Southern Alternatives to EU Trade Policy
Introduction: Southern Alternatives to EU Trade Policy 3 Alternatives to the EUâ€™s EPAs in Southern Africa The case against EPAs and thoughts on an alternative trade mandate for EU policy Timothy Kondo 13 Alternative Trade Policies from Latin America A Response to the European Union Free Trade Agenda Enrique Daza 28 Agriculture, trade, food sovereignty and agroecology Proposals on alternatives to current EU trade policies Henry Saragih and Mary Lou Malig
Land justice, land reform and access Proposals for land justice for poor families with particular emphasis on Zambia Joseph Mbinji 56 Alternatives on Resource Trade and Access to Information in Africa A response to EU policy on raw materials Dr Claude Kabemba 69 Mining, people and the environment The Implications of the EU-India Free Trade Agreement Chandra Bhushan and Sugandh Juneja
Transitions towards post-extractive societies in Latin America An answer to the EU Raw Materials Initiative Carlos Aguilar 95 Water Justice and Democracy Alternatives to Commercialisation and Privatisation of Water in Asia Mary Ann Manahan, Buenaventura B. Dargantes, and Cheryl Batistel
Introduction: Southern Alternatives to EU Trade Policy
2 Southern Alternatives to EU Trade Policy
ÂŠ ComhlĂĄmh 2012 Any part of this publication may be reproduced without permission for educational and non-profit purposes if the source is acknowledged. We would appreciate a copy of the text in which the document is used or cited.
Introduction: Southern Alternatives to EU Trade Policy
2 Southern Alternatives to EU Trade Policy
ÂŠ ComhlĂĄmh 2012 Any part of this publication may be reproduced without permission for educational and non-profit purposes if the source is acknowledged. We would appreciate a copy of the text in which the document is used or cited.
Contents Introduction 4 1 . EU Trade Policy & Development
2. Resistance is Fertile! Alternative Perspectives from the Global South
Conclusion 9 References 10
4 Southern Alternatives to EU Trade Policy
Introduction Perspectives on the relationship and linkages between trade and development, and on how trade can support development, diverge significantly, and have been the subject of significant debate for decades. Academics, policy-makers, politicians, and social movements globally adopt a diverse range of positions on what approach impoverished countries should take in trying to achieve sustainable development and move their populations out of poverty. The EU has for many years vigorously pursued wide ranging trade liberalisation in partner countries. It advocates that developing countries open up their markets to international trade, through, for example, reducing the taxes (known as tariffs) and other limits (such as quotas) on goods coming in, increasing rights for investors, pursuing privatisation of key industries and services, and reducing support to domestic producers. It is argued that this economic approach will be of benefit to developing countries, that competition and open markets will promote innovation, specialisation and increased trade and investment, which will lead to economic growth, which will in turn lead to poverty eradication. However, many civil society groups, social movements and others, including the authors and commissioners of this policy report, do not subscribe to this orthodox understanding of economics. This blanket trade liberalisation agenda prioritises the interest of corporations and industries of the global North rather than the interests of people globally. It also undermines developing country governments’ capacity to determine their own economic policies and has contributed to social, economic and environmental crises across the globe. Free trade policies have also contributed significantly to bringing about the ongoing global financial and jobs crisis which sees Europe needing to change its previous policies to address the multiple crises. For years, free trade policies have particularly limited Southern governments’ ‘policy space’: that is the extent to which developing countries are free to choose their own development policies and prioritise the development objectives which will protect the rights of their people and the environment. This policy space is imperative to enable developing countries to stabilise and develop their economies, promote food sovereignty, and to maximise the benefits of any foreign investment in their countries. Most importantly it is necessary to ensure that the benefits of economic development accrue to the poorest portions of the population, while taking into account the fact that limitless economic growth is not possible on a finite planet.
1. EU Trade policy & Development In 2006, the European Commission (EC) unveiled its new Communication Global Europe: Competing in the World, which outlined a new trade policy for the European Union. This document set out an aggressive ‘external competitiveness’ strategy to be achieved through bilateral free trade agreements and at multilateral level through the World Trade Organisation (WTO). The aim of the strategy was to secure new and profitable markets for EU companies, while pushing for even more business-friendly ‘domestic reforms’. The EU, recognising that progress on its liberalisation agenda was stalling at the WTO, set about negotiating a series of ‘ambitious’ bilateral free trade agreements with a range of developing nations which it identified as key markets. The EU had previously acknowledged that trade liberalisation can pose risks to development, observing that “by pitting unequally developed economies against one another, globalisation may, if unharnessed, widen the gap between rich and poor countries and further sideline the poorest economies” (EC, 2002: 6). Nevertheless, it pushed for speedy and far-reaching liberalisation in all its trade negotiations over the years following this strategy. The EU continued to build on this approach in the document Trade, Growth and World Affairs: Trade Policy as a Core Component of the EU’s 2020 Strategy (EC, 2010) which replaced the aforementioned ‘Global Europe’ in 2010. In its most recent communication on the topic of trade and development, Trade, Growth and Development – Tailoring Trade and Investment policy for those countries most in need (EC, 2012), the EC states that “effective trade policy can be a powerful engine for development, in line with the EU principle of Policy Coherence for Development” (pp. 2-3). However the reality is that the EU trade agenda continues to be concerned not with development needs, but with future EU trade and corporate interests. It sets Europe’s trade policy down a path focused solely on maintaining Europe’s competitiveness in the world market. It pushes to remove non tariff trade barriers for European exports and investment, secure better access to energy and raw materials, push the liberalisation of sectors including investment, public services, financial services, and increase protection of intellectual property rights. The EU’s use of bilateral trade negotiations to implement this external competitiveness strategy fails to prioritise people and their employment and food security needs, as well as environmental sustainability, over profits. Instead it is structured to benefit corporations, whether from the North or South, at the expense of producers and workers. It does not adequately take into account the level of development of partner countries or the possible negative impacts of these policies on the local
population, their social, economic and political rights, or the protection of the environment. By pushing to further open market access, Europe’s neoliberal trade polices undermine the ability of governments to protect their infant industries, to support their small scale and subsistence farmers, and more broadly to define their own development policy to address the needs and rights of their populations. EU policies based on “competitiveness” and increasingly open and deregulated markets have already undermined the capacity of developing countries to prioritise sustainable development, poverty eradication, food security and social justice. The type of reciprocal trade liberalisation pushed for by the EU has destroyed local agriculture, dismantled local and regional markets, shut down domestic industries, resulted in privatisation of public services and accelerated environmental degradation, as it attempts to override national policies and insist that all future directives on social, labour or environmental issues for instance, should not threaten the global competitiveness of European corporations. These policies often mean the destruction of local businesses and associated employment, with a large proportion of the profits which emerge from the liberalised export economy expropriated by foreign companies. Evidence shows that the liberalisation of trade has had a devastating impact on jobs and workers’ rights, with less developed countries bearing the greatest burden. For instance, in Ghana the labour market in the industrial sector shrank by 17% in the first eight years of trade liberalisation; for women workers the figure was 22% (War on Want, 2009: 8). In the agricultural sector also, opening market access has been disastrous for small farmers and food security in developing countries. Small scale and subsistence farmers in the Global South have found themselves unable to compete with highly subsidised agricultural imports from Europe and other regions. The concentration of control of land in the hands of big owners has brought about loss of jobs, income and livelihoods, and displacement of rural populations. While the EU imposes more and more economic policy constraints and restrictions on governments, it secures more and more rights for European corporations. The new European Commission focus on investment, as reflected for example in the investment chapters of FTAs (Free Trade Agreements), pushes developing countries to provide concessions to rich countries which go far beyond what is mandated at the WTO. Proposed investor-state-dispute agreements allow multinationals to challenge governments’ social, environmental and economic regulations, ignoring the domestic judicial system and undermining public intervention, if
companies believe they might harm the profitability of their investment (UNCTAD 2012). Such provisions on investment also undermine pro-development policy and the regional integration process, whereby neighbouring states enter into agreements in order to enhance social, political and economic cooperation in their region and strengthen their collective stance on core policy areas. Countries of the Global South are nowhere near as regionally integrated economically as the EU. However they are increasingly moving towards regional integration, seeing the benefits of trading with local partners of a similar development level. ALBA (Alianza Bolivariana para los Pueblos de Nuestra América - Bolivarian Alliance for the Americas) is one of the most well known alternative regional approaches to the focus on liberalisation of the Global North. A number of regions in Africa and Asia are also in the process of consolidating their trade and regional integration with neighbouring nations. However EU trade policies, from EPAs (Economic Partnership Agreements) to its FTAs, which demand that EU companies, services and products receive the same treatment as domestic ones, are preventing governments from supporting national and regional firms to industrialise, and from ensuring that where foreign companies invest, adequate benefit, capacity building and profit go to the host nation and community. The accompanying tendency towards liberalisation of public services, in order to secure competitive advantage for European service providers such as water corporations, results in a diminution of access to such services for poor people, and price increases in the cost of services to consumers, as foreign private companies prioritise profit over public access. In February 2000 for example, protesters in Bolivia took to the streets after the Cochabamba water system was privatised and rates were increased by as much as 100%. These free trade policies also seek to prevent developing countries from protecting their natural environment through regulation, and facilitate the export of environmentally damaging activities (such as mining) to poorer nations with weaker labour and environmental regulation. Consequently, the situation of the poor in developing countries has worsened over the past number of decades, due to the insistence on trade liberalisation, competition, deregulation, structural adjustment and other economic orthodoxies, enforced on developing nations by the Global North. These policies prioritise profit over sustainability and poverty eradication. Despite these observations, increasingly reflected in UN reports1 , and the clear incoherence with EU’s development policies and objectives (CONCORD 2009; 2011), the EU’s Trade strategy continues to pursue
6 Southern Alternatives to EU Trade Policy
a ‘business as usual’ approach. Recently the EU has renewed its efforts to relaunch EPA negotiations and is working to conclude FTAs with regions such as ASEAN and MERCOSUR. It has also begun negotiations with countries such as Egypt, Tunisia, Morocco and Jordan, where recent “Arab Spring” revolutions demanded regime change and reform, including a change to the neoliberal policies that are causing widespread poverty and unemployment, which the EU wants to consolidate before democratic institutions and processes are fully in place. (Cermak et al., 2012: 1).
2. Resistance is Fertile! Alternative Perspectives from the Global South This alarming approach of the EU and the dismal record of free trade liberalisation, has galvanised ordinary people, academics, politicians, and civil society, from both the North and the South, to call for a halt to further trade liberalisation and a rethink and redesign of global trade rules so that they promote economically, socially and environmentally sustainable outcomes for all. In Europe, a broad alliance including development organisations, trade unions, human rights, fair trade, farmers, migrant groups and others have come together under the umbrella of the Alternative Trade Mandate Alliance (ATM). They are calling for an alternative trade mandate for EU trade and investment policy that would support sustainable development and poverty eradication globally. The alliance foregrounds alternatives proposed by organisations and individuals in developing countries and asserts; “There are alternatives to the current trade and investment regime and they are gaining support around the world.” (ATM, 2011: 3). This report aims to contribute to the ongoing dialogues, locally and globally, on alternative trade and economic approaches. We hope to provide a space for proposals to be articulated by organisations and individuals from the Global South which could sustainably enhance local economies, societies and the environment. We also highlight perspectives which propose abandoning the growth model for economic development, taking into account the need to sustainably manage the world’s limited natural resources and ensure human wellbeing across the globe. We hope to promote an alternative discourse by amplifying these proposals in Europe, engaging EU citizens, policymakers, civil society and social movements to discuss these alternatives and to influence the formulation of EU trade policies which achieve pro-environment and pro-poor outcomes.
1 For example, UN Committee on Economic, Social and Cultural Rights, fifth report to German government about agriculture (2011): “‘The Committee notes with deep concern the impact of the State party’s agriculture and trade policies, which promote the export of subsidised agricultural products to developing countries, on the enjoyment of the right to an adequate standard of living and particularly on the right to food in the receiving countries’ (Paragraph 9 cited in Paasch, 2011: 10). See also UNCTAD Trade and Development Report (2010), UNCTAD Secretary General Report (2012), and the work of Olivier De Schutter, UN Special Rapporteur on the Right to Food
Rather than aiming to be exhaustive or conclusive, this report tries to bring together various voices of individuals, movements and organisations in the Global South and present their perspectives and visions of alternative trade policies and processes. It builds on our report commissioned in 2010 (Curtis, 2010) which focussed on European trade policies and agreements driven by the Raw Materials Initiative (2008) and its findings relating to policy space. It also widens the focus to encompass broader natural resource issues including land, agriculture, and water. This reflects the increasing focus on natural resources in trade and investment policies of late, given the abundance of natural resources in developing nations, and their central role in securing pro-poor and sustainable development.
The contributors and topics for discussion were selected on the basis of being linked to ongoing EU policy processes (so as to be useful in Europe) and representing issues being discussed by a significant portion of civil society and social movements in the Global South. Each contribution highlights and reflects the experience, perspectives and policy alternatives, of communities in the Global South who are living through poverty, debt, economic policy conditionality and lack of economic sovereignty. These people and movements have challenged the economic orthodoxy locally and globally for decades, with concepts such as Mother Earth, illegitimate and odious debt, and alternative trading patterns, rules and approaches. The report highlights many existing proposals from the Global South to enhance the development benefits from trade, deconstructing the notion that ‘There is no alternative’ to market liberalisation, while not necessarily advocating for any particular ‘right answer’. It should be stressed that the opinions laid out in the various contributions do not necessarily reflect the views of the project partners. Rather they are presented as valuable, diverse and different perspectives, reflecting the range, depth and scale of alternative visions of a global and local trading system which benefits all and does no harm. The contributions provided and alternatives proposed are diverse with varying levels of detail, longevity of focus or degree of applicability, reflecting the diversity and complexity of these debates across the globe. Such perspectives are often not acknowledged in European policy dialogues, or given serious consideration and reflection. However we believe that it is essential that the EU takes into account alternative proposals from the Global South and the development objectives of its partner countries in its trade policies, if Europe is to ensure coherence between its own trade and development agendas. This is all the more urgent in the context of a global economic downturn and climate crisis which is disproportionately impacting upon developing country economies and livelihoods. The following section contains short summaries of each of the eight contributions from Southern authors on alternatives to the EU’s current trade policy.
2.1 Agriculture and Land Two contributions to this report address issues relating to agriculture and land and how free trade policies and the liberalisation agenda have challenged food security. In his contribution, Joseph Mbinji of the Zambia Land Alliance focuses on obstacles faced by poor families in Zambia accessing and obtaining legal tenure to land,
especially in the face of land grabs and increased foreign demand for agricultural land. He argues that the main driving force behind land injustice in Zambia is liberalisation and introduction of land markets, adopted at the behest of the IMF and World Bank, coupled with pressure from the WTO and EU, through both multilateral and bilateral trade policy negotiations. He explores several alternatives that would improve land justice for the poor, including proposals to address land grabs and protect poor families, for securing legal title to land and livelihoods, and to reduce the negative effects of increasing food prices. In their contribution, Henry Saragih and Mary Lou Malig from La Via Campesina, argue that the liberalisation agenda has resulted in several Asian countries changing from being exporters into net importers of staple foods, such as rice, with local markets being flooded by artificially low priced crops imported from subsidised countries in the North. With little control over pricing, which is susceptible to financial speculation and market fluctuations, rising prices have undermined food security in the region. Saragih and Malig outline the principles an alternative Asia could be based on, which would reclaim the people’s sovereignty and build a common vision that encompasses the shared hopes, dreams and goals of communities and countries. They outline alternatives that would achieve food sovereignty by putting the aspirations and needs of those who produce, distribute and consume food at the heart of food systems and policies, rather than the demands of markets and corporations. Both contributions call for the EU to halt negotiations and trade policies which do not put the interests of people and need for food sovereignty at their centre. In particular, Saragih and Malig criticise the EU for backing the Global Partnership for Agriculture and Food Security (GAFSP) which they see as advancing the take-over of land by agribusiness in the name of increased land investment and higher agricultural productivity. They also demand a halt to the current system by which food production is monopolised by transnational and big agribusinesses.
2.2 Water and Access to Public Services The impact of EU trade policies, which prioritise the interests of European corporations, on access to public services for the poor is highlighted in the contribution by Mary Ann Manahan, Dr. Buenaventura Dargantes, and Cheryl Batistel, who detail the privatisation of water service provision and the dominant position of European water companies in Asia, with particular focus on the Philippines. They argue that the trend towards privatisation and commodification of water has reduced
8 Southern Alternatives to EU Trade Policy
access to safe drinking water and improved sanitation for poor people, resulting in the search for alternative water service provision. These alternatives include provision of water services by municipalities or local councils, local communities, cooperatives, public to community as well as public to public partnerships (PuPs) which are proving successful in securing water justice, access to safe drinking water and improved sanitation for poor families. In their contribution they argue that regional and bilateral free trade and comprehensive investment agreements, (such as the EU-ASEAN Free Trade Agreement which includes a provision for investor-state dispute resolution) are being employed by the EU as a means of securing more market access and corporate control through foreign direct investment. They believe that the liberalised environment being sought by the EU through trade negotiations, such as in the FTA already signed with Singapore, would favour European investors and privatisation of essential services, further consolidating their interests in Asian economies. Consequently they call on the EU to rethink existing EU bilateral and regional investment and free trade agreements that intend to open Asian markets and to ensure that Asian countries have the flexibility to choose policies which meet the needs of their people and the environment.
aim to bring greater transparency and accountability to the extractive industry in Africa. He cautions that EU trade and investment policy, especially in the form of the Raw Materials Initiative (RMI) and Economic Partnership Agreements (EPAs), could undermine the effectiveness of these initiatives. Responding to the EU’s Raw Materials Initiative, Carlos Aguilar takes an alternative position to the other contributors by reflecting on the historical role of extractivism in Latin America, criticising extractivism as a development approach and proposing a transition to post-extractive societies. He outlines initiatives which aim to design and implement social alternatives which depend less on extractive industries, and the diverse strategies being adopted by individual states as they respond to the pressure to provide the raw materials targeted by the EU’s Raw Materials Initiative. He argues that there has been a failure to recognise that a development paradigm based on exports and foreign investment will not address historical and structural problems of inequality but will make local communities pay for the environmental and social costs of extractive activities. Post-extractivism is therefore proposed as an alternative vision for Latin American societies, supporting rather than undermining the needs of the people and planet.
2.3 Extractive Industries and Raw Materials Three contributions explore the impact of EU trade policy on countries’ efforts to protect their natural resources and environment and/or ensure maximum benefit is derived where some degree of extraction does take place. Chandra Bhushan and Sugandh Juneja of the Centre for Science and Environment, New Delhi argue that the proposed EU-India FTA will undermine many of the progressive pro-poor and pro-environment provisions in a newly crafted domestic mining law – the Mines and Minerals (Development and Regulation) (MMDR) Bill, 2011. This bill establishes provisions including sharing mining profits with local communities, participation of local communities in decision-making processes, tightening of environmental regulations, among others, which conflict with European provisions on national treatment, dispute settlement and disclosure of information. Dr Claude Kabemba, director of the Southern Africa Resource Watch (SARW), in his contribution tackles the scourge of secrecy and lack of access to information in the extractive industry in Africa. He argues that secrecy in the extractive industry is one of the biggest problems confronting African governments, civil society, and local communities, in their effort to secure mining justice and effective natural resource governance. Kabemba outlines several recent initiatives at both international and national level that
2.4 Regional Integration and Economic Agreements Finally, the report addresses the impact of EU trade policy on regional integration and economic agreements with contributions by two authors. Enrique Daza, Secretary of the Hemispheric Social Alliance, outlines the range of alternative proposals to the dominant neoliberal economic approach currently being explored in Latin America, such as the ALBA3 and the People’s Trade Agreement. He argues that the financial crisis has raised many questions about the “social model” of European integration, which is in sharp contrast to the Latin American integration and social development agenda. He cautions that concentrated focus on the export of raw materials and dependency on speculative capital driven by the EU will only serve to increase the vulnerability of the region in the face of the global crisis. Finally, he argues that the EU’s trade and investment policies have weakened the regional integration processes in Latin America, giving the example of Europe’s agreement with Central America which prioritises free trade over sub-regional integration. He proposes that the EU pay more attention to the alternative proposals coming from Latin America such as the ALBA-TCP (People’s Trade 3 Bolivarian Alternative for the Americas. ALBA was a proposal of Hugo Chavez back in 2001, which became effective in December 2004. It is a political alliance of 9 countries around principles of solidarity and integration.
