To: Organizations addressing Trade-Finance Linkages

   
1) Trade‐finance linkages highlighted in Employment and Decent Work 
report 
 
2) Responding to World Bank Trade Strategy‐ please comment by 
September 15 
 
3) Capital controls are the "new normal," scholar says 
 
4) GATS an obstacle to financial taxes and capital management 
techniques, memo argues 
 
5) Invitation: How do GATS Rules relate to post‐crisis regulation? 
 
6) Accreditation for World Bank/IMF Annual Meetings open until 
September 27. 
  
__________________________________________________________ 
 

1) Trade-finance linkages highlighted in Employment and Decent Work

report

The UN Non-Governmental Liaison Service released Decent Work and Fair

Globalization: A Guide to Policy Dialogue.

The recent world economic and financial crisis has dramatically increased the
credibility of UN, civil society and other voices calling for a major overhaul in
current approaches to economic governance. An essential anchor to leverage
such change is the 2005 commitment of all Heads of State and Government to
strongly support a "fair globalization" and to make "full and productive
employment and decent work for all" a central policy objective in all relevant
national and international policies, including to meet the Millennium
Development Goals (MDGs).

The new NGLS publication aims to map out the ramifications of this
commitment in terms of better holding economic governance institutions
accountable to full and decent employment goals.
In this regard, a crucial point of departure that the document takes is that "The
need to bring coherence of macroeconomic, trade and financial policies with
development and social goals - especially decent work for all - was a central
conclusion of the World Commission on the Social Dimension of Globalization
established by the ILO in 2002."

Consistent with this approach, in its chapter on trade, the report not only refers
to unfair rules in the trade system, but also to the unfairness created by the
absence of rules in certain issues whose "effects on trade and employment are
much more significant than modest movements in tariff rates and non-tariff
barriers." In doing so it quotes a demand made by the International Working
Group on Trade-Finance Linkages in its submission to the UN Commission of
Experts on Reforms of the International Monetary and Financial System last
year (available at http://www.coc.org/node/6349): "The fast dissemination of the
crisis shows that the fate of developing countries in the trading system does not
lie so much in the achievement of enhanced market access as on meaningful
reforms to the international financial architecture in which context such trade is
conducted."

The relevance of other trade-finance linkages to the employment and decent

work agenda is also usefully covered and substantiated in the report.

Addressing macroeconomic policies for decent work the report refers to the role
that "capital management techniques" can play both in the governments' duty to
protect the right to work by preventing as much as possible financial instability
and crises that lead to the unnecessary destruction of jobs and often permanent
deterioration of average wages and its duty to fulfill decent work-related human
rights, notably through regulating finance in a manner that will maximize
productive employment creation.

Yet, the financial deregulation provisions in a number of other bilateral and

regional agreements that many developing countries have already signed or are
in the process of signing, restrict the ability of countries to implement such
capital management techniques. Reviewing such agreements is a necessary
part of the intensified international cooperation called for in the Global Jobs
Pact, says the report

In a chapter on reform of the international financial system, the report takes on

the connection between trade deficits/ surpluses and the reform of the global
reserve system. In the current system, the guide argues "countries with large
trade deficits are told to cut them back," but without comparable pressure on
large surplus countries. If a country cannot boost its export earnings sufficiently
to close its trade deficit, it depends on capital inflows to make up the difference,
needing to resort to contractionary policies if such inflows are not forthcoming or
the IMF, as often is the case, is not ready to provide them under different
scenarios.

The deflationary bias of the system has been compensated to some extent by
the fact that the United States, as issuer of the world's global reserve currency,
has been able to sustain large trade deficits for a long time. But this, in turn, has
led to a new version of the so-called "Triffin dilemma:" with the dollar becoming
the main choice for settling international payments everywhere, deficits in the
US can only increase. These deficits tend, in turn, to erode confidence on the
sustainability of the US dollar-based system, but the consequences of
diversification of reserves are a fall in the value of the currency, so all actors
tend to hold onto their dollar-denominated assets. The response, in the form of
countries building their own large stocks of US-dollar based assets through
trade surpluses, represents a reduction in aggregate demand that ultimately
runs against global full employment.

The report proposes a solution in the form of an annual emission of an

international currency that would be targeted to offset the increase in "non-
borrowed" reserves - meaning to compensate for reductions in global
purchasing power resulting from excessive reserve accumulation. The system
of allocation could also have built-in incentives or penalties to discourage
countries from maintaining large surpluses. Such system goes back to Keynes'
ideas on an international currency, though it could build on the existing Special
Drawing Rights (SDRs) issued by the IMF, assuming that they are reformed in
important respects, including their allocation basis.

