping a global response to the financial crisis: Participants agreed to hold a high-level UN conference in 2009 on the financial crisis and its impact on development. Many other decisions (such as a strengthened follow-up mechanism) were pushed to spring 2009, and a follow-up conference in 2013 is being considered.
• Role of emerging donors: The document includes very general language on South-South cooperation and calls on “new donors” to adhere to principles of aid effectiveness.

The conference was also used to kick off a couple promising new initiatives- the UK launched its Aid-for Trade Strategy and announced that it will spend £400 million annually on aid for trade by 2010. The international task force on innovative financing for health met for the first time and decided to have the next meeting in the spring in London. Germany, Pakistan and the Global Fund also signed a debt2health agreement, through which Germany will cancel $40 million of Pakistan’s debt and Pakistan will contribute $20 million to the Global Fund. Subsequently, the Global Fund will increase their financing of health programs in Pakistan by that amount.

-Andreas Huebers

On Saturday, world leaders pledged to shore up global growth, avoid protectionism and move quickly on regulatory reform. Presenting a united front, leaders from both developed and developing nations promised to take “whatever further actions are necessary to stabilize the financial system” and vowed to “use fiscal measures to stimulate domestic demand to rapid effect, as appropriate”. World leaders also pledged to ensure that developing nations caught up in the crisis have access to dollar finance. They said they would review the resources available to the IMF and other institutions.

Trade negotiators will step up work for a new global pact following a call from the weekend’s G20 summit, but have not agreed on a date for ministers to come to Geneva to seek a breakthrough, diplomats said on Monday. A meeting of about 30 key WTO ambassadors agreed negotiators must still narrow the gap on a range of technical issues before trade ministers can follow up that clear political signal with any chance of success.

As they attended this weekend’s summit, one by one, the leaders of big emerging economies made a single point again and again: no longer will the world’s financial rules be set just by a club of rich countries. That the summit was of the group of 20 emerging and industrialized countries, not the G7 or G8, was itself an indication of the shift in power – as was the fact that the future meetings in the process will also occur in the G20 format. Moreover, the summit agreed to throw open to emerging economies the membership of all the key groups that frame the rules of global finance. “We are talking about the G20 because the G8 doesn’t have any more reason to exist,” said Luiz Inácio Lula da Silva, Brazil’s president. “In other words, the emerging economies have to be taken into consideration in today’s globalised world.”

G20 leaders insisted the call for a breakthrough by year-end in the troubled Doha round of trade talks represented real progress, but gave no signs of specific concessions needed to reach a deal. The summit is the latest in a long string of heads of government meetings to promise prompt action on Doha. The G20 agreed not to impose new protectionist measures for the next 12 months. Officials believe there are signs of movement to resolve the dispute between India and the US over agriculture, the sticking point when the previous meeting of trade ministers collapsed in July.

-Chandler Smith & Steve Wilson

This past Tuesday, a group of African finance officials met in Tunis to discuss the impacts of the global financial crisis on the continent and strategize about how to address the likely consequences. The meeting was a call to action from the African financial community to the leaders attending the G20 summit to put the concerns of the developing world on the agenda for the meeting, which begins tomorrow in Washington, D.C., and to consider Africa’s dire situation when addressing the financial crisis. As we’ve outlined in previous posts, for many African countries the financial crisis could mean an increase in poverty and inflation, a decrease in economic growth, and a deepening of the food and fuel crises already gripping the continent.

ONE’s Edith Jibunoh in Nigeria has sent along a few highlights from the communiqué issued at the meeting which detail important points for this weekend’s G20 summit and the upcoming Financing for Development conference in Doha.

• Ministers said that the financial crisis is undermining Africa’s progress made in the last ten years and, along with the impact of climate change, will hamper countries’ abilities to achieve the Millennium Development Goals. They also expressed concern for the impact the crisis would have on trade and investment.
• On trade, the ministers urged a successful conclusion of the Doha Round of global trade negotiations, especially considering the spillover of the financial crisis to trade. They promised do their part by taking steps to improve the supply capacity in African countries through enhancing competitiveness, building infrastructure, and promoting greater economic integration within Africa. Ministers also promised to deepen their economic reforms and strengthen structures of governance and accountability.
• The Ministers also emphasized the importance of the international community keeping their commitments to Africa to improve aid quality, consistent with the Paris Declaration and Accra Call to Action. They asked that the F4D conference in Doha endorse these issues and reiterate their commitments.
• Finally, the participants asked South Africa to convey their views at the upcoming G20 meeting, although they stressed that one country representing the continent was not a substitute for inclusive African participation. They called for “new multilateralism” that fully reflects current realities and ensures the proper representation of all countries.

ONE will be bringing you information about the outcome of the G20 summit next week, so be sure to check back here.

-Beth Adler

As we reported earlier, October is Fair Trade Month. Erin Gorman, who works at Divine Chocolate, wanted to share some information about their organization and what they’re doing to make trade fair.

-Chris Scott

Happy Halloween! As you plan your costume and celebrations, here’s something delicious to consider: chocolate can help end poverty. Fair Trade chocolate that is. The best news: anyone that eats chocolate can play a part in making change happen.

I have been blessed to have a job that affords me the opportunity to share this good news and great chocolate with people everyday. Divine Chocolate (where I work) is a farmer-owned Fair Trade chocolate company. The 45,000 cocoa farmers that are members of Kuapa Kokoo Farmers’ Cooperative receive a guaranteed Fair Trade price and a social premium that is invested in community projects like schools, clean water, and training to help women start small businesses for additional income. As owners of their own chocolate brand, they receive a share of the profits, a say in the company, and have a seat at the table of global trade.

For the farmers of Kuapa Kokoo and other small-scale farmer cooperatives in the Fair Trade system, the extra money received from Fair Trade enables them to invest in the future – the future of their children and communities. Their investments are not dissimilar to the investments that you and I make. Their aspirations are similar to our own. Fair Trade helps to level the playing field to make it possible to realize those aspirations in a marketplace where farmers and consumers work together to create conditions of respect and dignity.

And it can all start with a bar of chocolate.

There’s no time like now to get started on a chocolate crusade against poverty.

1) Commit to making the chocolate you purchase Fair Trade. Check out TransFair USA’s website to find a list of companies including Divine Chocolate selling Fair Trade chocolate (www.fairtradecertified.org)
2) Ask for Fair Trade chocolate. When you shop, wherever you shop, ask the store to stock Fair Trade chocolate.
3) Raise money with chocolate. Divine Chocolate offers a fundraising program that helps organizations interested in raising funds and promoting Fair Trade. Check it out at www.divinechocolateusa.com
4) Spread the word. Send this post to the chocolate lover in your life.

Good luck with your Halloween costume. Perhaps you could go as a Divine Chocolate bar…

-Erin Gorman