Treaty) which calls for a form of integration where international agreements are based on reciprocity, mutual benefit, national sovereignty, the protection of internal markets and respect for the basic rights of the people and the planet. The final contribution by Timothy Kondo, representing ANSA (Alternatives to Neo-liberalism in Southern Africa), sets out ANSA’s perspective on trade policy and regional integration for southern Africa which would support a people-driven bottom-up approach to economic development. The positive role of civil society in stalling EPAs negotiations, identified as “a re-colonisation strategic plan rather than development instrument”, is outlined in his analysis of the EPA negotiation process. He stresses that the current structure of EU-ACP (African, Caribbean and Pacific) trade relations, and the economic threats to development for ACP countries which are included in the EPAs under negotiation, make it imperative for civil society to formulate and campaign for alternatives. In his contribution he calls for collective action between EU and ACP civil society in order to achieve development that prioritises people and the planet, reinforcing the need for a bottom up approach to trade and development issues.
4. Conclusion Given the depth, breadth and diversity of the perspectives in the alternative proposals from our Southern contributors, it is perhaps surprising that there are certain key commonalities between all contributions. The contributors clearly identify common principles and themes which should be at the heart of international trade policies particularly if the EU is to ensure coherence between trade and development policies. This includes ensuring that:
trade policy places people before profits where corporations are agents of positive change, not drivers of trade rules for profits; the need for participatory democracy is upheld and citizen engagement in decision-making supported; structurally unequal power relations are challenged and equitable and just power relations are established within countries and across regions; international conventions, agreements and treaties on human rights, labour and environmental standards are upheld and enhanced rather than undermined by global trade policy and practices; information is transparent and shared freely; and the trade practices undertaken protect the universal and inalienable human rights of all people and respect the Earth’s natural limit and the need to avoid catastrophic climate change.
European trade and investment policy must respect and serve the overarching aims of universal and indivisible human rights, decent work, democracy, ecological justice, gender equality, justice between countries, regions, social classes, castes and ethnicities, and the fight against poverty. The wealth and depth of perspectives from people in the Global North and South who suffer the impacts of neoliberal policies must be acknowledged by European policy-makers. It is increasingly urgent that a conversation on alternative visions for the world is nurtured, highlighting positive alternative approaches, at grassroots or international level, where economic policy is balanced by social and environmental need. To respond to the global and myriad crises facing our world, economically, socially and environmentally, the EU must desist from adopting a business as usual approach. To do so would ignore the role that the current economic paradigm and orthodoxy has played in contributing to these crises, and miss an important opportunity for European trade and development policy to achieve its overall aim of poverty eradication and sustainable development. For the sake of people in Europe and globally, and of the planet, it is imperative that European policy-makers pay heed to civil society voices globally and engage with this important discussion and debate.
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REFERENCES Alternative Trade Mandate (2011) An Alternative Trade Mandate for the EU, Seattle to Brussels Network (online). Available:ht tp://w w w.s2bnetwork.org /fileadmin/ dateien/downloads/ATM_EN.pdf [09/05/2012]. Cermak, M., Canonne, A., and Knottnerus, R. (2012) EU Deep and Comprehensive Trade Agreements: A Threat to the Aspirations of the “Arab Revolutions”, Réseau Seattle to Brussels (online). Available: http://www.s2bnetwork. org/fileadmin/dateien/downloads/Stand-alone_text_ on_Arab_DCF TAs_final_in_layout_plus_authors.pdf [09/05/2012]. CONCORD (2011) Spotlight on EU Policy Coherence for Development, Brussels: O. Consolo, CONCORD. Available:http://coherence.concordeurope.org/pdf/ Concord_Report_15_AW_LORES.pdf [09/05/2012]. CONCORD (2009) Spotlight on Policy Coherence, Brussels: O. Consolo, CONCORD. Available: http://www. concord.se/upload//CONCORD_PCD%20Spotlight%20 report_light.pdf [09/05/2012]. Curtis, M (2010) The New Resource Grab: How EU Trade Policy on Raw Materials is Undermining Development, Traidcraft Exchange, Oxfam Germany, WEED, AITEC, and Comhlámh. Available: http://comhlamh.org/assets/ files/pdfs/The%20New%20Resource%20Grab.pdf [16/05/2012]. European Commission (2012) Trade, growth and development: Tailoring trade and investment policy for those countries most in need, Luxembourg: Publications Office of the European Union. Available: http://trade.ec.europa.eu/doclib/docs/2012/january/ tradoc_148992.EN.pdf [09/05/2012]. European Commission (2010) Trade, Growth and World Affairs: Trade Policy as a Core Component of the EU’s 2020 Strategy, COM(2010)612 [online]. Available: http:// trade.ec.europa.eu/doclib/docs/2010/november/ tradoc_146955.pdf [09/05/2012]. European Commission (2006) Global Europe: Competing in the World, Brussels. Available: http://trade.ec.europa. eu/doclib/docs/2006/october/tradoc_130376.pdf [09/05/2012]. European Commission (2002) Making globalisation work for everyone: The European Union and world trade, Belgium: European Communities, 2003.
Paasch, A. (2011) Human Rights in EU Trade Policy – Between Ambition and Reality, Ecofair Trade Dialogue Discussion Paper: MISEREOR (Aachen), Heinrich Böll Foundation (Berlin), Glopolis (Prague). Available: http:// www.s2bnetwork.org/fileadmin/dateien/downloads/ Disk.Papier_EU_en_fuer_web.pdf [09/05/2012]. War on Want (2009) Trading Away Our Jobs: How free trade threatens employment around the world, London: War on Want. Available: http://www.waronwant.org/ attachments/Trading%20Away%20Our%20Jobs.pdf [09/05/2012].
Alternatives to the EUâ€™s EPAs in Southern Africa The case against EPAs and thoughts on an alternative trade mandate for EU policy Timothy Kondo
2 Southern Alternatives to EU Trade Policy
Timothy Kondo has been active in the Zimbabwe trade union movement for more than 30 years, and is currently Programme Coordinator at Alternatives to Neo-liberalism in Southern Africa (ANSA). ANSA act as a focal point, guide and catalyst to engage people, institutions and movements in the region and beyond, to join and forge alliances in the common pursuit of an alternative to neo-liberalism. He has specialist knowledge of working class global struggles against exploitation and interests in working class goals.
ÂŠ ComhlĂĄmh 2012 Any part of this publication may be reproduced without permission for educational and non-profit purposes if the source is acknowledged. We would appreciate a copy of the text in which the document is used or cited.
Alternatives to EPAs in Southern Africa 3
Contents Introduction 4 A. History of EU-Africa trade relations
B. The Economic Partnership Agreements negotiations
C. The Quest for an Alternative EU-ACP Trade Policy 8 D. Challenges for Non State Actors 11 Recommendations 14 References 14
4 Southern Alternatives to EU Trade Policy
Introduction This paper is a contribution to the debate on alternatives to the current EU Trade Policy. Its focus is on Economic Partnership Agreements (EPAs) and the strategies of Non State Actors to achieve progressive change. The paper begins by explaining the background of EU-Africa trade relations and then analyses the current EPA negotiations and their impacts. This sets the basis for the development of alternatives. ANSAâ€™s (Alternatives to Neo-liberalism in Southern Africa) principles on EPAs and, more generally, on trade policy and regional integration are presented. But alternative ideas do not become reality without actors working towards change. Therefore, in the last section, this paper devotes special
attention to strategies of Non-State Actors in the field of trade policy and presents recommendations on how to make the work on alternatives more effective. ANSA sees itself as a focal point, guide and catalyst that stimulates people, institutions and movements in Southern Africa as well as beyond to join hands and forge alliances in a common pursuit of an alternative to neo-liberalism. The discussion in this paper will draw upon the following ten ANSA principles: as outlined in Box 1 below:
BOX 1: The ten principles of ANSA (Alternatives to Neo-liberalism in Southern Africa) 1. Trade and development policy is led by the people 2. Autocentric development, based on domestic, human needs and the use of local resources 3. Regional integration, led from the grassroots 4. Selective de-linking and negotiated re-linking 5. Alternative science and technology 6. National, regional and global, progressive alliances 7. Redistribution of wealth to empower the non-formal sectors 8. Gender rights as the basis for development 9. Education for sustainable human development 10. A dynamic, participatory and radical democracy. Source: (ANSA 2007a)
Alternatives to EPAs in Southern Africa 5
A. History of EU-Africa trade relations Africa and Europe have had a long relationship dating back to the Berlin Conference of 1884 when European countries partitioned Africa for colonisation. This lopsided colonial relationship between Africa and Europe lasted from 1884 to 1957 when the first African country (Ghana) got its independence; the rest followed in the 60s, 70s, 80s, and 90s respectively. After the attainment of independence, however, most African economies remained linked to their former European colonial states, who continued to own and control the key economic sectors (mining, industry, agriculture, fisheries, services, commerce, tourism and banks). This encouraged the continuation of a lopsided trade relationship (which continues to this day) in which African countries supply raw materials while European countries export manufactured or finished products. To address this imbalance in trade and economic ties between the EU and ACP (African, Caribbean and Pacific) countries, trade negotiations were initiated, initially under the Lomé Conventions (1975 to 1990), then under the Cotonou Partnership Agreement (CPA) (2000), and currently under EPAs. It is worth revisiting the core principles of CPA. The core principles of the CPA (Article 35) on economic and trade cooperation were as follows: Economic and trade cooperation shall be based on a true, strengthened and strategic partnership.
“Economic and trade cooperation shall build on regional integration initiatives of ACP states, bearing in mind that regional integration is a key instrument for the integration of ACP countries in the world economy.” (Article 35, CPA, 2000)
“Economic and trade cooperation shall take account of the different needs and levels of development of the ACP countries and regions. In this context, the parties re-affirm their attachment to ensuring special and differential treatment for all ACP countries and to maintain special treatment for ACP LDCs (Least Developed Countries) and to taking due account of the vulnerability of small, landlocked and island countries.” (Article 35, CPA, 2000)
The above principles were based on the understanding that “Africa in particular, remains a marginal player in world trade (6% in 1980 and 3% in 2008) since the continent’s trade structure still lacks diversity in terms of production, exports and markets. As such,
negotiations to further liberalise African economies as prescribed by Structural Adjustment Programmes (SAPs), will be a futile and possibly suicidal exercise until certain pre-requisites are met and instituted within their economies. The emphasis on trade liberalisation alone as a means to stimulating growth and development is therefore misplaced” (SEATINI, 2009: 3). The argument from the onset became that liberalising trade or opening up Africa’s markets to the EU through bilateral trade agreements won’t be the panacea to solve the development challenges that the continent faces. The objectives of the CPA favourable to ACP countries included “achievement of sustainable development, eradication of poverty, reinforcement of regional integration, improved market access, and the gradual integration of Africa into the global economy” (CPA, 2000). Africa, therefore, expected that in the shaping of this important partnership and new trade regime, EU partners will be supportive of the attainment of these objectives. In other words, trade agreements between the EU and ACP countries that have progressed from the Lomé Convention, to the CPA, and now under EPAs, have always been seen as being more than just trade agreements. They have always been taken as instruments intended to change the productive, industrial and trade architecture of ACP economies.
6 Southern Alternatives to EU Trade Policy
B. The Economic Partnership Agreements negotiations As from September 2002, the CPA gave the legal basis to negotiate the current EPAs. EPAs are meant to be a comprehensive arrangement governing Aid and Trade relationships between the EU and ACP countries, and compatible with the World Trade Organisation (WTO) Rules. The deadline for EPA negotiations to be concluded was set for December 2007, and taking effect from January 2008. So far, however, EPA negotiations have failed to meet this. The deadline was missed due to a flurry of resistance especially from Non State Actors in Africa. ANSA participated in the resistance; the dominant belief was that EPAs are a re-colonisation strategic plan, designed by the European Union to perpetuate their self-interests of economic growth. The price Africa pays for signing EPAs is the increasing dependence of African countries on trade with Europe including aid and debt.
product] contribution of agriculture value added in Africa decreased from 41% to 22%. [During the same period], the GDP share of industry increased from 17% to 32%, while the share of services [recorded a rise] from 42% to 46%” (ibid.: 60). The report further notes that this structural change has not resulted in the type of economic diversification that is most needed to sustain growth and development in the long term” (ibid.). In fact, the African productive structure has become less diversified and the implementation of EPAs in their current form will further weaken any prospects of developing the productive base that is critical in supporting the industry and service sectors.
The “STOP EPA” campaign by the African Civil Society
Technical and political hurdles stood in the way of concluding full and comprehensive EPAs by the end of 2007, including a divergence in understanding of what pro-development EPAs constitute, that persisted for most of the previous phases of the negotiations. According to the UN Economic Commission of Africa (ECA) (2008), EPAs should have a “Development Chapter” that has the following key elements:
ANSA supported national processes, in various SADC (Southern African Development Community) countries and at the regional level, urging various actors to engage their policy makers, trade negotiators and other relevant and critical stakeholders demanding EPAs to stop, fearing that they would further plunge African countries into irreversible underdevelopment. ANSA convened and participated in various workshops, some of which culminated in declarations and positions being put forward on the pertinent issues in the negotiations.
“It should have shared understanding of development including references to overcoming major trade-related constraints and achieving certain satisfactory living standards within given time frames” (ECA, 2008: 8).
The Non State Actors from Africa established a plethora of issues that places ACP countries in compromising positions in the EPA negotiations which included the following:
It should also have “unequivocal commitments to putting development at the centre of EPAs and the understanding that all provisions of the EPA should support development” (ibid.).
1. Capacity and technical expertise limitations: The EPA negotiations demand a variety of expertise/ skills/knowledge/experience, e.g. from lawyers, economists, statisticians, business analysts, trade experts, etc. The European Commission (EC) negotiators can afford to pull together these different skills, knowledge, expertise and experience in one team of negotiators. The African teams, on the other hand, have to rely on their diplomatic personnel already working in the foreign missions in Europe. Hence, the African teams’ diversity of skills, knowledge, expertise and experience which they could contribute to the negotiating teams is compromised, affecting their capacity to have an in-depth understanding of the content of the voluminous EPA documents, and to competently analyse and critique the intents and potential hidden agendas behind the technical language.
“Clear commitments on adequate resources with clear obligations on EU and the member States; and an appreciable indication at some length of areas of cooperation and interventions with a clear prioritisation of regional integration, infrastructure, regional and global competitiveness, diversification and value addition, investment generation and industrialisation, and references to key international instruments on development and aid” (ibid.).
But the fear that EPAs are simply trade tools and not development instruments cannot be wished away. The UN Economic Commission for Africa in its 2009 Economic Report on Africa (ECA, 2009) notes that, “between 1960 and 2007, the GDP [gross domestic
Alternatives to EPAs in Southern Africa 7
2. Time constraints: The African EPA negotiators largely comprises the diplomatic staff based in Europe, as part of other day-to-day duties in the foreign missions, whilst the EC has a dedicated team of full-time experts selected on the merits of their trade negotiations skills, knowledge, experience and expertise. Thus the negotiators from African countries suffer time constraints for research, reflection, analysis, consultation, review and forward planning. The negotiations were also being fast tracked to meet the deadline of December 2007. 3. Reconfiguration constraint: African countries have established their regional blocks such as SADC, COMESA (Common Market for Eastern and Southern Africa), ECOWAS (Economic Community of West African States) to foster regional trade and integration. However, the EU reconfigured these countries into new groupings just for purposes of EPA negotiations, thereby undermining the objectives of self-initiated regional integration by the African countries. This “divide and rule” strategy makes it difficult for the African countries in the new configurations to develop, agree and adopt common positions in the EPA negotiations. 4. Accountability constraint: The greatest resistance against EPAs is being driven by Non-State Actors
(Civil Society) in African countries. However the majority of the African governments are enthusiastically willing to continue with the EPA negotiations against the will of their people. These African governments make no effort to inform, update, report back to or consult the people over EPA negotiations.
The state of affairs with regard to the signing of EPAs by African States At the time of writing, four years after the original deadline, EPAs are at an impasse. A small number of ACP countries have signed agreements; some have initialed agreements under pressure, but are fighting for a re-negotiation of contentious issues, while others have refused any agreement with the EU because the text on the table is not acceptable to them. One result of this situation is the disruption of existing regional integration processes, especially in Africa, where the AU and the various Regional Economic Communities (RECs) have been disregarded and ignored by some African countries, which proceeded to initial and/or sign EPAs, against the advice of the African Union (AU). A generic comparative analysis shows further disintegration of various African regional groupings (see Table 1), which is very worrying to all concerned Non State Actors (civil society players in particular).
Table 1: Stages of EPA negotiations by African countries Countries who have no EPA
ESA Djibouti (LDC), Eritrea (LDC), Ethiopia (LDC), Somalia (LDC), Sudan (LDC), Malawi (LDC). ‘SADC’ Angola (LDC). Central Africa Congo, CAR (LDC), DRC (LDC), Gabon, Chad (LDC), Equatorial Guinea (LDC). ECOWAS Nigeria, Mauritania (LDC), Senegal (LDC), Gambia (LDC), Guinea (LDC), Guinea Bissau (LDC), Mali (LDC), BurkinaFaso (LDC), Liberia, Sierra Leone (LDC), Togo (LDC), Benin (LDC), Niger (LDC), Cape Verde.
Countries who have initialled but not signed an interim EPA
ESA Comoros (LDC), Zambia (LDC). ‘SADC’ Namibia. ECOWAS Ghana. EAC Burundi (LDC), Kenya Rwanda (LDC), Tanzania (LDC), Uganda (LDC).
Countries who have signed but not taken any steps to ratify an interim EPA
‘SADC’ Botswana, Lesotho (LDC), Swaziland, Mozambique (LDC). Central Africa Cameroon. ECOWAS Ivory Coast.
Countries who have ratified an interim EPA
ESA Mauritius, Madagascar, Seychelles, Zimbabwe.
Source: European Commission’s overview of state-of-negotiations: http://trade.ec.europa.eu/doclib/docs/2006/ december/tradoc_118238.pdf; European Commission’s website on ACP relations: http://ec.europa.eu/trade/ creating-opportunities/bilateral-relations/regions/africa-caribbean-pacific/
8 Southern Alternatives to EU Trade Policy
In July 2007, an ANSA workshop issued a communiqué whose conclusion stated that: “the SADC and ESA governments and civil society organisations at large should reject the imposition of the proposed EPAs on the basis of lack of a common position on EPAs within the SADC and ESA governments and between the governments and CSOs [civil society organisations] in various countries and that EPAs are destroying regional integration initiatives [such] as SADC and COMESA” (ANSA, 2007b). The declaration by the 5th Ordinary Session of African Union (AU) Ministers of Trade held on 20 March 2009 in Addis Ababa confirmed the fears that Non State Actors have raised since the EPAs were launched. The interests of Africa are compromised by the individual countries that have signed EPAs against the advice of the AU, also violating the letter and spirit of Article 35.2 of the Cotonou Partnership Agreement (2000) which specifies that: “economic and trade cooperation shall build on regional integration initiatives of ACP States, bearing in mind that regional integration is a key instrument for the integration of ACP countries into the World economy”.
C. The Quest for an Alternative EU-ACP Trade Policy The current structure of the EU-ACP trade relations, and the threats included in the EPAs under negotiation makes it mandatory for civil society to formulate and campaign for alternatives. NGO and social movements in the EU have joined hands with colleagues in ACP countries in the framework of the STOP EPA campaign. Some EU civil society organisations have started a process towards a radical change of the EU trade policy, under the title “Towards an Alternative Trade Mandate for the EU”. The following discussion is intended to ‘walk the talk’ about stopping EPAs from an ANSA perspective: Primarily, the EU trade arrangement with the ACP countries is influenced by the current neoliberal globalisation process, driven by the global monopoly capital that dominates the world market, world trade and foreign direct investment (FDI) in developing countries. The thrust of neoliberalism is maximisation of “profits” particularly for FDI, whereas ANSA prioritises human needs and interests. The contradiction is that EPAs seek to advance the neoliberal globalisation agenda even though neoliberalism is the major cause of the escalation of poverty levels and the entrenchment of poverty amongst the people of Africa.
