It is time to propose a new international ”New Deal”
Excerpt from the UNCTAD Trade and Development Report 2014
Believing blindly in market dependability and unregulated free trade had its moment of glory, and continues to meet some success. The foundation considered as a given was even extended to “the miraculous improvement” that would affect the poor countries, which were supposed to export without barriers, since customs tariffs for access into rich nations would be eliminated.
Yet the old ground of miraculous virtues of total free and unbridled trade is no longer gaining as many followers. Voices are increasingly becoming louder to declare that global economic growth does not necessarily go hand in hand with free trade. The UNCTAD, which recently celebrated its 50th year, willingly acknowledges this in its 2014 report on trade and development, whose excerpt we are publishing below1. This is especially true for developing countries, which require some leeway to decide which economic policies are to be conducted beyond the restrictions dictated by bilateral, regional or global free trade agreements.
The UNCTAD thus advocates a new “New Deal” that will best meet the challenges of development. A task that must also be extended to food security. In this respect, a “New Deal” for agriculture must be introduced to initiate the conditions for the emergence of a new global governance system for agriculture, since it alone can safeguard:
- Free markets, thanks to adequate regulation at the international level;
- The food security required for the survival of the very poor and for world balance.
momagri Editorial Board
Fifty years ago this year, and twenty years after a new multilateral framework for governing the post-war global economy was agreed at Bretton Woods, a confident South gathered in Geneva to advance its demands for a more inclusive world economic order. The first United Nations Conference on Trade and Development (UNCTAD) added a permanent institutional fixture to the multilateral landscape, with the responsibility “to formulate principles and policies on international trade and related problems of economic development”. Moreover, and moving beyond the principles that framed the Bretton Woods institutions (and later the General Agreement on Tariffs and Trade (GATT)), it was agreed that “Economic development and social progress should be the common concern of the whole international community, and should, by increasing economic prosperity and well-being, help strengthen peaceful relations and cooperation among nations”.
UNCTAD’s 50th anniversary falls at a time when, once again, there are calls for changes in the way the global economy is ordered and managed. Few would doubt that, during the five intervening decades, new technologies have broken down traditional borders between nations and opened up new areas of economic opportunity, and that a less polarized political landscape has provided new possibilities for constructive international engagement. In addition, economic power has become more dispersed, mostly due to industrialization and rapid growth in East Asia, with corresponding changes in the workings of the international trading system. However the links between these technological, political and economic shifts and a more prosperous, peaceful and sustainable world are not automatic.
Indeed, growing global economic imbalances, heightened social and environmental fragilities and persistent financial instability, turning at times to outright crisis, should give pause for thought and further policy discussion. Hunger still remains a daily reality for hundreds of millions of people, particularly in rural communities, with children being the most vulnerable. At the same time, rapid urbanization in many parts of the developing world has coincided with premature deindustrialization and a degraded public sector, giving rise to poor working conditions and a growing sense of insecurity. Where these trends have collided with the ambitions of a youthful population, economic frustrations have spilled over into political unrest.
Back in 1964, the international community recognized that “If privilege, extremes of wealth and poverty, and social injustice persist, then the goal of development is lost”. Yet, almost everywhere in recent years, the spread of market liberalism has coincided with highly unequal patterns of income and wealth distribution. A world where its 85 wealthiest citizens own more than its bottom three and a half billion was not the one envisaged 50 years ago.
There is no fast or ready-paved road to sustainable and inclusive development; but the past three decades have demonstrated that delivery is unlikely with a one-size-fits-all approach to economic policy that cedes more and more space to the profitable ambitions of global firms and market forces. Countries should ultimately rely on their own efforts to mobilize productive resources and, especially, to raise their levels of domestic investment (both public and private), human capital and technological know-how. However, for this, they need to have constant shrinking of their policy space by the very international institutions originally established to support more balanced and inclusive outcomes.
Insisting on the importance of domestic institutions and policies does not mean adopting a closed or insular attitude to the many development challenges. On the contrary, access to external financial resources and technological know-how is still critical to unlocking the development potential of many poorer and vulnerable countries. Moreover, long-standing development issues - from sovereign debt problems to improved market access in a fairer international trading system, and from commodity price stabilization to financial markets that serve the real economy - can only be addressed through effective multilateral institutions supported by (and this is no small proviso) sufficient political will on the part of the leading economies. Added to these persistent challenges, today’s interdependent world has thrown up a variety of new ones, such as health pandemics, food insecurity, and global warming, which require even bolder multilateral leadership and collective action.
Pursuing bold international collective action to correct the deep inequities of the world, along with determined and innovative domestic policy initiatives, was what motivated the participants at Bretton Woods 70 years ago and in Geneva 50 years ago. Henry Morgenthau, the United States Secretary of the Treasury, was on the mark when he insisted at Bretton Woods that “Prosperity like peace is indivisible. We cannot afford to have it scattered here or there among the fortunate or to enjoy it at the expense of others. Poverty, wherever it exists, is menacing to us all and undermines the well-being of each of us”. As the international community frames an ambitious development agenda beyond 2015, the moment is right to propose another international “New Deal” that can realize the promise of “prosperity for all”.
1 The complete report is available from: http://unctad.org/en/PublicationsLibrary/tdr2014_en.pdf