Private sector reaps benefits as G20 countries speak aid & ‘development’?

Ruth Bergan – WNN Opinion

Woman working in Bangladesh factory
A Bangladesh textile factory. Schemes like America's African Growth and Opportunity Act do not help countries, a fact the G20 overlooks. Image: Jewel Samad/AFP

Perhaps it is naive to hope that a self-selected, unaccountable body should do anything more than serve the interests of those with the most resources to lobby its members, even if the G20 does choose to establish a so-called development working group (DWG). Leaked papers from the DWG’s most recent meeting clearly demonstrate not only that big business interests trump development, but also that development is increasingly viewed as a tool to achieve greater trade. To quote the document: “development is crucial for global economic growth”.

There is mounting evidence of the devastating human and environmental cost of blind faith in the current economic model, which insists on the primacy of growth. Yet the working group continues to espouse the assumption that trade will lead to growth, which will in turn lead inevitably to poverty reduction.

This refusal to question economic dogma leads the DWG to predictable conclusions, not least that market access is the answer to least developed countries’ woes. The paper congratulates G20 members who have achieved 97% product coverage for duty-free, quota-free (DFQF) access, yet sweeps under the carpet a hugely significant detail: the 3% of products not opened up are precisely those that many developing countries are interested in. For example, the US has special provisions for sub-Saharan African countries under the African Growth and Opportunity Act. But for all other countries – home to around three-quarters of the world’s poor – textiles and apparel (major exports for countries like Bangladesh, Cambodia and Nepal) are excluded. DFQF also does nothing for the poorest producers, who tend to target local or regional markets rather than international ones.

While regional integration, a priority for African governments since independence, is recognised by the G20 as important to development, they also claim increased regional integration can happen alongside greater external market opening. A recent UK analytical paper argues that “regional and global integration are complements and not substitutes”. This ignores the evidence that multilateral liberalisation can work against regional integration: Europe’s Economic Partnership Agreements (EPAs), which seek further liberalisation of African markets, have become notorious for stoking up tensions within African regions.

But G20 countries have a vested interest in multilateral liberalisation happening sooner rather than later. As Traidcraft’s recent report shows, companies are lobbying hard to secure access to Africa’s raw materials, which we depend on for everything from computers and mobile phones to furniture. As a result of this lobbying, the European Council has explicitly called on the commission and member states to use their aid programmes to secure access to raw materials.

Business is lobbying hard for investment agreements in their interests, including the ability to prosecute countries in international courts, without any legally enshrined responsibility to ensure adequate social or environmental standards.

In the face of the increasingly discredited World Trade Organisation (WTO) negotiations, the DWG, ostrich-like, proposes: “A focus on implementation of the undertakings set out in the WTO Hong Kong ministerial declaration“. If there were any grounds for taking them seriously (particularly since these commitments are now six years old) we might be tempted to give them a shopping list of steps they could take. How about prioritising the removal of developed-country trade-distorting subsidies (instead of just finding ways to recategorise them so that they fit WTO-approved boxes)? Or more support for developing countries to diversify away from reliance on export of primary commodities? How about ensuring that the special safeguard mechanism (meant to allow countries to protect their markets from being flooded with cheap imports) is actually accessible to developing countries?

Assuming for the moment that the G20 is unlikely to modify its trade liberalisation agenda, it is perhaps encouraging that it is starting to recognise the need to ensure mechanisms are in place to allow countries to benefit. Trade liberalisation often means reducing tariffs to trade; if this is done without securing a substitute source of revenue, vital services can be seriously affected. Other revenue streams, such as effective taxation and closing tax havens, are therefore crucial. These issues are mentioned by the DWG, although, again, the language is vague. Forget committing to concrete action – countries and companies should “seek greater transparency”, while the G20 should “deal effectively with tax havens”.

While governments are allowed to continue doing business in the G20, we should expect little more than lip service to development and a shopping list of measures to benefit the vested interests of the private sector. The WTO may be in freefall, but we must be vigilant that the G20, which does not even pretend to be democratic or accountable, does not become a substitute.


Ruth Bergan is co-ordinator of the Trade Justice Movement. Her work for the homeless and human rights has included campaigns at Oxfam, HomeWorkers Worldwide and as the Food and Development Programme Manager at The Cooperative College. This op-ed appeared first in the ‘Poverty Matters’ blog via our media partner at the Guardian Development Network.


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