The current neoliberal globalisation process is directly responsible for the current global crisis as illustrated by:
> Persistent growth of abject poverty and mortality rates among people of developing countries particularly in Africa; > Worsening global climatic changes resulting from massive destruction of the environment by largely multinational corporations in their thirst and wild global chase for profits; > Deteriorating living standards of a majority of African people resulting from the unjust, unfair and disproportionate distribution of social, economic and political resources, opportunities, and privileges in many African countries. The situation fuels unrests, protests, riots, demonstrations, to the extent that some of the mass-based struggles result in the regime change agenda spreading quite fast, e.g. in Arab-Africa countries; > The global financial crisis which has hit most private banks in the USA & EU, has resulted in the USA & EU Governments bailing out private banks using public funds;
Alternatives to EPAs in Southern Africa 9
> The spread of protests in developed countries e.g. the on-going Occupy movement which has spread from Wall Street to London to Frankfurt and other European cities where tension is growing and mass protests looming. ence, it is timely to formulate, adopt and implement an H alternative approach to the EU trade policy.
The ANSA Initiative’s Perspectives and Strategies for an Alternative EU Trade Mandate As one element of its work, the ANSA initiative has developed a comprehensive alternative vision for trade and regional integration policy in Southern Africa (see Box 2). The current EU trade policy, especially the EU’s negotiating position on EPAs, undermines such an alternative model. To allow Southern Africa and other regions to develop a people-driven, bottom-up approach to economic development, the EU should
revise its positions. Box 2 reflects ANSA’s positions on the challenge posed by EPA negotiations and how civil society organisations in the EU and Africa can work towards a positive change. ANSA’s Principles No.1 and 10 (see Box 1) call for trade and development policy to be “led by the people” and “a dynamic, participatory and radical democracy”. This therefore should be the same approach for an Alternative EU Trade Policy and reflected in the campaign Towards an Alternative Trade Mandate for the EU4. In other words, with respect to EPAs, this demands that the people (Civil Society) in ACP countries dynamically participate in the EPA negotiations processes, so that their demands are taken on board in an Alternative EU Trade Policy that prioritises human needs and serves the interests of people and the environment.
4 See http://www.s2bnetwork.org/themes/towards-an-alternative-trade-mandatefor-the-eu.html
Box 2: ANSA’s proposals for Alternative Trade and Regional integration policy in Southern Africa The fair trade alternative For ANSA, fair trade refers to Southern African economies having the political right to determine their own developmental trade processes. Southern African economies cannot be subjected to a form of trade liberalisation based on the same marketing rules and trade liberalisation timeframes - such as those advocated under EPAs. Southern African economies should oppose the current free trade concept and implement asymmetrical trade openness based on human centred development benchmarks. Such an approach would take levels of development into account. Southern African economies should learn to unite and defend regional interests when negotiating bilateral and multilateral trade arrangements (that is, in the WTO and in the EPA negotiation process). Policy reversal - restrictive trade policy Southern Africa should not hesitate to resort to protective tariffs or import controls in order to support its infant industries. This strategy has historically worked for countries such as France, Germany (which used various instruments of trade policy, such as customs duties and export subsidies, to promote the growth of industrial development and close the gap between itself and Britain), the United States (which charged approximately 48% import tariffs to protect its industrial products during the early 1900s), and Britain (which protected its wool
industry), and will undoubtedly benefit Southern Africa as well. Recent development experiences in South-East Asia have shown that such policies have helped countries in that region to protect their new industrial sectors such as electronics, ship building and semi-conductors. Southern Africa must politically reclaim its right to set nationally-driven trade policies which are pro-development, such as the right to protect infant and new industries. The region can also use some clauses contained in the WTO agreements, such as enforcing protectionism of infant and new industries within the auspices of special differential treatment and extended utilisation of transitional periods. Protectionism should be practiced until technological, institutional and knowledge gaps between developing countries and industrialised countries have been closed. Import substitution – a regional approach Southern African economies must strategically aim to produce for the domestic regional market first. The selection of commodities that each country would produce, would be based on their varying comparative advantages. The aim of this strategy should be to improve intra-regional trade and substitute import commodities with those that can be produced regionally.
10 Southern Alternatives to EU Trade Policy
This import substitution strategy should also be targeted towards the promotion of industrial production and the agro-industry, as this does not require the region to immediately invent new productive processes or products totally alien to the region. Thus, Southern Africa should protect the regional infant industry and the regional market from external competition until the industry has matured and is able to compete with imports and foreign suppliers both outside the region and internationally. This strategy should also be complemented by national and regional export promotion strategies. Regional economic cooperation and integration The full potential of intra-regional trade has yet to be fully exploited through greater coordination of efforts aimed at harmonising customs procedures and reducing tariffs and non-tariff barriers, and at improving transport and communications links through greater investment in developing regional infrastructure. Opportunities also exist for intraregional trade in labour, water, infrastructure, electricity and services. The countries within the region that currently dominate the regional economy should lead by example, that is, countries like South Africa and Mauritius should reinvest within the region and such investments should be subject to strict regional investment rules, that is, rules that observe technology transfer, decent employment, reinvestment of resources into the host country etc. Export commodity diversification The region must design and undertake a horizontal diversification programme which incorporates the production of more dynamic, higher-value-added products that are unrelated to existing or traditional exports, especially in labour-intensive manufactured products. It would even be more strategic to have commodity diversification borne from agriculture, as this would ease the transition without cutting back on primary commodity production, which is still the main source of export products. This means taking agriculture beyond exporting raw materials to exporting processed materials, food and food ingredients. This strategy would entail Southern African economies strategically selecting different commodities in which they each have a comparative advantage, nationally and regionally so as to avoid the risk of further depressing commodity prices if all countries produce the same commodities. The strategyâ€™s success will depend on enhanced farmer access to agricultural inputs, including improved seeds and credit, efficient extension
services and better cultivating techniques, good rural infrastructure and improved access to land with secure titles. Government intervention in trade Governments have a critical role in macroeconomic management and in encouraging and promoting horizontal and vertical diversification towards higher value-added products. They can achieve this through an integrated programme of â€œsupply-side responsesâ€? such as the provision of fiscal and other incentives, extension services, trade facilitation, market research and quality control. Governments, in partnership with the private sector, also need to promote regional economic cooperation with the objective of overcoming the constraints of small domestic markets and altering the traditional export structure. In addition, they should adapt to the challenges of increasing global integration and the associated challenges of increased competition. International watchdog It would be strategic for Southern Africa to effectively advocate for an independent international institution that has the sole responsibility for monitoring the impact of trade agreements on the economies of the region in relation to industrialised countries. The review processes conducted by such an institution would then feed directly into negotiation processes at the bilateral and multilateral levels. In addition, this institution would then be responsible for conducting impact assessments of trade provisions (bilateral and multilateral) on trade creation and diversification in Southern Africa and other developing countries and thus provide a potential guide on the best options regarding trade policy.
Source: ANSA (2007a)
Alternatives to EPAs in Southern Africa 11
Therefore, while the ‘STOP EPA campaigns’ should be more vigorously organised, nurtured and embarked upon within the African countries forthwith, it is also necessary to have a similar civil society engagement in STOP EPA campaigns in the EU to confront the European governments and the European Commission (EC). With respect to the ongoing negotiations, the contentious issues raised (since the start of EPA negotiations) by the African Countries regarding reciprocity, trade in services, tariffs, agricultural subsidies, among others, should be urgently addressed and resolved.
A Minor Victory The fact that the deadline for signing EPAs has constantly shifted from the initial December 2007 to the current January 2014 should be considered as partial victory of the STOP EPA campaigns by civil society partners. The deferring of the deadline to sign EPAs has provided civil society in EU and ACP countries with another opportunity to promote, support and engage with the STOP EPA struggle more vigorously.
D. Challenges for Non State Actors The current EPA dispensation demands that the Non State Actors in Africa be adequately resourced and more effectively capacitated to confront their governments, regional blocks e.g. SADC, ECOWAS, COMESA, the EU and the EC, as a matter of extreme urgency, and to adopt and implement ANSA’s ten Principles (as presented in Box 1). A major challenge faced by European Non State Actors is deteriorating funding towards supporting their partners in Africa to drive the STOP EPA agenda more vigorously at all platforms. It would be desirable to find ways to mobilise more funding to support the campaign for Alternative EU Trade Policy within Europe and Africa. On the other hand, European Non State Actors need to engage their governments and the EC, putting them to task to formulate, adopt and implement an Alternative Trade Mandate for EU trade policy and for EPAs. As per the spirit of ANSA Principle No. 6 “National, regional and global, progressive alliances”, there is urgent need to intensify and solidify North-South collaboration, mutual solidarity support, cooperation and collective action between the EU and ACP Non State Actors. Together they are in a stronger position to demand an alternative system, policy mandate, and conditions for the trade agreements between the EU and African Countries. The ANSA vision and mission as defined by the ten ANSA Principles is founded on a human-centred and people-driven development strategy that puts human interests first before the interest of capital to maximise profits for foreign and local private business entities. These profit driven motives do not take into account key issues such as current negative climatic change (global warming) and other massive damages to the environment by multinational companies. Neither do they consider escalating poverty levels and high mortality rates, particularly in Africa, nor other adverse effects such as de-industrialisation in developing economies, facilitated by the instruments of neoliberal globalisation such as EPAs, PRSPs (Poverty Reduction Strategy Papers of the World Bank and International Monetary Fund), WTO rules etc. Once again, a major global challenge for civil society networks, movements, programmes and organisations is to create awareness, build consciousness, re-mobilise, and re-politicise the masses; so that they are capable of engaging in policy reform dialogue and collective action demanding alternative trade mandates and development protocols, agreements and charters away from the neoliberal globalisation ideology.
12 Southern Alternatives to EU Trade Policy
The current bilateral and multilateral trade contractual obligations under EPAs and WTO rules imposed upon developing countries are top-down, profit-motivated schemes, designed and implemented without Non State
Actors’ involvement. Hence, Non State Actors should advocate for a bottom-up approach towards trade and development issues at all platforms. This is illustrated in Diagram 1.
DIAGRAM 1: The ANSA Bottom-up worldview OF developing alternatives to neoliberalism
Only when our nations and regions have been liberated from this grip of the Empire and are responsible to the people can we develop alternatives that bring positive outcomes in terms of our objectives.
The people/mobil ● ● ●
Source: ANSA (2007c) Note: In the alternative model, the arrows primarily lead from bottom to top, in contrast to the current neoliberal system where they lead from top to bottom.
Along a holistic Domestic private Formal and infor
Alternatives to EPAs in Southern Africa 13
Towards an Alternative Strategy for an EU Trade Policy The strategic action that both Non State Actors and state agencies in Europe should take to address the need for alternatives to the current trade mandate of the EU fits very well into the ANSA operational strategy of Walking on Three Legs (see Diagram 2 below). Although each of the ANSA legs are separate, they are inter-related, inter-connected and feed into each other in processes intended to achieve common goals of the initiative. 1. The first leg of the ANSA operational strategy is research and information, compilation and dissemination As stated in the previous discussions, the issue around EU trade policy and mandate are equally subjects of research, analysis of facts and figures, compilation of data, and information dissemination to all interested and concerned parties in Europe, in ACP countries, and beyond.
3. The third leg ‘Advocacy and Engagement’ includes the following activities: D emocratisation of the policy spaces at all levels and the system’s thrust and mandate to ensure effective participation of civil society stakeholders in policy formulation, implementation, monitoring and evaluation discourse. Empower, capacitate and motivate Non State Actors to demand that their governments establish social dialogue platforms and meaningfully engage them in policy reform dialogue, or risk the unfavourable outcomes of mass protests and mass demonstrations on the streets.
2. The second leg is ‘Awareness, Education, Training and Mobilisation’ ANSA believes that “ideas are a powerful force once they are seized by vast numbers of people.” It should not be taken for granted that everybody is aware, conscious, well informed, and ready to take action upon the alternatives to the current EU trade mandate/policy, who the beneficiaries are, etc. with particular emphasis on EPAs and their implications to ACP countries. Therefore this leg is important to state and Non State Actors in both Europe and Africa.
DIAGRAM 2: ANSA STRATEGY—Walking on Three Legs:
Source: ANSA (2007a)
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Recommendations The current EU trade policy towards ACP countries fails to address the imbalances between the regions. EPAs are not only an inadequate response to trade patterns dating back to the colonial times, but they also risk undermining existing regional integration approaches and limiting the policy space developing countries need to pursue their own economic and social development strategies. If this policy were successful and EPAs concluded under the current terms, alternative proposals such as ANSA’s for alternative trade and regional integration policy in Southern Africa could not be transformed into practice. Therefore EU trade policy needs to be radically revised. The EU must change its approach in the EPA negotiations, re-negotiate contentious issues and respect the policy space and the prioritisation for bottom up regional integration processes of its trading partners. EU trade policy needs to be democratised, among other things to ensure effective participation of all stakeholders at all stages of the policy process. It won’t be easy to induce such a radical revision of a central policy field of the EU. Non State Actors like those promoting an Alternative Trade Mandate for the EU will have to maintain their stamina over a long period. Some key steps are to: Facilitate the process of developing an Alternative Trade Mandate for the EU within the framework of the bottomup operational strategy proposed by the ANSA bottom-up Operational Framework from the Grassroots to the Empire.
Implement the three-pronged strategic implementation (action) plan proposed by the ANSA Initiative, so that targeted stakeholders and interested parties (i.e. civil society, policy makers and policy implementers, targeted beneficiaries and or role players, victims and perpetrators e.g. policy advisers, among many others) get actively involved and participate effectively in the agenda for an Alternative Trade Mandate for the EU.
Engage in research (fact finding missions around the agenda) and dissemination of information to the variety of stakeholders and interested concerned parties, in order to create awareness and consciousness of the implications of the current trade mandate for EU trade policy, to justify the need and content of their proposed alternative.
Encourage, motivate, and convince stakeholders and interested parties to participate actively in pushing forward the agenda for action towards an Alternative Trade Mandate for the EU and convince policy makers/ implementers to adopt the proposed Alternative Trade Mandate for the EU and radically implement the program of action proposed.
It is important to keep in mind that the issue of trade and alternatives to the current trade policy is of primary interest not only to those in Europe, but more so to the stakeholders in ACP countries, particularly African countries. Therefore collaboration, networking, solidarity action, mutual support, and cooperation between stakeholders in Europe and ACP countries is of equal importance, so that they collectively drive the agenda.
ReFERENCES ANSA (2007a) Alternatives to Neo-Liberalism in Southern Africa: towards a people-driven development agenda, Harare, Zimabwe: ANSA Secretariat. ANSA (2007b) Economic partnership agreements Big Five Hotel declaration, 16-17 February 2006, South Africa: LEDRIZ. ANSA (2007c) ‘Principles and concepts of the ANSA alternative’ in Kanyenze, G., Kondo, T., and Martens, J. (Eds) (2007) The Search for Sustainable Human Development in Southern Africa, South Africa: Creda Communications Cotonou Partnership Agreement (2000) 2000/483/EC: Partnership agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 - Protocols - Final Act – Declarations. Available: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:22000A1215(01):EN:NOT [03 April 2012] Southern and Eastern African Trade, Information And Negotiations Institute (SEATINI) (2009) Statement to the COMESA Summit on the ESA-EC Economic Partnership Agreements Negotiations, [online] Monday 1 June 2009. Available: http://pambazuka.org/en/category/ advocacy/56743 [27 April 2012]. United Nations Economic Commission for Africa (2009) Economic Report on Africa 2009: Developing African Agriculture Through Regional Value Chains. Addis Ababa, Ethiopia: Economic Commission for Africa. United Nations Economic Commission for Africa (2008) North-south FTAs after all?: a comprehensive and critical analysis of the interim economic partnership agreements and recommendations on how they could be made to really address Africa’s developmental objectives, ECA; Trade and International Negotiations Section; Trade, Finance and Economic Development Division. Available: http://www.uneca.org/atpc/documents/Analysis%20 of%20I-EPAs.pdf
Alternative Trade Policies from Latin America A Response to the European Union Free Trade Agenda Enrique Daza
2 Southern Alternatives to EU Trade Policy
Enrique Daza is Secretary of the Hemispheric Social Alliance, and Director of the Centre for Labour Studies, Bogotá, Colombia.
© Comhlámh 2012 Any part of this publication may be reproduced without permission for educational and non-profit purposes if the source is acknowledged. We would appreciate a copy of the text in which the document is used or cited.
Alternative Trade Policies from Latin America 3
Contents Introduction 4 A. The process of change in a divided continent 4 B. The EU vs. Regional Integration
C. Latin American Alternatives 7 D. ALBA 9 E. The Peoplesâ€™ Trade Agreement
Conclusion 11 References 12
4 Southern Alternatives to EU Trade Policy
Introduction In recent years, there has been growing criticism of free-market policies that led to the current international economic crisis. From different ideological viewpoints and different countries, calls to change both domestic policies and the framework of the relationship between countries have been made. A wide range of alternative proposals to the dominant neoliberal regime have come from Latin America; in fact no other part of the world has produced such a range of proposals in so short a time. This paper will look at some of these alternative proposals and contrast them with the dominant free market policies. The paper will first explore the current debate taking place in the region on different development models, especially on what type of insertion in the world economy will best serve Latin America. Secondly, the paper will examine concrete alternative proposals being tested in the region. It concludes by urging the EU to seriously consider these alternative proposals in support of a better future.
A. T he process of change in a divided continent In the last 13 years, after what has been labelled the lost decade, Latin America has gone through a process of important changes. The so called lost decade was characterised by a massive increase of external debt, hyper-inflation, and financial instability, caused by the terrible debt crisis of the 1980s. “Lending was massive. Between 1975 and 1982 the external debt in Latin America almost quadrupled, from $45,200 million to $176,400 million. If short-term borrowing and International Monetary Fund credits are added, in 1982 the total debt was $333,000 million” (Yerguin and Stalislaw, 1998). In response to this situation, the 1990s were marked with widespread economic adjustment, import liberalisation, labour market flexibility and privatisations. However, in spite of the promises of an improving situation contained in the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) 1998 document “Panorama Social de America Latina” [The Social Situation in Latin America], it was recognised that in 1980, 35% of households were living in poverty; in 1990, this figure increased to 41%, and by 1997 it stabilised at 36%. That is, at the end of the 1990s, and after a period of deep neoliberal reform, poverty was still at the level of 1980s (Brieger, 2002).
A shift to the left From the heart of numerous countries and their social movements, some alternatives to the predominant neoliberal trade policies have been born, such as the ALBA1, the new orientation of MERCOSUR, the Union of South American Nations (UNASUR) and, finally, the Community of Latin American and Caribbean States (CELAC). Indeed, as a reaction to the poverty and inequality caused by years of neoliberal policies in 1999, a process of change was unleashed in Latin America starting with Hugo Chavez becoming president of Venezuela after a period of political instability and social mobilisation. The same year, a serious political crisis in Paraguay took place with the assassination of vice-president Luis Maria Argaña. In Argentina the political crisis became more acute after 2000, with a series of general strikes. 2002 saw more political and economic instability and riots in both Argentina and Paraguay. In October 2002, 1
olivarian Alternative for the Americas. This was a proposal B of Hugo Chavez back in 2001, which became effective in December 2004. It is a political alliance of 9 countries around principles of solidarity and integration, an alliance to favour the people.
Alternative Trade Policies from Latin America 5
Luis Ignacio “Lula” da Silva became president of Brazil. In 2003, Néstor Kirchner became Argentina’s president, and in 2004 Tabaré Ramón Vásquez Rosas became president of Uruguay. The following year, Evo Morales became president of Bolivia, and on 28th April 2006, at a meeting that gave birth to ALBA, he launched a proposal for a People’s Trade Agreement (PTA) in opposition to Free Trade Agreements (FTAs). In April 2008 the Centre-Left Coalition of Paraguay, led by Fernando Lugo, defeated the ruling Partido Colorado at the ballot box. In Central America the winds of change were also blowing, though with less intensity than further South. In 2006, Daniel Ortega won the elections in Nicaragua, and in January 2007, after a protracted period of political instability and mass mobilisation, Rafael Correa became president of Ecuador. In 2009, a coalition lead by the Frente Farabundo Martí won the elections in El Salvador, thus making the journalist Mauricio Funes the new president. All of these governments emerged out of complex social dynamics and had enormous differences with one another. But all of them also shared some common features such as their links to social movements, their attempts to establish sovereign policies over natural resources, their aim at strengthening the capacity of the state to intervene in the economy, their moves to expand their internal markets in order to raise the living standard of the population, looking after social
rights gained in the past, devoting an important part of their budgets to social spending, their drive to diversify international relations, and their rejection of free trade schemes promoted by the US, the EU, and the World Trade Organisation (WTO).
