Growing support for a Tobin tax

Oct 19th, 2009 10:28 AM EST
By Joseph Powell

Over the past few weeks proposals for a small tax on international financial transactions, such as currency trades, have gained support from European politicians. The idea, known as the Tobin tax, originated from the Nobel laureate economist James Tobin, who in 1971 proposed a currency transfer tax to curb speculators who were causing dangerous levels of volatility in exchange rates. In recent years campaigners have suggested using the revenue generated from such a tax to fund global public goods. Suggestions have ranged from helping pay for the UN, covering some of the climate change adaptation costs to support for developing country health spending.

The current interest in the tax was arguably sparked by UK Financial Services Authority chief Adair Turner, who commented that the UK banking sector had become bloated and was engaged in too much “socially useless activity”. He suggested a tax on financial transactions could be used to rein in the City and simultaneously create a revenue source for development. Other European government figures have joined the debate, including French Foreign Minister Bernard Kouchner and German Finance Minister Peer Steinbrück. All have been more or less supportive of a tax, but made different proposals on what level it would be set at, its scope and how the money would be used. For example Kouchner called for a voluntary contribution of 0.005% on all currency transactions, which he believes can raise $44.1 billion a year.

The increased political activity has been followed by a reference in the recent Pittsburgh G20 communiqué to finding new ways of making the financial sector contribute to stabilising the global economy. The IMF is now mandated to assess schemes which will include a financial transactions tax.

Taken together these moves represent an opportunity for campaigners to argue for innovative sources of financing for development objectives. Concerns over technical feasibility remain, but could probably be overcome if world leaders agree on the principle of a transactions tax. If agreement is reached anti-poverty groups should be ready to push the case for using at least part of the revenue for international development.

-    Joe Powell

Does trade improve the quality of jobs in poor countries?

Oct 14th, 2009 4:50 PM EST
By Mikiko Imai

Apparently not, according to the new report from the World Trade Organisation (WTO) and the International Labour Organisation (ILO). The surge in global trade over the last two decades has failed to improve working conditions and living standards in many developing countries. Although trade has contributed to growth and development worldwide, many of the jobs created in developing countries have appeared in the informal sector. Informal sector jobs tend to be the most vulnerable, characterised by less job security, lower incomes and an absence of access to social benefits. Yet, in many African and South Asian countries, as much as 60 percent of the country’s labour force is employed by this sector. In turn, these vulnerable labour market conditions have prevented developing countries from fully benefiting from globalisation. The report warns that this situation is likely to worsen as a result of the global financial crisis.

What can we do about this? The WTO’s chief Pascal Lamy encourages putting in place proper domestic policies to create good jobs in developing countries. The report recommends a number of ways to make trade policies more closely aligned with job issues in developing countries, including better coordination between trade and labour policies, and implementing policies to encourage formalisation of employment. Rich country governments also need to support poorer country governments in doing so, and enhanced trade capacity building assistance is one way to do this.

Read the report here

Africa’s trade links (or the lack thereof) in pictures

Oct 9th, 2009 4:02 PM EST
By Mikiko Imai

Here at ONE, we often talk about the fact that Africa’s share of world trade, at around 3.5%, is the smallest of any region in the world. This is concerning because this means that African countries have not been able to reap the opportunities of global trade. Trade and investment could spur economic growth that could in turn help countries work their way out of poverty, but sub-Saharan African countries face some of the world’s greatest challenges in accessing local, regional, and global markets.

William Easterly, Professor of Economics at New York University, introduces a fascinating collection of graphics which illustrates just how scarce the trade links between Africa and the rest of the world is. You can read his blog here.

Can trade ministers gathered in India find the missing piece in the Doha puzzle?

Sep 4th, 2009 1:33 AM EST
By Mikiko Imai

Trade ministers from rich and emerging nations are gathered in India for the second day of the two-day informal trade meeting, to make progress on the G20 commitment to conclude the Doha Development Agenda by the end of 2010. As the US Trade Representative Ron Kirk said before he left for India, this could be a “very important step” for their efforts to do so.

So are we finally close to a trade deal that would allow all countries, especially poor African countries, reap the benefits of trade, where they can work their way out of poverty as a result of new opportunities presented by the expansion of global trade? On the one hand, the economic crisis has renewed the political will for an early conclusion of the long-stalled Doha round and thus there is more scope today to achieve the “ambitious and balanced” WTO deal pledged in L’Aquila in July. On the other hand, we have heard these high-level Doha promises before-without any results.

If the Doha Development Round is to be completed by 2010, participants must ensure that the talks produce a deal that integrates poor African countries into the global trading system. Keeping Africa’s needs in the picture is the only way to achieve a truly global recovery — ONE recovery ONE world.

African countries continue to face multiple constraints to expanding trade. A Doha trade deal must effectively help African countries trade more among themselves and with the rest of the world. For a Doha deal to benefit Africa, it must include real reductions in agricultural subsidies in developed countries, improved market access for goods from African countries, a new financial commitment to aid-for-trade and allow countries to pursue trade policies that support development.

If this progress is not forthcoming through Doha, WTO members should develop a separate trade initiative for sub-Saharan Africa. This could be built on existing preference programmes such as the U.S. African Growth and Opportunity Act (AGOA) and the European Union’s Everything But Arms (EBA) programme. The package needs to be comprehensive, combining market access and effective trade capacity building. A sub-Saharan Africa wide programme would help prevent trade distortions between neighbouring African countries, and could promote regional trade.

The G-20leaders meeting in Pittsburgh later this month should consider how they could achieve harmonised and coordinated trade measures for Africa – this would go a long way towards achieving a Doha deal that really delivers for development.

-Mikiko Imai

Alarm bells for WTO’s proposed cotton deal

Jul 21st, 2009 3:03 PM EST
By Mikiko Imai

You may have heard the news that the leaders of the most powerful developed and developing countries called for a conclusion of the World Trade Organisation (WTO)’s Doha Development Round by the end of 2010 last week at the G8 L’Aquila Summit in Italy.

As trade diplomats negotiate towards a deal, they must make sure that poor countries, particularly in Africa, are integrated into the world trading system. By participating fully in the global economy, countries can earn sustainable resources through exports and ensure that their development concerns are prioritised. Prospects are not looking promising in this regard—a senior African agricultural economist, Mr. Abdoulaye Zonon, raised alarms that the current deal proposed at the WTO to cut cotton subsidies offers little hope to African countries as the proposed cuts apply to only a fraction of actual payments made to its farmers by the US government.

You can read the Reuters article on this here

ONE in Ghana: At the West African Trade Hub

Mar 5th, 2009 11:05 AM EST
By Jennifer Hoerl

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

What can Europe and North America do for development?

Feb 13th, 2009 11:08 AM EST
By Beth Adler

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:

(more…)

Fall in Love with Fair Trade Certified

Feb 12th, 2009 1:42 PM EST
By Tyler Douse

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

The Doha Deal: Outcomes for Africa

Dec 5th, 2008 11:10 AM EST
By Andreas Huebers

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

African Finance Officials Call G20 to Action

Nov 14th, 2008 11:12 AM EST
By Beth Adler

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