The full NGLS publication can be found at www.un-ngls.org/decentwork

2) Responding to World Bank Trade Strategy- please comment by

September 15

Comments submitted by the Steering Committee of the International Working

Group on Trade-Finance Linkages in response to the World Bank's call for
comments on its upcoming Trade Strategy, are available at
http://www.coc.org/node/6577

We would like to use this document as the basis for more broadly-signed inputs
into the next portions of the World Bank process towards approving its Trade
Strategy (these inputs would not only go into advocacy with Management/staff,
but also with all Executive Directors).

Thus, I ask you to please review the text of the document with the goal of
determining whether your organization could eventually sign on it (the website
above contains also a version in "word" that will hopefully facilitate your input).

Proposals for edits, and comments, will be received until September 15, please
send them to cgibson@coc.org
3) Capital controls are the "new normal," scholar says

In a piece published in the triple crisis blog, University of Denver Professor Ilene
Grabel says "a new normal has flown in under the pundit's radar screen. This
new normal is the proliferation of capital controls, which are being implemented
rather widely across the developing world."

The piece contains a rapid survey of the many countries that are implementing
capital controls and an explanation of why this is happening.

Read the full piece (in two parts) at

http://triplecrisis.com/capital-controls/
http://triplecrisis.com/capital-controls-the-new-normal-part-ii/

4) GATS an obstacle to financial taxes and capital management

techniques, memo argues
In a recent memorandum, Todd Tucker, from the US-based organization Public
Citizen, focuses on the The WTO Conflict with Financial Transaction Taxes and
Capital Management Techniques, and How to Fix It.

The document argues that the General Agreement on Trade in Services

(GATS) of the World Trade Organization is the world's most significant
multilateral agreement restricting countries' ability to use financial transaction
taxes (FTT) and capital management techniques (CMT) to combat speculation
and destabilizing capital floods and flights.

Unlike the many international financial regulatory bodies that are comprised of
financial regulators, the WTO is regime under which FTTs and CMTs can be
challenged as GATS violations, and WTO panels can authorize the imposition
of trade sanctions if these measures are deemed GATS-illegal.

The memo surveys the disciplines in the GATS agreement that affect the ability
of countries to establish such taxes and capital management techniques, the
potential safeguards that GATS offers alongside their weaknesses, including
controversial and unresolved issues that worry legal and financial experts. It
does also provide useful recommendations on how to help insulate capital and
current account management techniques from the impact of GATS.

Read full memo at

http://www.citizen.org/documents/MemoonCapitalControls.pdf
5) Invitation: How do GATS Rules relate to post-crisis regulation?

Please consider attending -or inviting a colleague to attend - this on the financial
crisis at the upcoming WTO Public Forum in Geneva:

This Our World is Not for Sale (OWINFS)-sponsored session, "How Do Gats
Rules Relate to Countries' Post-Crisis Financial Regulatory Policies?" will be
held on Wednesday, September 15 16:15-18:15 in Room D of the Centre
William Rappard.
The Panel includes:

Moderator: Wamkele Mene, Counsellor, South African Permanent Mission

Pedro Paez, Chair of Ecuadoran President Rafael Correa's Technical

Commission on the New Regional Financial Architecture; member of the UN
Commission of Experts on Reforms of the International Monetary and Financial
System
Abdel-Hamid Mamdouh, Director of Trade in Services, WTO Secretariat
Lori Wallach, Director, Public Citizen's Global Trade Watch
Ellen Gould, Research Associate, Canadian Centre for Policy Alternatives

For more details, see the WTO Public Forum Program:

http://www.wto.org/english/forums_e/public_forum10_e/programme_e.htm

For RSVP email Sarah Edelman at sedelman@citizen.org

6) Accreditation for World Bank/IMF Annual Meetings open until

September 27
Accreditation for the upcoming World Bank/IMF Annual Meetings is now open.

The 2010 World Bank and International Monetary Fund Annual Meetings will be
held on October 8 to 10, 2010 in Washington, DC. All Civil Society
Organizations (CSOs) representatives interested in participating in the Annual
Meetings must obtain individual accreditation. Representatives are encouraged
to apply for accreditation online until September 27. To learn more about the
Civil Society Policy Forum (to be held between October 6 - 10) visit

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/CSO/0,,contentMDK:22
661279~pagePK:220503~piPK:220476~theSitePK:228717,00.html

Aldo Caliari
Director
Rethinking Bretton Woods Project
Center of Concern