Other countries consolidate a free market approach On the other hand, another group of countries followed a different course. Colombia, Mexico, Peru and Chile and the majority of Central American countries (Panama, Guatemala, Costa Rica) kept strengthening the predominant outlook of the 1990s based on free market policies. These countries have implemented Free Trade Agreements (FTA), Bilateral Investment Agreements (BIT) and generally speaking, an insertion in the world economy based on the acceptance of the international financial framework led by the WTO, World Bank and the International Monetary Fund (IMF). The pioneer of this neoliberal block was Mexico which signed the North American Free Trade Agreement (NAFTA) in 1994 with the US and Canada. In 1997 Mexico finished the negotiation of a FTA with the EU. Many evaluations of these agreements have been done, but it is important to point out that both Mexico and Chile, which signed an FTA with the EU in 2004, are also the countries which remain outside of the alternative integration process in Latin America. The cases of Mexico and Chile are further discussed in Boxes 1 and 2.
BOX 1: The mexican case The Mexican case was the first of these free trade agreements, and therefore gives us a long period of time to assess its impacts. Thanks to this FTA, the trade deficit of Mexico increased, investments were concentrated (particularly through privatisation and investment in manufacturing and finance) and Mexico was used by EU companies as a platform to enter into the US market. Regional inequalities worsened, as the economic model based on privatisation, de-nationalisation of production, loss of food self-sufficiency and dependence on external capital influx was reinforced. At the same time, Mexico expressed hostility towards integration alternatives based on the idea of Latin American unity. The clause on cooperation on human rights and democracy of the EU-Mexico FTA has proved completely meaningless: social conditions have worsened and violence has increased and become ubiquitous over the last years. No attention has been paid to those promises of the respect of human rights and civil society participation – the latter was absent from the negotiation process and even more absent from the implementation of the agreement, despite promises of “political dialogue”. Similarly, the cooperation programmes have privileged the implementation of the FTA without paying any attention to poverty eradication and environmental protection1.
1 F or more details on the Mexico’s experience with the agreement with the EU, see Aguirre, 2007; Arroyo, 2007; Aguirre, 2008; Castañeda. 2008; Arroyo, Villarreal et al., 2008.
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BOX 2: THE CHILEAN EXPERIENCE Chile had a similar experience to Mexico, although its starting point was entirely different as it was marked by the violent imposition of open market policies since 1973. Since then, Chile quit the Andean Community (CAN) and started reducing its custom duties steadily, signing FTAs with Canada, Korea, Mexico, and Central America, among others, during the 1990s. The FTA with the EU came into effect in 2003. Even though it had a significant impact on the increase in investment flow, it has to be stated that 90% of its increase in exports is due to mining exports, while GDP grew at a lower rate than the previous decade (Cortés & Flores, 2009). At the same time, Chile is among the 15 countries with the worst income distribution in the world, while the economy is based on the export of primary products and is quite vulnerable to world crises because of its open market orientation and dependency on external financial flows. In the meantime, multinational corporations enormously increased their profits.
B. The EU vs. Regional Integration The EU has been giving increasing importance to its relations with Latin America, as illustrated by the EU-LAC (EU-Latin American and Caribbean) Summits. In May 2012, Chile will be the host for the 7th EU-LAC Summit. During the six previous summits, starting in 1999, an idea of a strategic association between the two regions has been fostered, but the global economic crisis, together with the recent evolution of Latin America and the rest of the world require revisiting the terms of this “association”. The crisis has raised many questions about the “social model” of European integration and has revealed its deep inequality; the fact is that the EU process of integration is on shaky ground, plagued with asymmetries, dominated by financial capital where the upper hand is held by France and Germany over countries with relatively weaker economies. The solution the EU has devised to come out of the crisis is to create even more inequality and to dismantle all of the welfare system which, until recently, was its pride. The slow growth of the EU’s economy, which some experts claim will improve only by 2020, coupled with its loss in the share of global trade, brings into question strategies based on the belief that there is an unlimited availability of capital for export and that markets are on permanent expansion. The drop in the trade flow, the drop of remittances, the loss of dynamism in investment and the decrease in funds available for cooperation, among other factors, has made it all too clear that Latin America and Caribbean countries (LAC) cannot hope to develop out of this type of relationship with the EU. Latin America has an integration and social development agenda of its own, including focusing on internal development, diversification of international relations, giving priority to South-South relations, and moving beyond a model based on the export of raw materials. The type of insertion in the world economy proposed by the EU, however, consists in the export of raw materials and dependency on speculative capital, thus increasing
the vulnerability of the region in the face of the global crisis. The LAC agenda has to be strengthened on issues such as autonomous regional integration, modification of productive models beyond extractivism, and more South to South relations. It is impossible to create a new international economic framework with those who want to keep intact the present one.
The EU’s nefarious role in regional integration The EU has contributed to weakening the regional integration processes in Latin America. The EU’s nefarious role in the region is best demonstrated by its special relationship with Chile and Mexico – the least interested countries in regional integration; its agreement with Central America which prioritises free trade over sub-regional integration agreements (by including Panama in the agreement, for instance, which has not taken part in the integration process); its agreement with the Caribbean countries and its safeguard of its neo-colonial role, while attempting to divide the Caribbean from the rest of the continent; and its support for the fragmentation of the Andean Community (CAN).
Alternative Trade Policies from Latin America 7
C. Latin American Alternatives There are a wide range of alternatives which are growing slowly in Latin America. Some have yet to be fully implemented, so their full potential remains to be seen. During the Free Trade Area for the Americas (FTAA) negotiations a number of proposals were made by the social movements. The most important one of them was the document An Alternative for the Americas, from the Hemispheric Social Alliance (HSA)2. This document summarises the response of the social movements to the FTAA proposal. It was the product of collective work by social movements and intellectuals, who agreed by consensus to an alternative form of integration. They outlined not only a proposal on how different Latin American states should relate to one another, but most importantly, how a new type of society could look in the region. Its starting point was that trade agreements, export and capital flows do not guarantee development. Therefore, instead of looking for an alternative based on trade agreements, it was proposed to build a new form of integration where international agreements are based on reciprocity, mutual benefit, national sovereignty, the protection of the internal markets and respect for the basic rights of the people. The explicit objective of this document was to outline an alternative proposal for integration, defined as â€œan integral proposal for an alternative sustainable and equitable development of our societiesâ€? (HSA, 2002: 4). Besides the long term objectives aiming at deep social change and the transformation of the state, immediate demands were incorporated, as well as demands to governments and other daily demands of our people. The proposals dealt both with issues related to free trade agreements (investment, intellectual property, settlement of disputes, communications, access to markets, agriculture, services and rules of origin) and social issues which are not (gender, sustainability, human rights, education, immigration, role of the state, international finance), and also suggested radically different themes such as the environment and labour. These proposals are further discussed in Box 3.
Hemispheric Social Alliance is a grand coalition of social movements, born in 1997 in Belo Horizonte; between 1998 and 2005 it led the struggles against the FTAA through mass protests and the development of alternatives.
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BOX 3: SOME PROPOSALS OF THE Hemispheric Social Alliance General Principles: Trade and investment should not be ends in themselves, but instruments towards a fair and sustainable form of development. Citizens should have a right to participate in the design, implementation and evaluation of continental social and economic policies. The main goals of these policies should be the promotion of economic sovereignty, social welfare, and the reduction of all forms of inequality. Human Rights: A common agenda on human rights should be the main body, inclusive of all other continental policies, and should include mechanisms and institutions to guarantee its full implementation. It should promote the broadest possible definition of human rights, covering civil, political, economic, social, cultural and environmental rights, gender equality and those rights related to indigenous communities and people. Environment: Governments should subordinate trade and investment to policies prioritising sustainable development and environmental protection. They should also have the capacity to channel investment towards environmentally sustainable activities, reject privatisation of natural resources, and policies that subsidise or promote fossil fuel energy. Labour: Hemispheric policies should guarantee workers their basic rights, create a fund to compensate workers and communities affected by unemployment and promote the improvement of labour and life standards for workers and their families. Immigration: Governments should subscribe to international treaties on the rights of migrants, to guarantee labour rights to all workers without discriminating because of their origin, and to punish those who violate these rights; to grant amnesty to all workers without papers in their borders, to demilitarise their borders, to support international subsidies for regions who import large quantities of labour. The role of the State: Hemispheric policies should not be detrimental to the capacity of a nation-state to look after the social and economic needs of its citizens. Nation-states have a right to maintain the public sector companies and production policies that contribute to their plans of national development. The goal of having national regulation of the private sector should be to guarantee economic activities that promote a fair and sustainable development.
Investment: Investment should lead to high quality employment, sustainable production, and economic stability. Governments should have a right to reject forms of investment that do not contribute to development, particularly speculative capital. Citizens and all government institutions should have a right to demand redress from investors who violate rules of investment. Finances: The total of the debts of low income countries and the illegitimate debt of middle income countries should be cancelled. Structural adjustment programmes of the World Bank and the IMF have to be abandoned. These institutions should be radically changed or replaced by others. Countries should be allowed to have control over capital flows, and speculation should be regulated through a multiparty mechanism. Governments should have the capacity to adopt their own monetary and financial policies, thus resisting efforts to â€œdollariseâ€? their economies. Intellectual Property: Governments should have the capacity to set their own rules on intellectual property that reflect their social, cultural and economic reality. This should include the right to access certain essential drugs and protection of biodiversity, indigenous and traditional knowledge. There should be no patent on any life form. Agriculture: In order to guarantee food security, countries should have a right to protect or exclude basic staples from trade agreements. Hemispheric policies should promote growing harmonisation of financial assistance for agriculture (such as a percentage of the GDP), protection for agricultural workers and the traditional rights of indigenous people living in their ancestral territory. Gender: International agreements on womenâ€™s rights should be vital to all hemispheric policies. Women should have more opportunities to participate in policy design. Governments should have national laws to guarantee access to facilities for child care and to stop sexual harassment at the workplace. Services: Basic services such as education, health, water and others should be available to all people in the Hemisphere. Governments should promote national development and prioritise environmental and other concerns over the efficient allocation of resources. Source: (HSA, 2002: 5-7)
Alternative Trade Policies from Latin America 9
D. ALBA In November 2000 the first Hemispheric Summit against the FTAA took place in Havana, Cuba, and in December 10th 2001, during the III Summit of Heads of State of the Association of Caribbean States in Margarita Island, Chávez launched the proposal of ALBA, Bolivarian Alternatives for the Americas and the Caribbean. In its initial form, this proposal contained the ideas which the Hemispheric Social Alliance had put forward in opposition to the FTAA (HSA, 2002). The ALBA was proposed once again in Havana, in December 2004, as an agreement between Cuba and Venezuela, but it was only in April 2006 that it was officially launched as a formal agreement between States, including Bolivia this time. Today, its members also include Nicaragua, Antigua and Barbuda, Dominica, St. Vincent and the Grenadines and Ecuador. More than a mere integration process, ALBA is a political alliance built on strong ideological grounds and a common attitude towards certain global problems. Its potential lies in its firm decision to preserve its autonomy and its clear rejection of neoliberal policies, giving priority to social welfare. Its weakness lies in its dependence on the political situation in Venezuela, the economic weakness of its ties and its small population. Also its pronounced ideological edge makes it difficult for other countries such as Brazil and Argentina to become members. A good deal of the importance of ALBA is due to the fact that it highlighted the potential for Latin American integration and in its reference to traditional views in the region, such as Latin American unity, anti-imperialism, defence of national sovereignty, primacy of solidarity, attention towards the welfare of the population, and primacy of politics over economics. ALBA, in opposition to the dominance of multinational corporations, has put forward a proposal for the creation of joint public companies among its member States, called Greater-Nation Projects. Some of these projects are more advanced than others, such as the ALBA Bank, ALBA Cultural, ALBAMED, the Greater-Nation Project of Literacy and Post-Literacy, the construction of food companies, companies to distribute pharmaceutical products, ALBA shops, social tourism, telecommunication companies, and a cultural fund. There are thus a whole range of areas where initiatives from the people in the region can develop. More than being a mere institutional agreement, it is an umbrella under which a multitude of bilateral agreements take place.
Among its most resounding successes is the literacy campaign, the noticeable improvement of health standards and the progressive development of its own system of payment, the SUCRE currency, and the creation of the ALBA Bank. The Petrocaribe project supplies Venezuelan oil to partner countries at a lower price than in the international market and at favourable payment conditions. One of the ALBA programmes, called “Operation Miracle”, gave free ophthalmologic treatment to 2 million people. The ALBA Bank is funding social projects from its fund of over US$1 billion. The project ALBA SALUD has allocated more than US$3.5 million to create a drug company and for the distribution of medicine, including a unitary system for the production and distribution of 489 drugs for the most common illnesses of the poor. The Bank has allocated US$8 million for energy projects of its member countries. There are also plans to eradicate illiteracy from the Caribbean. In 2010, Cuba, Venezuela, Bolivia and Nicaragua created Albatel to strengthen communications in those countries thanks to the satellite Simón Bolívar. US$50 million has been allocated to agrarian projects to promote food security. During 2010 and 2011 many transactions were carried in a regional currency, the SUCRE, through a complex accounting system it compares the value of each national currency to avoid using dollars in exchange relations between ALBA member countries.
10 Southern Alternatives to EU Trade Policy
E. The Peoples’ Trade Agreement While negotiating within the CAN with the EU, Bolivia made a number of alternative proposals, which were later adopted by ALBA and thus the name ALBA-TCP (People’s Trade Treaty). These proposals became the core of Morales’ People’s Trade Agreement and of the concept of “Buen Vivir” (Good Living), both of which have been widely adopted by indigenous communities and social movements alike for the Principles of a People’s Trade Agreement (see Box 4).
These proposals are all linked to the rejection of the very foundations of the Western capitalist model; the proposal of “good living” is a critique of consumerism in the search for a way to restore harmony with nature. It is not just a solution to Bolivia or the region’s problems, but a response to the several global crises and a rejection of the energy model based on fossil fuels. It is a critique of excessive industrialisation, mass agro-exports, the waste and privatisation of water, biofuels and of genetically modified organisms. It is a defence of peasant
BOX 4: Principles of a Peoples’ Trade Agreement 1. C omplementary trade based on solidarity and cooperation, in order to achieve life with dignity and good living. 2. S overeign trade, without conditioning nor interference in internal affairs of each country. 3. Trade in a spirit of complementarity and solidarity between the people, nations and their companies.
11. Trade which adjusts tariff policies according to the requirements of developing countries. 12. Basic services to be protected as human rights in trade agreements. 13. Cooperation in order to develop different service industries. 14. Respect and cooperation through public procurement.
4. P rotection in areas of production of national interest, integral development for all the people and nations. 5. T reatment in a spirit of solidarity towards the weakest economies. 6. R ecognition of the role of sovereign states in the social and economic development of countries and in the regulation of the economy. 7. H armony between people and nature, respect for the Rights of Mother Earth and promotion of a type of economic development in harmony with nature. 8. T rade and investment should contribute to strengthening the cultural and historical identity of our people. 9. P referential treatment to communities, localities, cooperatives, social services companies, small and medium companies. 10. To develop food sovereignty and food security among partner countries in order to guarantee food in sufficient quantity and quality for our children.
15. Joint investment in trade matters can adopt the form of Greater-Nation Projects. 16. To be partners, not bosses. 17. Trade should respect life. 18. The right to development and health should take priority over intellectual and industrial property. 19. Mechanisms leading towards financial and monetary independence should be adopted. 20. The rights of workers and indigenous peoples should be respected. 21. Trade negotiations should be public so the people can have a participatory and leading role in trade. 22. Social accumulation of quality knowledge to be applied in production, in order to satisfy the social needs of the people. 23. Free movement of the people to be regarded as a human right.
Source: Fundamental Principles of the Peoples’ Trade Treaty (2009)
Alternative Trade Policies from Latin America 11
Conclusion economies, of local markets, and of the rights of Mother Earth. Many social movements around the world have adopted these proposals and have incorporated them as part of their project for social change. The water and gas “wars” in Bolivia, the agrarian struggle against biofuels, the struggle for the nationalisation of natural resources are examples of the mass mobilisation around these issues.
The EU’s trade and investment policy, which prioritises investment and access to markets through trade and/ or investment agreements is in stark opposition to the ideas and aspirations of those LAC countries who are members of the ALBA. This has encouraged division among the LAC, posing an obstacle to the very regional integration necessary not only to face the current global economic crisis, but also for future economic development. In LAC, proposals which aim at strengthening economic and social development, protecting natural resources, reinforcing internal markets and promoting regional integration have emerged which essentially propose a radically different type of insertion in the world economy. This requires rethinking about LAC’s international relationships. If the EU wants to support the prevalent tendencies in LAC, it must think twice about the way it is approaching the region.
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REFERENCES Brieger, P (2002) De la década perdida a la década del mito neoliberal, in: J Gambina (ed) (2002), La Globalización Económica Financiera: Su Impacto en América Latina. Buenos Airies: CLASCO. Hemispheric Social Alliance (HSA) (2002) Alternatives for the Americas [Online]. Available: http://www.web. ca/~comfront/alts4americas/eng/eng.pdf [17 April 2012]. Yerguin, D. and Stalislaw, J. (1998) ‘Playing by the Rules: A New Game in Latin America’ in The Commanding Heights: The Battle for the World Economy. New York: Simon and Schuster. Fundamental Principles of the Peoples´ Trade Treaty - TCP VII Summit - Cochabamba, Bolivia - October 17, 2009. Available online: http://www.alba-tcp.org/en/contenido/ fundamental-principles-tcp [16 April 2012].
Bibliography Acosta y Gudynas (editores), Libre comercio, mitos y realidades, nuevos desafíos para la economía política de la integración latinoamericana, ediciones ABYA YALA, 2004. Agebjorn, Anika, ¿Desarrollo en exportación? Acuerdos comerciales de la Unión Europea con África y América Latina, Diakonia, Suecia, 2008. Arroyo, Alberto, Lecciones de México para las nuevas negociaciones de la UE con América Latina, Revista Alternativas No 21, RMALC, México, 2007 Aguirre, Pérez, Siete años del tratado México UE (TLCUEM), una alerta para el sur global, documento de debate, regionalismos alternativos, TNI, RMALC, 2007. Aguirre, Rodolfo, La experiencia mexicana en el acuerdo global con la Unión Europea, Revista Alternativas No 37, RMALC, México, 2008. ALOP, ¿Hacia dónde van las relaciones entre América Latina y la Unión Europea? cohesión social y acuerdos de asociación, México, 2008. América Latina en movimiento 414-415, Integración: Nuevas rutas, ALAI, Bolivia, 2006 América Latina en movimiento 450 - 451, Lecturas desde los movimientos ¿Qué ha Cambiado con los gobiernos de cambio? ALAI, Bolivia, 2009
Arroyo, Rodríguez, Castañeda, La Unión Europea: ¿promotora de la integración regional en América Latina?, retórica y realidad, TNI, RMALC, México, 2009. Arroyo, Villareal y varios, Balance del acuerdo global entre México y la Unión Europea, a 8 años de su entrada en vigor, Fundación Henrich Boll, México, 2008. Castañeda, Norma, Balance del acuerdo de asociación, económica, concertación política y cooperación entre México y la Unión Europea, Tercer Foro de la sociedad civil, México Unión Europea, noviembre de 2008, Bruselas. Cuadernos de formación 3, Integración en América Latina, Apuntes para debatir la integración de los pueblos, Alianza Social Continental, Brasil, 2006 Gudynas, Eduardo, El camino de sudamericana, CLAES, CEADES, 2006
Gudynas, Eduardo, Integración en América Latina Cambian los agrupamientos, persisten los énfasis comerciales, Revista del Sur 163, 2006 Informe de Oxfam 90, Cantos de sirena por qué los TLCs de Estados Unidos con los países andinos socavan el desarrollo sostenible y la integración regional, Oxfam, 2006 Lara Claudio, Silva Consuelo, Conflictos en las negociaciones, lo que queda del acuerdo entre la Unión Europea y la Comunidad Andina de Naciones, 11.11.11, Red UE CAN, Santiago de Chile, 2009. Laats, Henkjan, La integración suramericana, actuar juntos y bien, CEADESC, Cochabamba, 2009. Moncayo, Héctor León, Ni lo uno ni lo otro, integración y desarrollo en América Latina, Integratemas No 5, Bogotá, 2006.
Agriculture, trade, food sovereignty and agroecology Proposals on alternatives to current EU trade policies Henry Saragih and Mary Lou Malig
2 Southern Alternatives to EU Trade Policy
Henry Saragih is General Coordinator of La Via Campesina and Chairman of the Indonesian Peasant Union (SPI) and Mary Lou Malig is staff for La Via Campesina-Asia. La Via Campesina is an international movement of peasants, small- and medium-sized producers, landless, rural women, indigenous people, rural youth and agricultural workers. It is an autonomous, pluralist and multicultural movement, independent of any political, economic, or other type of affiliation. Born in 1993, La Via Campesina now gathers about 150 organisations in 70 countries in Asia, Africa, Europe, and the Americas.
Agriculture, trade, food sovereignty and agroecology 3
Contents Introduction 4 A. Story of Structural Adjustment
B. Building another world, another Asia
C. Time for the EU to stop, look and listen 14 Recommendations 15 References 16
4 Southern Alternatives to EU Trade Policy
Introduction As the world population hits the 7 billion mark, hunger or the want or scarcity of food, also hits a record high. According to the United Nations Food and Agriculture Organisation (FAO), there are 925 million hungry people in the world (FAO, 2010). The majority, 578 million hungry people are in Asia and the Pacific. Figure 1 illustrates the distribution of undernourishment across the globe.
Figure 1: Undernourishment in 2010, by region (millions) TOTAL = 925 Million Developed countries
Near East and North Africa
Latin America and the Caribbean 53
Source: FAO, 2010: 10
This increase in hunger can be correlated to the drastic increase in food prices, making it even more difficult for people, especially those living in poverty, to afford food for themselves and their families. The data released by the United Nations Conference on Trade and Development (UNCTAD) and the FAO indicate that world food prices increased by 84 percent from 2002 to 2008 (cited in Vander Stichele et al. 2010). The price of wheat increased by a dramatic 314 percent, soybeans by 87 percent (ibid.), rice by 74 percent and corn by 31 percent (FAO, 2008). This increase is reflected by the upward trend in the FAO Food Price Index illustrated in Figure 2.
Asia and the Pacific
Agriculture, trade, food sovereignty and agroecology 5
Figure 2: Trend of FAO Food Price Index 1990-2011
FAO Food price index
Source: FAO (2012)
While analysts will point out that hunger is caused by a number of other factors such as conflict, climate change and poverty, the food crisis of 2008 and at present, indicate that there is a strong correlation between excessive food speculation and the sharp increase in the number of the world’s hungry. A letter to the G-201 Finance Ministers, signed by 450 economists from around the world stated that, “while there are many pressures on food prices, fundamental changes in supply and demand cannot fully account for the dramatic price fluctuations that have occurred in recent years”. In addition, they further cited a report prepared for the G-20, in which the International Monetary Fund (IMF) stated that, “too much speculation can cause frequent and erratic price changes”2. In an insightful analysis of the cause of the recent rapid rise in food prices, Walden Bello (2011) cites what he calls the coming together of a number of developments to create the perfect storm including; World Bank and IMF imposed structural adjustment programs in developing countries, which severely cut government support for agriculture and reduced agricultural production; the diversion of vast amounts of corn land, especially in the US, to feedstock for biofuels rather than food production owing to huge subsidies; speculation in food commodities in financial markets; and growing T he G-20 is composed of: Argentina, Australia, Brazil, Canada, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, United Kingdom, United States of America and the European Union. 2 450 economists tell the G20: regulate speculation on food prices, October 11, 2011. http://www.wdm.org.uk/stopbankers-betting-food/hundreds-economists-tell-g20-regulatespeculation-food-prices. 1
resistance of insects to pesticides and refusal of soils to respond to more applications of fertiliser. In Asia, the negative impacts of a long history of neoliberal policies such as structural adjustment programmes, free trade liberalisation and free trade agreements have wrought havoc on Asian agriculture and destroyed the productive capacity of farming communities in the region. Now with the growing number of people living in hunger, it is even more urgent for alternatives to the current neoliberal system of free trade and its market oriented policies on agriculture. This paper will discuss (a) the role of structural adjustment programmes, free trade policies and trade liberalisation in destroying Asian agriculture, (b) proposals for an alternative Asia, imagining a region based on trade that will be oriented towards the good of the people and an agricultural system that is based on food sovereignty and agroecology, and, (c) recommendations for EU trade policy especially vis a vis the Asian countries, to move away from the neoliberal paradigm and instead listen to people’s alternatives.
6 Southern Alternatives to EU Trade Policy
A. Story of Structural Adjustment In the early 1980s the World Bank and the IMF began imposing, as a condition to developing countries for getting new loans, a package of policies called Structural Adjustment Programs (SAPs). SAPs, implemented by almost 90 developing countries, were a set of conditionalities designed to turn the developing countries into more market-oriented economies. They had a ‘one size fits all’ design, with the basic elements involving deregulation of the economy, liberalisation of trade and investment, privatisation of state owned enterprises, cutbacks in government expenditures, high interest rates, and currency devaluation (Bello, 1999). Decades later, there is ongoing debate among analysts on the devastating role the IMF and its SAPs played on the economies of developing countries, and in particular, the Asian countries in the lead up to and during the Asian financial crisis. Analysts blamed capital account liberalisation, an IMF directive, for the influx of speculative capital into the financial and real estate sectors across the region of Asia, which once it all exited in 1997 and 1998, triggered the collapse of the economies it so easily entered. Asian currencies plummeted, with the Thai baht losing 52 percent of its value, while the Indonesian rupiah lost 84 percent of its value against the US dollar (Muchhala, 2007). The IMF worsened the crisis by telling countries to further curb government spending, pushing their economies into recession. Many analysts point out this disastrous role in the Asian financial crisis as the major factor in the loss of legitimacy of the IMF in the region. Despite this loss of credibility, the damage however had already been done. The neoliberal doctrine of orienting economies to export and following free market principles of trade liberalisation, deregulation and privatisation had stuck. For those countries who signed on to the World Trade Organisation (WTO), it not only stuck, it was legally binding. The establishment of the WTO in 1995 was the coming out party of neo-liberalism, with many of the Asian countries eagerly lowering their tariffs in order to enter the highly esteemed trading organisation.
World Trade according to the US and the EU When the WTO was launched in 1995, the advocates of globalisation were singing high praises for it, exalting its multilateralist nature and how this would inherently give an equal voice to all of its 140 plus members. Promises of development, aid for trade and market access were made to developing countries. A multilateral free trade agreement was going to usher an era of growth for all, but most especially to the ones who needed it most,
the least developed and the developing countries. Four years later however, in the streets of Seattle, the real nature of the WTO would become clearer to not only the social movements, organisations and unions who were protesting outside the Ministerial venue, it also became abundantly clear to developing country delegates that developed countries had been looking after their own interests. Long-standing demands of developing countries for an assessment of the impacts of the Uruguay Round were ignored and instead proposals by developed countries for an expansion of negotiations into other areas were being pushed forward. It was then no surprise that the 1999 Seattle Ministerial ended in disarray as developing country ministers walked out of negotiations and protesters successfully blockaded the streets calling for an end to unfair trade agreements. The WTO regrouped and in November 2001 held its next Ministerial in Qatar, at which protests were considerably restricted. Given the post-September 11th 2001 political climate, many states felt the need to stand together with the United States. This combination produced the Doha Development Agenda (DDA), which launched a new round of trade negotiations. In addition to agriculture, cotton, and industrial products liberalisation, four sets of controversial new issues, the so-called “Singapore issues” (investment, competition policy, government procurement, and trade facilitation) were tabled (Malig and Kwa, 2003). All these issues were to be tackled in the next Ministerial in Cancun, Mexico in 2003. Also at stake in the Cancun Ministerial was the issue of agriculture. A month prior to the Ministerial, the United States and the European Union had come together to propose a tariff-cutting formula that would mean much larger tariff cuts for developing countries than for themselves while at the same time keeping their domestic subsidies, albeit with some cosmetic reductions. The EU was also clearly ensuring protection for their sensitive products (ibid.). This move by the US and the EU not only ignored the long-standing demands of West African countries such as Mali, Burkina Faso, Chad and Benin for the US to eliminate its subsidies in cotton, it also ignored the demands of the rest of the developing countries for a fair deal in agriculture. Nothing had changed since Seattle, the US and the EU were still only looking out for their own interests and were not delivering on their promises of development for the developing countries. Instead, they were making great demands on developing countries to cut tariffs and giving nothing in return.
Agriculture, trade, food sovereignty and agroecology 7
Not surprisingly, the Cancun Ministerial collapsed and the WTO, even though it reached a tentative deal in the succeeding Ministerial in Hong Kong, was never the same again. The deal on the table showed that things would never be fair in the WTO as developing countries would always end up with the raw end of the deal despite promises of development. The succeeding meetings of the WTO reflected this realisation as negotiations reached an impasse by mid-2006 and would be suspended for the rest of the year. Until today, negotiations have remained stalled and despite calls by the G-20 leaders for a conclusion to the Doha Round, positions have not changed. Developed countries are still asking for the world from developing countries and in return offering only empty promises.
at the gates of the Cancun Ministerial conference, while holding a placard that said “WTO kills farmers”. There are many more stories of suicides in India, Indonesia and Korea.
BOX 1: Farmers suicide, Indonesia January 2011 Husband and wife Maksum (35) and Rohani (33) who worked as labourers on a sugar plantation in Cirebon chose to hang themselves as they could no longer bear the economic pressure that hit their family. The parents of three children only earned 25,000 Indonesian Rp a day (less than 3 USD per day) and were therefore unable to meet the daily needs of their family. Source: Ya’kub, 2011
In the meantime, bilateral and regional free trade agreements have proliferated, and as movements would soon realise, these were all WTO-plus agreements that pushed even worse deals for developing countries. Although EU trade agreements have a more benign name, being called Economic Partnership Agreements (EPAs), upon closer inspection, they are just as bad as the Free Trade Agreements (FTAs) from the US.
The damage has been done A long history of SAPs, FTAs, and transformation of economies to export-oriented has taken its toll on the countries of the developing world, especially Asia. Asia, originally known for its countries with agricultural economies, has seen the conversion of several of its exporters into net importers of staple foods such as rice. This neoliberal model flooded developing countries with artificially low priced crops from subsidised countries in the North, dismantled the productive capacity of farming families and peasant farmers, took away their ability to feed themselves, their communities and their countries, and instead made them dependent on imports. And now that prices, left to the whims of the markets and financial speculators, have gone through the roof, this has left the import dependent countries with a food deficit. In other areas of the world, this has sparked food riots and exacerbated hunger and poverty. Worse still, Asia is now home to the majority of the world’s hungry. Hundreds of farmers commit suicide every year as they can no longer afford to feed their families, and with the prices of basic food commodities skyrocketing, this number is expected to rise. Between 1996 and 2007 the number of farmers driven to suicide in India was a staggering 200,000 (KAU et al. 2011). The most famous of these farmer suicides is probably that of Mr. Lee Kyung Hae (see Box 1) who took his life
With the worsening climate crisis wreaking havoc on agricultural lands, the situation has become almost untenable. 2011 alone has seen the ravaging of the rice bowls of Southeast Asia. “Some 1.5 million hectares of rice land have been inundated in Cambodia, Laos, Vietnam and Thailand, with one million hectares in Thailand, the world’s No. 1 rice exporter, alone. An estimated 1.3 metric tons of rice in Thailand have been lost, while in the Philippines, more than 103,000 metric tons of the standing rice crop were wiped out by the recent typhoons” (Bello, 2011). This has pushed farmers into an even worse position, devastating their crops, making them unable to pay the debts they incurred in planting their crops, and making them unable to feed their families as the loss of crops would inadvertently lead to a further rise in the price of these commodities. Couple this with the conversion of food crops to agrofuels, feeding cars instead of people, as well as to animal feed for the industrial production of meat, to meet the ever growing demands of the rich, and the refusal of the G-20 leaders to put an end to speculation on food commodities driving food prices through the roof, and governments (because of their adherence to free trade agreements, neoliberal policies and corporate interests) refusing to give support to their farmers, it is almost no wonder that poor farmers have been driven to suicide. And now with the financial crisis hitting the centres of capitalism, the US and EU, the world stands at the brink of a global recession. The globalised world of export orientated economies and market determined prices has also meant that the problems of the US and EU will now also negatively impact Asia and the rest of the world. As the famous adage goes, “when the US sneezes, the world catches a cold”. Asia though, with
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its long history of misguided policies from the IMF, the WTO, FTAs and the US and the EU, can no longer afford to catch a cold. The multiple crises of food, finance, energy, and climate have exposed the cracks in the neoliberal system, and the status quo of business as usual will no longer be accepted. Neoliberal institutions have been hard at work to reinvent themselves and not lose their hold on the region. This is evident in the push for more FTAs and EPAs and reviving the delegitimised institutions of the IMF, World Bank and the WTO through the new political body of the G-20, which includes a number of key Asian countries. The time is ripe for system change. The house is on fire and it is no longer enough to just put out the fire, the time is now for rebuilding that house based on the peoples’ alternatives. The crisis is presenting the people with an opportunity to advance solutions and alternatives to the old system.
B. BUILDING ANOTHER WORLD, ANOTHER ASIA For many years now, the slogan of the World Social Forum “Another World is Possible” has captured and continues to capture the imagination of people all over the world. The imagining of “Another World” evokes hope that someday the world will be fair, just and free. The world though, reaching its environmental limits and witnessing record numbers of hunger, famine and poverty, can no longer wait for that someday. That someday is today. The time is now for changing the system, and changing the world. In Asia, where the majority of world hunger occurs, the urgency is even more palpable. People are dying and the proposals of even more free trade and business as usual can no longer be accepted. Here in Asia, several social movements including La Via Campesina-Asia, have been discussing what an Alternative Asia would look like and the different principles it would be based on. The discussions are still at a nascent stage but the shared goal would be to reclaim the people’s sovereignty and to build a common vision that encompasses our shared hopes, dreams and goals for our communities, countries and region. There is also a clear realisation drawing from the experience of the ‘one-size-fit-all’ policies from structural adjustment and the neoliberal system, that alternatives will be as diverse as the communities they will apply to. There will be no one alternative for the whole region. Instead, alternatives will be respectful of the different cultures, environment, local, national and social realities. Communities and countries should have the freedom and the sovereignty to choose their own unique path of development that respects its people and nature. Given the long experience and damage wrought by the neoliberal project, movements have a clear idea of what it is they don’t want. At the same time, there are numerous ideas for alternatives to the current system. Discussions have been rich and interesting and the hope is for a common proposed vision to be put forward soon at various foras and levels from local to national to regional. Box 2 discusses some of the alternative proposals.
Agriculture, trade, food sovereignty and agroecology 9
BOX 2: Alternative Vision Some proposals that are being discussed now include the following principles listed below. Although they are still in their early form, the main concepts and elements can be seen. These will be more thoroughly fleshed out in the coming years as the debates progress and proposals and ideas are sharpened. One of the first principles being discussed is for Asia to have economic democracy. This is a kind of economy that is decided on by the people and not the corporations, and one that will move away from an overdependence on the export-oriented model but will instead move towards a deglobalised and localised system with food sovereignty and full and quality employment at its heart. The state will be an active engine of the economy for people’s interests and there will be joint decision-making by the state and the people. There will be strong regulation of capital and banks by both the state and society and corporate power will be dismantled. In this Asia, there will be a democratisation of control over financial institutions with people actively and equally participating in decision-making in the shaping of economic and financial policies, agreements and programs. There will be various forms of social ownership, encouraging cooperatives and community collectives. Also, at the heart of this economic democracy is the principle of food sovereignty. This and the proposed alternative of agroecology will be further discussed in detail later in the chapter. Secondly, trade that is based on solidarity and complementarity will be used to grow the economy, achieve true and meaningful sustainable development and reduce poverty. Trade will not be based on the whims of the free market and not at the expense of people and their livelihoods. In this Asia, there is no place for the free trade of the neoliberal system, which has ravaged this region for several decades and has left millions of people in poverty and hunger. Trade will be oriented towards the good of the people, locally as well as regionally and globally. Trade, at all levels – local, national, regional and global - will be a tool to achieve sustainable development and reduce poverty and it will be based on cooperation, solidarity, complementarity and responsibility. Natural resources will be used sustainably, respecting the rights of nature and keeping in mind the future of the planet and humanity.
Thirdly, financial markets and their system of casino capitalism will have no place in this Alternative Asia. Stricter rules on financial activity must be put in place, and regulation will be done both by the state and the people. There will be an end to tax havens and an implementation of a financial transaction tax. The disaster that speculation brought about in Asia in the late 1990s and in the food sector starting in 2008, should not be allowed to happen again to any region or any sector. There should be an end to food speculation and an end to the recklessness of the financial sector and the banks. Prices of commodities especially basic commodities, shall be determined outside the market and most definitely not by financial speculators. An alternative financial system will be one that will have strong regulation and a democratisation of control over financial institutions and banks. Banks and financial institutions will not be allowed to amass so much wealth as to be “too big to fail” as is the case now. Fourthly, people will have the right and access to public services, whether it be water, healthcare, transportation, housing or energy. Fifth, the rights of the people will be respected, upheld, promoted and protected. Fundamental labour rights will be protected of workers at home and migrant workers. People will have rights, regardless of their ethnicity, class and gender. Indigenous peoples’ culture, identity, traditions and heritage will be respected. Sixth, the rights of nature will be respected and integrated into the model of sustainable development and the formation of alternative economic and financial policies. We are in the midst of a worsening climate crisis and the impacts can already be felt by the people of Asia. In the Philippines, entire villages were swept away, while in Thailand, homes and livelihoods were destroyed by floods, and in various countries in Asia, crops were lost to drought, flood or extreme weather changes. Climate change is real and action must be taken now to ensure it does not descend into climate chaos by promoting real solutions such as agroecology, the use of clean technology and living sustainably. Development must be done sustainably and in harmony with nature, ensuring the future of both the planet and future generations. The principle of climate justice shall also be put forward, ensuring that the polluter must pay and
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that false solutions that seek to make more profit out of pollution and the further destruction of the planet, must be all rejected and stopped. The rich industrialised nations must take responsibility and action and make real and deep emission cuts at source and need to pay their climate debt to the developing countries. These funds must be new, public and as is stated in the Cochabamba People’s Agreement, should be at least 6 percent of their Gross Domestic Product (GDP). These proposed principles of a new form of economy, society and governance cannot be achieved and are not compatible with the current neoliberal system nor with the current FTAs, EPAs and other free trade policies. There must be a stop to all these free trade agreements and a thorough review made of each and every one of them and be put to the scrutiny of the people. Many, if not all, of these free trade agreements were signed on behalf of the people without genuine consultation with the people they impact. In many cases, free trade agreements were adopted despite the loud and visible protests from social movements, trade unions and civil society. Trade needs to be at the service of the
The time for Food Sovereignty is now At the heart of this Alternative Asia is food sovereignty. Since 1996, La Via Campesina has been developing and promoting food sovereignty as an alternative to the dominant agricultural and food system under the capitalist and neoliberal world. The system of transnational capital and agribusiness, free trade agreements and policies, industrialised monoculture soaked in pesticides, and genetically modified organisms (GMOs), displaces peasants and small family farmers, degrades the environment and supplies our countries with expensive, imported and unhealthy food. Food sovereignty which places at its centre sustainable peasant’s agriculture will not only feed the people with healthy, locally produced food, but as studies have also shown, this kind of agriculture has the ability to cool down the planet. See Box 3 for a more detailed definition. “Agricultural policies have to support sustainable family farm based agriculture in the North and the South. In order to be able to make their food sovereignty work, countries in the North and in the South have to be able to support their agriculture to guarantee the
people, and not the other way around. And with the system of free trade, this will never happen as the system of neoliberal free trade puts the interests of corporations first and is implemented at the expense of the people. Development in this Alternative Asia will not be development for corporations and the elites and will not be measured by the increase of corporations’ profits. Development will be a real and meaningful and sustainable kind of development. One which has at its heart both the people and the environment. This kind of development does not leave anyone behind and ensures the fair and equitable distribution of resources and wealth by empowering people to determine their country’s economy, by democratising control over financial institutions, by taxing the wealthy and ensuring the delivery of public services to all. Not the current development that we see where the 1 percent get richer and control the majority of the world’s resources while the 99 percent are left without jobs, food or houses. The Occupy Wall Street demonstrations in the US, which have spread around the world, are an indicator that the people will no longer accept the status quo of massive inequality.
right to food of their populations, to preserve their environment, to develop sustainable agriculture and to protect themselves against dumping. They should also be able to support their agriculture to fulfill other public interests that can differ according to countries and their cultural traditions. But at present the United States and the European Union in particular abuse public support to reduce their internal market prices and to dump their surpluses on the international markets, destroying family farm based agriculture in the North and the South” (La Via Campesina, 2003). Food sovereignty includes the right of the state to determine its own agricultural policy and the right of farmers, peasants to produce food and the right of consumers to be able to decide what they consume, and how and by whom it is produced. More importantly, food sovereignty puts the aspirations and needs of those who produce, distribute and consume food at the heart of the food systems and policies rather than the demands of markets and corporations. It defends the interests of the next generation. “It offers a strategy to resist and dismantle the current corporate trade and food regime, by promoting food, farming,
Agriculture, trade, food sovereignty and agroecology 11
Box 3: Definition of Food Sovereignty Food Sovereignty as defined by La Via Campesina, is the Peoples’, Countries’ or State Unions’ RIGHT to define their agricultural and food policy, without any dumping vis-à-vis third countries. As such, food sovereignty includes: • Prioritising local agricultural production in order to feed the people, and access of peasants and landless people to land, water, seeds, and credit. Hence the need for land reforms, for fighting against GMOs, for free access to seeds, and for safeguarding water as a public good to be sustainably distributed. • The right of farmers, peasants to produce food and the right of consumers to be able to decide what they consume, and how and by whom it is produced.
Source: La Via Campesina, 2003
pastoral and fisheries systems determined by local producers and users. Food sovereignty prioritises local and national economies and markets and empowers peasant and family farmer-driven agriculture, artisanal fishing, pastoralist-led grazing, and food production, distribution and consumption based on environmental, social and economic sustainability. Food sovereignty promotes transparent trade that guarantees just incomes to all peoples as well as the rights of consumers to control their food and nutrition. It ensures that the rights to use and manage lands, territories, waters, seeds, livestock and biodiversity are in the hands of those who produce food. Food sovereignty implies new social relations free of oppression and inequality between men and women, peoples, racial groups, social and economic classes and generations (Nyéléni, 2007). See Box 4 for an example of food sovereignty in practice.
• The right of countries to protect themselves from too low priced agricultural and food imports. • A gricultural prices linked to production costs: they can be achieved if the countries or Unions of States are entitled to impose taxes on excessively cheap imports, if they commit themselves in favour of a sustainable farm production, and if they control production on the inner market so as to avoid structural surpluses. • Populations taking part in the agricultural policy choices. • The recognition of women farmers’ rights, who play a major role in agricultural production and in food. Food sovereignty includes fair trade. Food sovereignty is not contrary to trade but to the priority given to exports: it guarantees food security for the people, while trading with other regions specific products, which make up diversity on our planet.
Agroecology requires technological development that is based on both traditional and indigenous knowledge. The science of agroecology favours the protection of the natural environment, biodiversity, economic viability and social sustainability. It is based on the principle of obtaining good quality food products without negatively affecting the environment, and enhancing the conservation of soil fertility on the basis of a correct use of natural resources and the smallest possible quantity of industrial chemicals. “For agroecology practitioners, including NGOs and some farmer organisations and farmers, agroecology refers to farming methods that are based on the application of principles (rather than recipes) which are drawn from biology. These principles are (Altieri 1995, 2002): Increasing the recycling of biomass and achieving a balance in nutrient flows.
La Via Campesina also calls for the promotion and the building of public policies to promote agroecology. Agroecology, or the use of ecological principles in the production of food, is a sustainable form of agriculture and numerous studies have shown it to be more effective in not only feeding people but also ensuring their nutrition. It has also been shown to be effective in cooling down the planet.
ssuring favourable soil conditions, keeping the soil A covered with mulch or cover crops, guaranteeing a high level of soil organic matter and an active soil biology.
Minimising nutrient losses from the system, through relatively closed rather than open system design.
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BOX 4: Food Sovereignty at work In Indonesia, the Indonesian Peasant Union (SPI) has begun to implement alternatives locally: Building an Organic Vegetables Cooperative Amidst this current situation, the Indonesian Peasant Union (SPI) whose members include peasants, farm workers, small farmers, small land lender farmers, and indigenous farmers, sees the importance of financing small food producers to ensure the continuation of the production for achieving the socio-economic goal of SPI through the Cooperative Institution. The goal is to achieve the realisation of reform, renewal, recovery, and restructuring of national and international economic development, in order to create a self-sufficient economy of peasants, people and the country, just and prosperous, the outer and inner, material and spiritual; both in policy and in the reality of everyday life. A self-sufficient economic life, fair and prosperous society can only be achieved if there is a fair arrangement of the agrarian system. A just and civilised agrarian order can only happen if genuine agrarian reform is implemented by peasants, the people, nations and the states. For SPI, as a peasant mass organisation, the cooperative is one of the economic structures that is stated in the Indonesian constitution that can achieve the welfare of the people. A cooperative is a form of business unit which is best suited to democratic economic principles. The main characteristic that distinguishes a cooperative with other business entities is that in a cooperative, members have dual identity. Dual identity means that members of the cooperative are the owner and user as well. In a cooperative there is no employee or employer, all people work together for their common goal (Hatta, 1954). Generally, a cooperative is controlled jointly by all members, wherein every member has equal rights in any decision. Its profit sharing is usually calculated based on a member’s contribution, for example by distributing dividends based on purchases or sales made by the members. On 17 April 2010, the Indonesian Peasant Union (SPI) set up The Bogor Production Cooperatives (KSPI Bogor). This production cooperative was established based on the members’ common vision to have an economic structure that could serve both as the provider of agriculture capital and to ensure price and buying stability for the horticulture products in Bogor.
This vision was reached through a series of need assessments conducted in 4 villages and within the organisation structure, in 4 SPI bases in Cibeureum, Ciaruteun, Cikareo and Tambilang. These 4 villages were later to serve as cooperative units of KSPI Bogor. From the needs assessments process, farmers realised that they needed easy capital with low interest, accessible agriculture inputs i.e. seeds, fertilizers, and also the certainty of price for their products. That is why the farmers in these 4 villages then agreed to have a production cooperative rather than a saving and borrowing cooperative. The cooperative of organic vegetables started with a principal contribution of each member, Rp. 50.000 (around US$ 5) per person. There was also a voluntary contribution, paid by the member every month. Besides the principal contribution from members, the cooperative also received a loan of Rp 20.000.000 (around US$ 2,000) from the SPI national board, which was used to provide initial supplies. The repayment for this loan is 2 years after the cooperative’s running with no interest rate. The cooperative has 4 organic terminals. It collaborates with the consumers’ cooperative in residential areas. The consumers’ cooperative provides the space, a small shop, and KSPI provides the vegetables. This direct selling system benefited both the farmers and the consumers, because the farmers could sell their products for a good price and the consumers could easily have fresh organic vegetables in a shop near their houses. This collaboration with the consumers’ cooperative is also an effort to build awareness among consumers on how food, in this case vegetables, are produced, which kinds of vegetables are better to consume and also the understanding of farmers‘ production cost. Consumers often do not realise or do not know of how much production costs are needed by the farmer, especially when the farmer still has to rent the land. This makes the consumers often prefer to buy cheap imported vegetables from China, United States and Australia. For vegetable farmers the market situation today is very difficult as many cheap imported vegetables reach even the village and district markets. It forces local farmers to sell the products at a low price, sometimes even lower
Agriculture, trade, food sovereignty and agroecology 13
than the production cost or else nobody wants to buy the products. So collaboration with the consumers’ cooperative helps KSPI cope with the price instability problem. In addition, special attention given by the cooperative to organic produce, is another strategy used by SPI to increase the shift from the conventional to an organic agricultural system. The organic farmers will spend less for inputs and yet will have higher price for their products. By doing the production organically, farmers receive higher incentive. There are three lessons from KSPI Bogor, which could be used as a model for others are:
a. Type of Cooperative: a production cooperative allows for members to more easily get agriculture inputs. b. The Cooperative provides all agricultural inputs, hence it is involved in the whole series of activities from production until distribution. c. The Cooperative is also part of the campaign for organic farming through implementation at member level as well as through an active communication with consumers. This will lead to a road that achieves both sustainable production and sustainable consumption. Source: Kartini Samon, Indonesia Peasant Union (SPI)
romoting the functional biodiversity of the system, P including within- and between-species diversity, aboveand below-ground and landscape level biodiversity. Promoting increased biological interactions and synergisms among system components that can sponsor system services like regenerating soil fertility and providing pest management without resorting to external inputs.
The emphasis at all times is on the adaptation and application of these principles in accordance with local realities” (Rosset et al. 2011: 163). The use of agroecology is backed by the UN Special Rapporteur, Olivier de Schutter, in his recent report, Agroecology and the Right to Food (2010), presented to the UN Human Rights Council. In his presentation of the report he said; “to feed 9 billion people in 2050, we urgently need to adopt the most efficient farming techniques available. Today’s scientific evidence demonstrates that agroecological methods outperform the use of chemical fertilisers in boosting food production where the hungry live – especially in unfavorable environments” (2011). De Schutter continues, “A large segment of the scientific community now acknowledges the positive impacts of agroecology on food production, poverty alleviation and climate change mitigation – and this is what is needed in a world of limited resources”. Furthermore, he “urges States to support small-scale farmer’s organisations, which demonstrated a great ability to disseminate the best agroecological practices among their members” (ibid.).
There is, therefore, growing support for the promotion of agroecology, and governments need to listen to this if they are to address global hunger, increasing poverty and worsening climate change. Agroecology is a clear solution from the people that is already being implemented in many places around the world and has already been proven by science as not only a viable alternative but a needed solution to fight hunger, poverty and climate change. These examples of alternative systems of agriculture which have at its core the principles of food sovereignty show that it is indeed possible to have alternatives to the current dominant system of transnational and big agribusiness (see Box 5). La Via Campesina members around the world have and continue to pressure their governments to listen and take on the proposal of food sovereignty and to implement it as public policy. With the growing number of people suffering from hunger, it is ever more urgent to join other social movements and all those who support the call for food sovereignty, to increase the pressure on governments and decision makers.
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BOX 5: Agroecology at work The practice of organic farming has penetrated into the city. One example is the land managed by husband and wife in Johor region, Medan, North Sumatra. In an area of 3,000 square feet they managed to provide fresh and healthy vegetables for 500 families in the region. Darno, the husband, started farming three years ago with the aim to meet the household’s needs for vegetables. “At that time I had no land and had no intention of farming. Thank God there is a plot of land near our house which is abandoned. After asking permission from the owner, he allowed me to manage their own property without any charge” said Darno in his small shelter. Together with his wife, Darno started cultivating the abandoned land. Finally, they managed to “juggle” the abandoned land into productive agricultural land with a variety of vegetables such as spinach, cucumbers, green beans, tomatoes, peppers, pariah, and papaya.
“Initially we only intended to provide for the vegetables at home, but now it can add income to buy various household needs, and now we are also assisted by two of our children,” said Mary, his wife. Darno explained that he manages the land using organic farming methods that he learned from Indonesia Peasant Union (SPI). “After some exchange of views with the cadres of SPI on sustainable agriculture, it really helped us to apply methods of sustainable agriculture in the day-to-day farming” said Darno. Regarding the marketing of agricultural products, Darno stated that he did not use specific techniques. Usually the buyers come directly to the plot. In addition to people around here, we also already have a subscription from out of town. If they want to come here they usually tell me in advance via phone, he explained. Source: Indonesian Peasant Union (SPI)
C. TIME FOR THE EU TO STOP, LOOK AND LISTEN The EU, as part of the G-20, the self proclaimed premier forum for international cooperation, has backed the Global Partnership for Agriculture and Food Security (GAFSP) and gave the World Bank a lead role in operationalising the programme. This programme however, upon closer inspection, is one whose intended goal is to push small farmers to depend on genetically modified seed technology, and a way to legitimise a massive takeover of land by agribusiness in the name of increased land investment and higher agricultural productivity. The GAFSP is supposed to promote agricultural productivity but analysts agree that the kind of productivity this describes is one of intensification of agribusiness and the legitimisation of land grabbing. It will legitimise the displacement of small farmers by big agribusiness in the spirit of increasing productivity and efficiency. The EU and the rest of the G-20 for that matter, must realise that their proposed solutions of even more neoliberal free trade is not rescuing, but rather endangering the people and the planet. These 20 countries also have neither the legitimacy nor the mandate to make decisions on behalf of the rest of the 172 countries not invited to their exclusive summits. Also, despite the crisis and indications that the free trade model is inherently flawed, the EU is pushing
for a new and comprehensive economic partnership agreement (CEPA) with Indonesia, which if successful, will supposedly lead to several other comprehensive partnership agreements with other member countries of the ASEAN (Association of Southeast Asian Nations). The people of Indonesia, and of the rest of Asia have suffered enough from failed neoliberal policies beginning from structural adjustment in the 1980s. Given the long and painful history of Asia, this proposed CEPA with its proposed ambition in areas of services and investments does not bode well for the people of Indonesia. The EU, if it were really sincere in its desire to formulate and implement policies in trade and investment that would lead to economically, socially and environmentally sustainable outcomes for all, would do itself some real good by stopping, looking and listening. The current path of adhering to the neoliberal system of free trade is a road to further crisis, hunger and poverty. The EU would do well to listen to the people and their proposed alternatives of trade that is based on solidarity and not competition and an agricultural system that is determined by the people, not the market and transnational corporations, which is the case under the current proposed EU free trade agreements and this CEPA.
Agriculture, trade, food sovereignty and agroecology 15
Recommendations For a full implementation of food sovereignty and agroecology, the current dominant system of transnational and big agribusiness, as well as free trade agreements, must be replaced. The following recommendations will help create a new system that has at its core the principles of food sovereignty and agroecology: The EU should put an end to its destructive policies on agriculture and listen to the growing clamour from social movements for support for agroecology and food sovereignty.
The EU should put a stop to its proposed CEPA with Indonesia, and the rest of its destructive free trade agreements that threaten to destroy even further the capacities and livelihoods of small farmers in Asia.
The trade we envision for the region, based on solidarity and complementarity, will have food sovereignty as a core principle. As detailed earlier, food sovereignty is not contrary to trade but to the priority given to exports: it guarantees food security for the people, while trading with other regions’ specific products, which make up diversity on our planet. Under the responsibility of United Nations (UN) this trade must be granted a new framework, which:
Prioritises local and regional production before export,
llows the countries/Unions to protect themselves A from too low priced imports,
ermits public aids to farmers, provided these are not P intended directly or indirectly to export at low prices,
uarantees stable agricultural prices at an G international level through international agreements of supply management (La Via Campesina, 2003).
Furthermore, what developing countries need is the policy space to determine their own development paths and not be dictated to by the free trade agreements and neoliberal policies pushed by the EU. The world does not need the conclusion of the Doha Round or the further expansion of the WTO, and the EU should desist from its efforts to revive it. What is needed is a new kind of trade, economy and financial system that is based on complementarity, solidarity and cooperation. One that puts and respects the rights of people and of nature first and develops sustainably.
With the current multiple crises and the increasing number of people suffering, there is no time to waste. If there is one thing that the multiple crises have proven, it is that, another world is not only possible, it is necessary.
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REFERENCES Bello, W. (2011) ‘Seven billion… and rising’, Inquirer Opinion [Online], 3rd Nov. Available: http://opinion. inquirer.net/16433/seven-billion…and-rising [15 April 2012] Bello, W. (1999) ‘Should developing countries push to decommission the IMF?’, International Forum on Globalisation [Online], 6th Dec. Available: http://www.ifg. org/analysis/imf/waldenimf.htm [15 April 2012] De Schutter, O. (2011) ‘Eco-Farming can double food production in 10 Years, says new UN report’, United Nation Human Rights Display News [online], 8th March. Available:http://w w w.ohchr.org /EN/NewsEvents/ Pages/DisplayNews.aspx?NewsID=10819&LangID=E [16 April 2012]. De Schutter, O. (2010) Agro-ecology and the Right to Food, United Nations General Assembly, A/HRC/16/49. Available: http://www.srfood.org/images/stories/pdf/ officialreports/20110308_a-hrc-16-49_agroecology_ en.pdf [26 April 2012]. Food and Agricultural Organisation of the United Nations (FAO), (2008) The State of Food Insecurity in the World 2008, Rome: Food and Agriculture Organisation. Available online: http://www.fao.org/docrep/011/ i0291e/i0291e00.htm [15 April 2012] Food And Agriculture Organisation Of The United Nations (FAO) (2010) The State of Food Insecurity in the World: Addressing food security in protracted crises, Rome: FAO/ World Food Programme. Food And Agriculture Organisation Of The United Nations (FAO) (2012) World Food Situation: FAO World Food Price Index [Online]. Available: http://www.fao.org/ worldfoodsituation/wfs-home/foodpricesindex/en/ [15 April 2012] Indonesian Peasant Union (SPI) (2012) Urban Agriculture for Food Sovereignty [Online], 12 Jan. Available: http://translate.google. c o m/t r a nsl a te? u = h t t p % 3 A % 2F % 2F w w w.sp i. or.id%2F&langpair=id~n [16 April 2012] Koalisi Anti Utang (KAU), Indonesian Peasant Union (SPI) and Wahana Lingkungan Hidup Indonesia (WALHI) (2011) Food price crisis, speculation and the G-20, Briefing Paper. Available online: http://issuu.com/ putuhenayusuf/docs/briefing_paper_eng_ver [16 April 2012]
La Via Campesina (2003) What is Food Sovereignty? [Online]. Available: http://www. v i a c a m p e s i n a.o r g /e n/i n d ex .p h p?o p t i o n = c o m _ c o ntent & v iew = ar t icle &id = 47:fo o d sovereignt y&c atid =21:food - sovereignt y - and trade&Itemid=38 [16 April 2012] Malig, M L. and Kwa, A. “World Trade Organisation protests, Cancun, 2003” cited in Ness, I. (2009) International Encyclopedia of Revolution and Protest: 1500 to the Present, pp. 3644–364. New Jersey: WileyBlackwell Publishing.
Muchhala, B. (Ed) (2007) “Ten Years After: Revisiting the Asian Financial Crisis”, Washington: Woodrow Wilson International Center for Scholars, cited in Smith, D. (2010) The Age of Instability: The Global Financial Crisis and What Comes Next, p. 30. London: Profile Books Ltd. Nyéléni (2007) ‘Declaration of the Forum for Food Sovereignty’, Forum for Food Sovereignty [Online], 23rd - 27th February 2007. Sélingué, Mali. Available: http:// www.nyeleni.org/spip.php?article290 [16 April 2012] Rosset, P.M., Machı´n Sosa, B., Roque Jaime, A.M., and Lozano, D.R. (2011) ‘The Campesino-to-Campesino agroecology movement of ANAP in Cuba: social process methodology in the construction of sustainable peasant agriculture and food sovereignty’, The Journal of Peasant Studies, 38 (1): 161–191. Vander Stichele, M., Kerckhoffs, T. and Van Os, R. (2010) ‘Financing Food: Financialisation and Financial Actors in Agriculture Commodity Markets’, SOMO Briefing Paper. Available online: http://ssrn.com/abstract=1597138 Ya’kub, A. (2011) “Menyelamatkan Pertanian dan Manjamin Kedaulatan Pangan”, Jakarta, 24 February 2011 and published in www.spi.or.id and www. indoprogress.com in January 2011.
Land justice, land reform and access Proposals for land justice for poor families with particular emphasis on Zambia Joseph Mbinji
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Joseph Mbinji is currently the Coordinator of the Agricultural Consultative Forum (ACF), Zambia. ACF promote and strengthen private-public sector partnerships, through consultaltation and participation, in Zambian Agriculture. Before joining ACF, Joseph completed a Masters in International Development and Management: Sustainability and Natural Resources Management at Lund University, Sweden, whilst also working as Programmes Manager at Zambia Land Alliance.
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Contents Introduction 4 A. Obstacles Poor Families face in Securing Legal Title to Land in Zambia
B. Alternative Proposals
C. How EU trade and investment policy will undermine alternatives 10 Recommendations 12 References 13
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Introduction In recent years, Zambia has registered positive economic gains with annual economic growth rate averaging 6.1%, helping it graduate from a Lower Income Country to a Lower-Middle Income Country, with an annual per capita income of US$ 1,070. However, this positive trend in macroeconomic indicators has not translated into improved living standards for many ordinary citizens, especially in rural areas, where poverty levels are still very high, over 80% compared to about 55% in urban areas (IFAD, 2011). The high dependency of more than 90% of rural households on agriculture-based livelihoods, has led to the prioritisation of agriculture on the national development agenda in order to increase rural incomes, food security and ultimately reduce poverty. The challenge is how to achieve these development goals in a global liberalised economy where there are competing demands for food, energy and raw materials, without undermining livelihoods of poor families. The European Union (EU) has adopted an expanded trade policy that requires open markets in both the EU and developing countries to facilitate trade, Foreign Direct Investment (FDI), and access to raw materials to support increasing domestic consumption requirements in Europe. This, in addition to energy policies (such as the increasing use and production of biofuels) and the global food crises of 2008 has created unprecedented demand for land and raw materials in developing countries. The liberalised market economic policies (including the liberalisation of land markets) embraced by the Zambian government at the behest of the International Monetary Fund (IMF) and the World Bank and as part of trade negotiations with the EU (in the form of Economic Partnership Agreements (EPAs)), have increased land injustices and obstacles that poor families face in accessing legal title to land, consequently undermining their agriculture-based livelihoods. This paper will look at some of the main issues surrounding land injustice in Zambia, beginning with an examination of obstacles poor families face in securing land rights and tenure security, and then discussing alternative policy proposals. It will also show how the current EU trade and investment policy, especially as mediated through EPA negotiations, will undermine the realisation of these alternative proposals, and concludes by providing policy recommendations to the EU, government, civil society, local communities and general public, on how best to secure land justice for the poor and protect their right to food security and a decent livelihood.
A. Obstacles Poor Families face in Securing Legal Title to Land in Zambia Zambia has a dual land tenure system comprising leasehold administered by the Ministry of Lands (6% of total land mass), and customary tenure (94% of total land mass) administered by traditional leaders or chiefs. Most of the rural population live in areas which are under customary tenure characterised by informal arrangements of land access and ownership. Most of the urban areas, particularly along the line of rail, fall under leasehold tenure characterised by formal land â€˜ownershipâ€™ or legal title with different lease periods ranging from 12 years for land records issued by local authorities to 99 years for title deeds issued by the Ministry of Lands. The pluralism or dualism in land tenure was inherited from colonial times and continued under the current market-led land reforms that began in the 1990s. All things being equal, holding land on legal title offers many benefits, including legal protection from arbitrary land displacements (i.e. land-grabbing), provides solid proof of land ownership and reduces land ownership disputes, facilitates land transactions, facilitates inheritance or bequeath of land, can act as an incentive for increased investment on a piece of land to increase productivity, and can be used as collateral to access credit. Under the current market-led land reforms however, many ordinary citizens particularly poor families face various obstacles in obtaining legal title to land. Most of these obstacles exist in customary areas where the majority of poor families live. These obstacles are discussed below. a) Liberalisation, land markets, demand and competition for land: In the 1990s, Zambia began to implement a series of reforms to liberalise markets, promote Foreign Direct Investment (FDI), and protect investor interests. These reforms were being pushed on one hand by the IMF and World Bank as part of the Structural Adjustment Programme (SAP), meant to transform Zambia into a market economy. The other push came from trade liberalisation, both at WTO level and at bilateral level (as in EPAs), which required opening up markets to promote FDI and increase access to natural resources in developing countries. The concept of liberalisation and land markets, however, has stifled access to land by many poor families in Zambia in both customary and leasehold tenure (see Box 1). In the past, acquiring land in customary areas was affordable for many poor people as it only involved payment in-kind, i.e. presentation of a homage gift of any kind depending on oneâ€™s capability, to the local Chief or traditional leader. However, with the introduction of land markets access to land by poor
Land justice, land reform and access 5
families has become costly, since traditional authorities are demanding large sums of money or huge gifts equivalent or matched to the market value of land. This is disadvantaging poor families and paving way for foreign entities, rich investors, and elites from urban areas to acquire huge tracts of land in customary areas because they have the ability to meet these demands. Even access to leasehold land directly from the Ministry of Lands, which used to be relatively easy, has become more costly and beyond the reach of many poor families. In addition to consideration fees, there are several other charges to accessing and holding leasehold land such as survey fees, consent fees, annual ground rent and property rates etc. The Government has in recent years revised these rates or charges upwards in response to the increasing market-value of land.
Box 1: Liberalisation and FDI as obstacles to land access by poor families The effects of liberalised land markets and FDI on access to land by poor families is more apparent in government led land development programmes such as the Farm Block Development Programme and the Multi Facility Economic Zones (MFEZ). These are new government programmes that are aimed at opening up virgin land including underutilised land under customary areas and providing basic services such as water, roads and electricity to attract investments in agriculture, processing and manufacturing industries. Obtaining land in these serviced areas is not only expensive but impossible for poor local populations who live on less than US$1 a day, since the focus is on attracting FDI and to a lesser extent local investment. In relative terms, the cost of this land is nothing to rich foreign entities, which means that this land is given away for very little in the name of attracting FDIs. An example includes the recent land allocation (in 2011) in the Nansanga Farm Block involving more than 150,000 hectares in the Central part of Zambia, where more than 250 pieces of land (ranging from approx. 10â€“100 ha each) were allocated to elites from urban areas with the core ventures (core ventures are more than 7000 ha each) offered to large local and foreign corporations. Less than 50 pieces of land (ranging about 10â€“20 ha) were reserved for local people. However, it is not even clear what criteria will be used, if and when this land is allocated to local people. This is a form of land injustice facilitated by the government, since most of this land is acquired from customary areas with little or no consultation, and no benefits and/ or compensation to the affected communities. The investor protection and leasehold period of 99 years granted to investors is too long to reverse any land injustices that poor host communities face.
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Figure 1: Trend in the demand of land for agriculture and commercial investments in Zambia
1200 1000 800 600 400 200 0 2006
Source: Ministry of Lands (2010)
The increased competition and demand for land and natural resources due to liberalisation of land markets does not only constrain access to land but is also an important causal factor for land dispossessions or displacements of poor families in the country. Figure 1 shows increasing demand for agriculture land in Zambia over the last 5 years.
This increasing demand for land leads to displacements of poor families to pave way for rich investors. Currently there are several cases of displacements of the rural poor across the country due to increasing FDIs. Box 2 below describes the Macha displacement case arising from increased demand for land for FDI.
Box 2: Macha Displacement Case Macha is a missionary site in Choma District in the Southern Province, about 450km south of Lusaka, the capital city of Zambia. The Macha displacement case involved the eviction of over 3,000 people from a piece of land measuring about 3,003 acres, which the Missionary church had obtained from the local people in 1906. The church has been utilising less than 10% of the land. Over the years local people began to settle on the remaining part of the land, some with permission from the church as part of the retirement benefits after working for it and others for convenience purposes â€“ proximity to health and education facilities provided by the church. The Christian mission and the local community lived in harmony under this arrangement for a long time until the community was forcefully displaced in 2010.
This was after the missionary church sub-leased part of the land to a foreign investor to grow jatropha (a biofuel crop) and to undertake other developments. The displacement was done through a court order granted to the missionary church without legal representation of the poor local community. However, with social mobilisation and support from Zambia Land Alliance, the Macha community was able to challenge the displacement and was granted a â€˜Stay of Executionâ€™ to allow it to continue having access and utilising the disputed land for their farming and other livelihood activities until the case was fully determined by the High Court. At the moment the case is still in the court.
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b) Land Policy and Legal Framework: At the moment, Zambia has no clear land policy. Policy decisions are executed through the existing Lands Act of 1995, Statutory Instruments by the Minister of Lands and ad hoc pronouncements by the President. Efforts to have a national land policy since the 1990s have not been successful due to many contentious issues associated with liberalised market policies, which is the main thrust of the reforms. The process of formulating the land policy has also been taken over by events such as the National Constitutional reforms that have taken long to complete. The lack of a clear land policy makes land administration chaotic. The current land administration is characterised by lengthy procedures of land acquisition, bureaucracy and corruption in land allocation, political interference, and poor coordination of institutions responsible for various functions in land administration. This confusion makes it very difficult for poor families to access land, let alone to seek legal justice in cases of land rights violations. The current land law (Lands Act of 1995) was enacted hurriedly under controversial circumstances without adequate consultations of stakeholders, particularly chiefs, smallholder farmers, civil society and ordinary citizens. The Lands Act of 1995 is based on liberalised market principles, which have led to stiff competition in accessing land. This Land Law offers very little to poor families, and benefits mainly rich and foreign entities. The law is very weak in many respects including its lack of provision for sufficient minimum guidelines on the administration of customary land. This, in addition to the unwritten nature of customary law or practices used to administer customary tenure, leaves room for manipulation and corruption. c) Corruption in land administration: The bureaucracy of obtaining land on legal title introduces corrupt practices on the part of public officers who demand monetary inducements to facilitate speedy processes of acquiring legal title to land. Corruption is rampant in government institutions that play key roles in land administration. Currently, the Ministry of Lands and Local Authorities in Zambia rank highly in terms of corruption. Corruption has a tendency of pushing up the cost of acquiring land on legal title and excluding poor families. d) Low Awareness of Land Laws and Procedures of acquiring legal title: The low levels of awareness of the provisions in land laws and procedures in land acquisition by many poor families form an important obstacle to obtaining legal title to land. This low awareness is largely a result of the exclusion of ordinary citizens and poor people in formulating land policies, laws and procedures and low literacy levels. Inadequate outreach and sensitisation of poor families in rural areas by both
government and civil society also largely contribute to low awareness levels. e) Resistance by traditional leaders to grant consent for legal title: The Lands Act of 1995 grants legal power to traditional leaders (chiefs) to give consent to individuals willing to convert land from customary to leasehold tenure. However, most chiefs are not willing to provide this consent under the current legal framework. This is because granting of consent for land conversion entails chiefs losing authority and control over land in their chiefdoms. In addition, despite chiefs playing this critical role in land administration, the current arrangement does not provide incentives for performing this function. Most of the benefits accrue to the central government in the form of various land fees and property taxes, which are not shared with traditional leaders.
B. Alternative Proposals In order to ensure that poor families enjoy their land rights in the face of EU trade policy, there are several alternatives that can be explored. Alternative proposals focus on addressing the obstacles that poor families face in accessing and obtaining legal title to land. A lot of work has already been done by civil society groups such the Zambia Land Alliance in documenting some of the alternative proposals for securing legal titles to land for poor families in the Zambian context. The United Nations Food and Agriculture Organisation (FAO) and other international organisations have also in recent years developed and championed voluntary guidelines for responsible investments in agriculture and natural resources. This includes the Responsible Agriculture Investments (RAI) Initiative by the World Bank and other international organisations. The application of a combination of these alternative proposals would go a long way towards addressing the many injustices caused by the imposition of neo-liberal policies in agriculture and land by EU trade and investment policy, and IMF and World Bank conditionalities. The following paragraphs discuss some of these workable alternatives:
Proposals for addressing land grabs and protecting poor families Strengthening national land policy, legal framework and investment guidelines would significantly help reduce land grabs and protect the interests of poor families. This should firstly involve developing a comprehensive pro-poor land policy to guide the review of legislation for land administration in the country. The pro-poor policies and review of legislation need to address factors that facilitate land grabbing such as weak policy and the legal and institutional frameworks for land administration. The current land laws do not adequately protect land rights
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of poor families, particularly under customary tenure due to lack of clear legal guidelines for customary land administration. Adopting more consultative processes in the formulation of land policies and legislation is critical not only in increasing awareness of land rights by poor families, but also in addressing the real issues affecting them. Adoption and legal recognition of democratic consultative processes involving different groups of community members in the acquisition and conversion of customary land could help minimise land grabs, unlike the current arrangement which only recognises the chief or traditional leader. Providing deliberate legal requirements in the investment guidelines for all investments to reserve a specified minimum shareholding and benefits to host communities could secure land rights of poor families. In such an arrangement shareholding by local communities should be based on the land contribution to the investment. Alternatively, the community could sub-lease part of its land to investors. In this way the communities would benefit from FDIs. However, for these proposals to work, local communities need to firstly register legal entities or trusts to legally own land. This could either involve identification of strategic land in the communities for allocation or sub-leasing to investors based on participatory land-use planning processes or it could be by way of delineating and registering the whole chiefdom and obtaining a block title where individual titles including title to investors are granted on a sub-lease basis. However, these alternative proposals require capacity building of traditional authorities in various issues ranging from basic participatory land-use planning, negotiation skills, contract management, marketing, proposal writing, democracy and local governance etc. These proposals can actually be implemented within the existing legal framework. These initiatives are already being implemented in some parts of the country, especially in Southern Province of Zambia, where there is a lot of demand for land for tourism investments. Examples include the Mbeza Royal Development Trust, Sekute Trust, and the Mukuni Development Trust. Figure 2 illustrates the organisational structure of the Sekute Trust. Sekute Chiefdom covers an area of 250,000 hectares with an estimated 2,900 households (17,500 people); 289 villages and 15 areas. All members of the community are entitled to membership through village and area committees and chiefdom level boards (Metcalfe, 2005).
Figure 2: Organisational Structure of the Sekute Trust COMMUNITY DEVELOPMENT TRUST BOARD Trustee representatives from 15 Area Trust Committees Customary Chief Patron of Board
AREA TRUST COMMITTEES 15 Area structures 19 villages per ward Representative of villages on area Trust Committees
VILLAGE TRUST COMMITTEES 289 village structures (10 household villages) Households elect representatives Customary village heads patrons of committees
HOUSEHOLDS 2900 households x 6 people per household Total = 17,500 people in chiefdom Source: Metcalfe (2005)
The organisational structure of the Sekute Trust gives it sufficient legal authority to enter and sign agreements, acquire permits and enter into contracts with investors. Holding of the whole or part of customary land on lease by the Trust and partnering or sub-leasing to investors empowers communities to be in control of the land and reduces the risk of land grabbing (ibid.). Downward accountability in this structure is achieved through Annual General Meetings and/or General Assemblies of members (Ribot & Larson 2005; Sekute Trust 2003, cited in ibid.: 8). There is evidence of how this alternative proposal of community land trusts has helped poor communities challenge land grabbing by investors. This was demonstrated in Sekute Chiefdom when the Trust legally challenged a private investor who had unscrupulously claimed ownership of a prime island on the Zambezi River within the Chiefdom. This legal challenge was achieved with support from Africa Wildlife Foundation (AWF). The community has since repossessed the island (Metcalfe, 2005).
Land justice, land reform and access 9
A number of traditional leaders in other parts of the country have expressed interest to adopt such initiatives. However, there is not much documentation on how these initiatives are operating and what challenges they face. Raising communitiesâ€™ awareness of their land rights is yet another proposal that could empower communities to challenge and hold their traditional leaders accountable on questionable land transactions that cause land grabs. The current low levels of awareness of land rights by poor families contribute to land grabs that take place without any legal challenge. These land rights could be further strengthened if local land policies and laws recognise them and even provide institutional arrangements for seeking legal redress in the event of land rights violations. However, strong mechanisms for redressing land rights violations and land disputes are required. The new Lands Tribunal Act of 2010 is a step in the right direction as this has broadened the jurisdiction of the Lands Tribunal to cover land disputes involving legal titles in customary areas unlike before where its jurisdiction was restricted to state land.
Proposals for securing legal title to land and livelihoods for poor families In Zambia, most poor rural families living in customary areas currently still have access to agriculture land. However, the major challenge is lack of land ownership, limited land sizes1 and capacity to fully utilise the land to meet food and income requirements. Most poor families lack financial, technical (extension information and farming technology) and material (agriculture inputs) capacity to fully utilise their land to maximise income and food gains. Most of these factors affect disproportionately women or female headed households, leading to low production and productivity. The other challenge is that most of the land where poor families cultivate is not secured in form of legal title due to the many obstacles highlighted in the preceding section. This makes poor families more vulnerable to land grabs and displacements. However, the legal title to land (title deed) in its current form would not be the best option of securing land rights for poor families in Zambia unless all the obstacles outlined above are sufficiently addressed. The easier option would be the introduction of cost-effective but legally recognised customary land titles. Implementing this proposal, however, requires formalising customary land administration institutions and building their 1 Although there is a huge gap in the sizes of land holdings of smallholder famers in Zambia, the national average is 2.25ha for cultivated and fallow land and 3.27ha for all land including virgin and rented land (Jayne et al., 2008).
capacities to effectively undertake this task. Capacity is required in basic land administration, focusing on sustainable or participatory ecological land use-planning, land registration and records management, and strengthening already existing land disputes resolution mechanisms to make them more impartial, effective and gender sensitive. Sustaining this formalised land administration system in customary areas would require families seeking land to pay a minimal administrative fee. In addition, there is need to assist customary authorities to develop minimum standards or guidelines for land administration. This is to avoid the current confusing and diverse nature of customary norms and practices applied from one place to the other, which sometimes acts as an obstacle to land acquisition. A few traditional leaders are implementing this initiative in various parts of the country with the support of non-governmental organisations such as Zambia Land Alliance and Action Aid Zambia. The initiative has received overwhelming support by many traditional leaders and poor families in rural areas. However, the lack of legal recognition of these customary land titles or certificates still remains a challenge, until legal reforms are undertaken to accommodate this alternative proposal. The advantage of these simple cost-effective but legally recognised customary land titles is that they would not only serve as proof of ownership of land but would also increase access of poor families to micro-credit to help boost their agricultural production and productivity. Considering the obstacles that poor families face to obtain credit due to lack of legal title to land (for use as collateral), other alternatives such as the Warehouse Receipt System can be explored. The new Agriculture Act of 2010 is one such legal reform that seems to be promising in terms of increasing borrowing by smallholder farmers without using land as collateral. Once the Credit Act of 2010 is operational, smallholder farmers will be able to borrow from commercial banks and other credit institutions using warehouse receipts based on the quantity and quality of their agriculture produce (grain) deposited in certified warehouses across the country.
Proposals for reducing effects of increasing food prices Reducing the effects of rising global prices for food commodities requires investment in increased local production by supporting smallholder farming. This support should be directed towards securing their land rights and tenure security, increasing their productive capacities through agriculture input support coupled with effective financing, extension and research support, and developing local and regional markets. Increased production and productivity levels would help reduce the
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prices of staple food crops on the market and would help build up food reserves. The agriculture marketing programme also faces many challenges, which includes inefficient and ineffective purchases of produce and management of bumper harvests due to inadequate storage infrastructure and transport facilities especially in remote parts of the country. The transport challenge leads to wastage of most of the produce and in some areas leads to exploitation of peasant farmers by traders who take advantage of the absence of the Food Reserve Agency (FRA) to suppress the prices to below the official floor price set by government. The wastage and low price of maize crop reduces poor familiesâ€™ incomes and undermines their overall food security. One alternative of reducing wastage is to develop regional markets around Southern and Eastern Africa. These regional markets have great potential to absorb excess grain or bumper harvests owing to natural calamities which severely affect some countriesâ€™ food output. However, regional markets can only be developed through strong regional integration, which is currently being threatened by EPAs which are designed to split-up existing regional blocks like the Common Market for East and Southern Africa (COMESA) and Southern Africa Development Community (SADC).
C. How EU trade and investment policy will undermine alternatives Apart from splitting up existing regional blocks, the opening up of markets under EPAs will disrupt local and regional markets by flooding the local market with cheap EU agricultural products, thus negatively affecting production, as well as local and regional marketing of agri-products by smallholder farmers (Situmbeko and Zulu, 2004). This reduced production among smallholder farmers will undermine alternative proposals to reduce land grabs because the underutilisation of land is often used as justification to grab land and allocate it to investors who have the capacity to fully utilise it. EU trade and investment policy will also undermine alternative proposals to secure land justice for the poor because these trade agreements strengthen the legal power of investors while weakening the policy space of governments and the power of host local communities (Bertow and Schultheis, 2007). This undermines the introduction and implementation of progressive land policy and legal reforms aimed at empowering poor families, especially with their emphasis on liberalisation of land markets and protection of investors. This also undermines alternatives to strengthen communitiesâ€™ voices or legal power to hold both their governments and investors accountable for actions that cause land rights violations, land grabs, and displacements. The ultimate goal of alternatives to empower poor families with legal title to land is to ensure improved or stable livelihoods and increased household food security and incomes. However, achieving this goal is seriously undermined by unregulated FDI in agriculture as advocated by trade agreements. This is because of the dangerous disconnect between FDI in agriculture, which often involves taking over land in poor countries, and the goal of securing food security for poor and vulnerable populations in the host countries (Daniel and Mittal, 2009). Investment in large cash crop monocultures has severe impacts on the availability of food for many poor households, especially female headed, as this diverts their food producing resources and labour for cash crop production (Graham et al., 2010: 8). It is argued that more sustainable food security of poor households can only be achieved if food production takes place on their land (ibid.). The high dependency on food produced from elsewhere reduces the quality and variety of diet of communities and alters their food customs (ibid.). Even the jobs created by these investments do not help increase income and food security due to the low quality and conditions offered by many investors. The EU trade policies will also undermine alternatives
Land justice, land reform and access 11
aimed at increasing access of poor famers to credit such as the Warehouse Receipt System and the issuance of traditional land titles or certificates. This is because of the increased competition for credit resulting from liberalisation of markets. Increased competition for credit among different borrowers often disadvantages the poor who have little collateral options for obtaining credit. Under high competition for credit, traditional land titles which are not legally recognised at the moment would be unattractive to use as collateral by lenders, rendering them less useful. Large-scale land investment in agriculture, particularly agro-fuels, also threatens communitiesâ€™ access to water, since production of agro fuel crops such as jatropha requires high water input (ibid.). This competition for productive resources such as fertile land and water unleashed by trade agreements such as EPAs, is leading to increasing prices for land and water, putting them beyond the reach of many poor families especially in rural areas. The other impact of open trade in developing countries like Zambia is reduced government revenue from trade tariffs. This has undermined public investment in agriculture and rural development. Currently, the Zambian government is under-funding the agriculture sector, below the 10% of the total national budget which is a minimum requirement set by the African Union through the Maputo Declaration of 2003. This low level of investment reduces availability of resources to support key drivers of agriculture growth such as research and extension, rural infrastructure development (roads and storage facilities), irrigation, water and soil management. It has also led the government to direct the huge chunk of the agricultural budget to the highly politicised subsidy programme for staple food (i.e. maize) production and marketing. This level and type of public investment in agriculture will continue undermining achievement of crop diversification and sustainable levels of agricultural growth necessary to increase household food security and shield poor families from rising food prices. The loss of tariff revenue has also meant that the government lacks the necessary means to build the capacity of traditional authorities to improve customary land administration. Customary land in Zambia constitutes the largest and most diverse land tenure system in nearly all rural and remote parts of the country. However, at the moment, there are no deliberate policies to improve its administration. Alternatives of improving customary land administration such as developing culturally acceptable minimum standards or guidelines in addition to provision of basic equipment and training of traditional leaders in basic land administration requires huge public investments. The needed resources,
however, cannot be mobilised locally due to the effect of reduced revenue caused by trade liberalisation. Finally, the huge investments in the industrial mode of production involving FDI in agriculture is often associated with negative ecological consequences, which includes loss of fertile top soils due to erosion, biodiversity loss, and environmental pollution due to intensive cropping and over-application of agro-chemicals (FAO, 2001). In addition, the strict EU requirements on meeting trade standards are forcing a shift from smallholder model to large-scale farming, as the latter model is in a better position to guarantee these standards than the former (Bertow and Schultheis, 2007: 27). This shift has far reaching consequences on the environment and land tenure rights of the poor who are often faced with land displacements to pave way for large commercial investments in agriculture. Environmental degradation also reduces the market-value and productivity of land, which in turn reduces incentives for poor families to obtain legal title to land, thus ultimately undermining alternatives.
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Recommendations Below are a series of recommendations at an international and national level, in order to improve access to land and land rights in Zambia.
The EU should: Reform its trade and investment policies and adopt guidelines for responsible trade and investments such as the FAO Voluntary Guidelines (VG) and RAI initiatives in order to minimise the impacts of EU trade policies on land rights and livelihoods of poor families;
Continue working with poor communities in exploring practical or workable cost-effective alternatives or proposals that would increase access of poor families to legal title and improve livelihoods in customary areas;
Create awareness of land rights among poor families and provide monitoring and support mechanisms to poor families who are victims of land grabs and displacements;
Step-up campaign and advocacy for pro-poor national land policy and legal reforms to address obstacles poor families face in accessing and obtaining legal title to land;
Create space in trade negotiations for civil society and farmer organisations to increase voices of the poor and smallholder farmers;
Increase financial aid targeted at improving infrastructure, land tenure and administration, agriculture and rural livelihoods in poor countries like Zambia. This would reduce poverty and impacts of EU trade policies on the poor in rural areas;
Support research and adoption of alternatives such as the Warehouse Receipt System that allow poor families access to credit without using land as collateral.
The Zambian government should: Formulate a comprehensive land policy and undertake legal reforms with a pro-poor focus in order to address the many obstacles faced by poor families in accessing legal title to land including formalisation and recognition of customary land titles;
Increase public investment in agriculture and rural development in accordance with the Maputo Declaration of 2003/ Comprehensive Africa Agriculture Development Programme (CAADP) principles in order to increase household food security and shield poor families from increasing food prices;
Develop local minimum trade and investment guidelines including monitoring mechanisms aimed at increasing consultations, accountability, benefits and reducing impacts of FDI on host communities;
Civil society and NGOs should: Continue voicing out the concerns and plight of poor families in EU trade policy negotiations and if possible build their capacities to voice out in international platforms on trade negotiations;
Strengthen their social capital to effectively mobilise themselves and consolidate their position to hold traditional leaders, government and investors accountable and challenge injustices they suffer from the advent of FDI and land grabs or displacements; Support and work with civil society and NGOs in campaign and advocacy initiatives that aim to address the impacts of EU trade and investment policies on land rights and livelihoods of poor families.
Land justice, land reform and access 13
Bertow, K. and Schultheis, A. (2007) Impact of EU’s agricultural trade policy on smallholders in Africa, Bonn, Germany: Germanwatch.
EC (2010) Trade, Growth and World Affairs, Trade Policy as a core component of the EU’s 2020 Strategy, COM (2010) 612
Daniel, S. and Mittal, A. (2009) The Great Land Grab: Rush for World’s Farmland Threatens Food Security for the Poor, Oakland, CA 94619: The Oakland Institute.
EC (2010b) The CAP Towards 2020: Meeting the food, natural resources and territorial challenges of the future communication from the commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Brussels, COM(2010) 672 final
FAO (2001) Soil biodiversity and sustainable agriculture: Paper submitted by the Food and Agriculture Organisation of the United Nations UNEP/CBD/SBSTTA/7/INF/11, 5 November 2001, para. 83. Available: http://archive.unu. edu/env/plec/cbd/Montreal/reports/FAO-soil.pdf [23 April 2012]. Graham, A.,Aubrey, S., Künnemann, R. and Monsalve Suárez, S. (2010) Land Grab study: CSO Monitoring 2009-2010 “Advancing African Agriculture” (AAA): The Impact of Europe’s Policies and Practices on African Agriculture and Food Security. Available: http://fian.org/ resources/documents/others/report-on-land- grabbing/ pdf [23 April 2012] Jayne, T.S., Zulu, B., Kajoba, G. and Weber, M.T. (2008) Access to Land and Poverty Reduction in Rural Zambia: Connecting the Policy Issues. Food Security Research Project. Working Paper No. 34. October 2008. The International Fund for Agricultural Development: (IFAD) (2011) Smallholder Productivity Promotion Programme; Programme Design Report Volume 1 – Main Report- June 2011. Metcalfe, S. (2005) ‘Landscape Conservation and Land Tenure in Zambia: Community Trusts in the Kazungula Heartland’ African Wildlife Foundation Working Paper. Ministry of Lands (2010) Government’s Role in Customary Land Administration in Zambia, A Paper Presentation by Mulenga, B.B Commissioner of Lands, Ministry of Lands at the Consultative Forum on Customary Land Administration in Zambia, organized by Zambia Land Alliance and Action Aid Zambia held at Golfview Hotel on the 25th August 2011 in Lusaka, Zambia. Situmbeko, L.C., and Zulu, J.J. (2004) Zambia Condemned to Debt: How the IMF and the World Bank Have Undermined Development. London: World Development Movement.
i Alternatives on Resource Trade and Access to Information in Africa A response to EU policy on raw materials Dr Claude Kabemba
2 Southern Alternatives to EU Trade Policy
Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). Before joining SARW, he worked as the Chief Research Manager at the Human Sciences Research Council and the Research Manager at the Electoral Institute of Southern Africa. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Trade Policy Analyst and Researcher respectively. Claude received his PhD and MA in International Relations (Political Economy) from the University of Witwatersrand.
Alternatives on Resource Trade & Access to Information in Africa 3
Contents Introduction 4 A. Secrecy in the resource sector and impact on the poor
B. The role of the EU
C. Towards full disclosure of resources contracts and trade policy
Recommendations 13 References 14
4 Comhlámh Policy Report 2012
Introduction Resources are a valuable asset for sustaining growth, reducing poverty and achieving the Millennium Development Goals for African countries. In the past decade meetings have taken place in many parts of the globe to discuss ways to ensure that mineral-rich developing countries get better deals from the extraction of their abundant resources. It has been established that most developing countries, especially African countries, do not benefit from their resources. The causes are both internal and external. Internal causes include poor governance, weak tax regimes and poor tax collection, weak administration and secrecy. External causes include an unfair international trade regime, distorted foreign direct investment (FDI) and asymmetric information. But the biggest problem in the extractive industry in Africa is secrecy. Citizens in many developing countries do not have access to information related to the extraction and trade of their resources. Secrecy in extractive industries is not only related to contract negotiations and the refusal by governments and companies to make contracts available, but also relates to the entire value chain – countries’ mineral potential, production volumes, revenue streams, corporate social responsibility arrangements, and mining closure funds. This paper looks at alternatives that are being developed both internationally and on the African continent to try to deal with this very serious problem affecting many resource rich poor countries.
A. Secrecy in the Resource Sector and Impact on the Poor Most constitutions in Africa guarantee each citizen the right of access to information. Despite this constitutional right, citizens in most African countries have no access to information in relation to extractive industries. This lack of transparency promotes corruption and hinders African government’s ability to maximize benefit from mineral resources trade. Thus, good governance is obstructed by secrecy in the sector. The importance of transparency in the extractive industry cannot be overestimated. In countries where mining seems to benefit the people, governments provide information on how decisions on resources extraction, revenue collection and distribution are made. Countries which have achieved a high level of control over their resources are those that have put in place systems of management that are transparent and accountable. Accountability and transparency helps to promote a pro-poor and pro-environment extractive industry.
The mining business and governance Mining is a risky, complex and capital intensive business. It is also a long term investment. It has a level of unpredictability which sometimes both government and companies have little control over in terms of exploration cost, real level of production and future price fluctuation. This problem is compounded by weak institutions in Africa. It has also been observed that extractive companies prefer to invest in African countries with opaque, weak institutional and governance structures. The collusion between weak institutions and governance structures in Africa and mining companies’ pressure to make profit exposes the sector to mismanagement, opacity and corruption. Although rarely documented and by nature hard to detect, corruption in allocation /negotiation of mining concessions is widespread in Africa. Because of the secrecy that surrounds mining contract negotiations it is very easy for acts of corruption to set in. Corruption can happen at each level of the value chain from the determination of the mineral reserve, licensing, contract negotiation, environmental impact assessment application, tax payment and mining closure. Many African countries, including the Democratic Republic of Congo (DRC), Liberia, and Guinea Conakry, have renegotiated mining contracts (see Box 1 for details of the DRC). Other countries are contemplating doing the same. Most multinational companies resist attempts by countries to review their resource contracts. The renegotiation of resource contracts is similar with the principle of odious debt. The odious debt principle is morally convincing because of the primacy it ascribes to
Alternatives on Resource Trade & Access to Information in Africa 5
Box 1: Example of the DRC re-negotiating contracts In the case of the DRC, the government of President Kabila initiated the renegotiation of 63 mining contracts in 2008. These contracts were signed during the period of war and political transition in total opacity when the state clearly was not in a position to engage in such commercial transactions. The state was weak and had no capacity to negotiate contracts. These contracts were extremely disadvantageous to the DRC, leaving the country with such a low share of resource revenue that the state will be unable to generate profits from the deals. In this case, the principle of permanent sovereignty over natural resources allowed the elected government to unilaterally cancel or amend dubious contracts. The case of the DRC shows that with combined pressure from below (local) and from above (external), it is possible to force government and companies to review their contracts.
an effective promise. It rightly stipulates that international treaties that are signed by an autocratic regime do not constitute an effective promise and, therefore, do not have to be paid back. Hence, the odious debt principle fulfills the principle of justice for international debts. In the same vein, dubious resources contracts which do not serve the interest of the people should be renegotiated or cancelled. This principle, however, is being undermined by the inclusion of very stringent investor-protection and dispute-settlement clauses in EU Free Trade Agreements (FTAs) and Economic Partnership Agreements (EPAs), which will effectively make it very difficult for developing countries to cancel or renegotiate odious mining contracts. For any country, resources contracts (mineral, oil, timber or fisheries) are not simply commercial instruments; they are part of countries’ public policy to achieve short and long term economic development. This is why contract negotiation and trade agreements on these resources must be transparent to allow citizens to hold their government to account, and where necessary, apply pressure for fair trade.
The lack of transparency is at the centre of the mismanagement of Africa’s abundant natural resources. Most African countries’ resource contracts and trade agreements are signed away from the scrutiny of citizens. In the majority of African countries, although this is slowly changing, it is difficult to know the terms of the agreements, due to opaque processes and reasons of confidentiality often invoked in relation to resource contracts (Chêne, 2007). In this environment, powerful multinational companies, sometimes supported by their governments, coerce their hosts (using their knowledge advantage and sometimes threats of withdrawal of Foreign Direct Investment) to get tax concessions, reduce corporate social responsibility, undermine environmental protection requirements and sideline community involvement in resource projects. Table 1 shows how highly profitable mining companies in South Africa are, and that they spend less than 1 percent of their profit on community development.
TABLE 1: Community Development Spending of five selected companies in 20071 Community development spending (CDS) (millions) Profit (millions) CDS as % of Profit Anglo Platinum 15.9 1.600 0.99 AngloGold Ashanti 3.2 (*) 657 0.49 Impala Platinum 5.7 (**) 2.200 0.26 Lonmin 2.8 408 0.68 1
Figures provided by companies in Rands have been converted to US dollars at the rate of 1 Rand = $0.127 (*) Includes spending in southern Africa region from where a number of employees in South Africa are drawn. (**) Includes community development spending in Zimbabwe, to be consistent with the fact that profit levels also include Zimbabwe. Source: AngloGold Ashanti (2007), Anglo Platinum (2007), Impala Platinum (2008), Harmony (2007).
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Box 2: LACK OF TRANSPARENCY IN AFRICA’S MINING SECTOR The lack of transparency and accountability has also led to illicit financial flows or transfer pricing. Karin Lissakers, Director of Revenue Watch Institute, says for example that in 2008, Africa exported natural resources worth some US $ 400 billion but the continent benefited very little. In the DRC, a senate report (the Mutamba report 2009) revealed that the country loses approximately US$ 5bn a year in the mining sector alone due to corruption and tax evasion; in Zambia a report by European and Zambian civil society (2010) accused Glencore, the world’s largest commodities trader and owner of Mopani Copper mines in Zambia, of having evaded tax amounting to US$ 100 million.
In the situation of total opacity, companies believe that it is less costly to bribe than to pay market prices for resource concessions. In the DRC, for example, First Quantum (a Canadian Company) had its contract cancelled in 2009 after years of being in operation, when President Joseph Kabila’s government discovered that due process was not followed when the contract was signed. In Africa, mining operations are synonymous with corruption. The lack of direct benefits to local people from mining activities is increasingly producing violent manifestations and litigation from citizens demanding greater share of the revenue and protection of the environment. It is not surprising that there exists an unacceptable gap between enormous profits realised by mining companies on the one hand, and the limited revenues that remain in developing countries, which is compounded by the lack of tangible benefits realised by communities living within the immediate vicinity of the mines (see Box 2). In 2006, for instance, the Zambian government earned US$ 70 million from about US$ 3 billion turnover from copper sales. This is not reasonable even if the case for recapitalisation was made (Mwitwa and Kabemba, 2007). What in fact this amounted to was the transfer of wealth from one of the poorest countries in the world, facing huge developmental challenges, into the coffers of big Western multinationals. Sadly, many resource rich developing countries are similarly robbed of their resource wealth. Most contracts do not deal comprehensively with human rights issues and social justice. Contracts also do not prioritise the environmental impact of mining. In many countries, companies select Environmental Impact Assessment (EIA) consultants to carry out the assessment of their project. There is no independent assessment of the EIA. Equally, control of minerals in weak governance settings is often associated with violence, insecurity and human rights violations. Civil society groups and individual activists who have dared to speak out have met stiff resistance not only from powerful mining companies but
also from governments. In Zimbabwe, a human rights activist Farai Maguwu and Director of the Zimbabwean based Centre for Research and Development has been arrested many times by President Robert Mugabe’s regime for exposing corruption and human rights abuse in the trade of the Marange diamonds. As such, the lack of transparency and accountability in the extractive industries is undermining the consolidation of democracy in Africa.
B. The role of the EU Impact of EU trade and investment policies Current EU trade and investment policies are undermining Africa’s ability to make the most of its natural resource wealth. For instance, a contentious issue that cuts across EU-Africa trade discussions on resource trade is the issue of export tax. The primary aim of EU trade policy is the establishment of an unregulated and unrestricted free market, which in the case of Africa includes the elimination of regulation and export restrictions on raw materials. Through the use of trade initiatives such as the Raw Materials Initiative (RMI) and Economic Partnership Agreements (EPAs), the EU is aggressively fighting export restrictions that it argues will restrict the supply of critical raw materials to European industry. The RMI, for example, is an attempt by the EU to secure access to resources by all means including undermining transparency and accountability in Africa’s extractive industry. This is in stark opposition to the Africa Mining Vision, passed by the African Union (AU) in 2009, which aims to introduce regulations on raw material extraction and trade. The Africa Mining Vision is in tune with many resource rich developing countries’ new industrial strategies and policies which have a protectionist approach aimed at adding value to their resources to promote industrial development. The contradiction between the objectives of the EU’s RMI and the Africa Mining Vision show how far apart the two economic blocs are, and clearly demonstrates how difficult it is to reconcile the interests of two very unequal partners facing two very different economic challenges. Africa
Alternatives on Resource Trade & Access to Information in Africa 7
wants to fight poverty and accelerate development, while the EU is struggling to prevent economic decline and maintain global market share. The EU wants unrestricted access to raw materials as a preventive mechanism to two realities. First, to deter resource rich countries from introducing access restrictions. The EU fears that such a move will have an impact on economic development and employment in Europe. But what about Africa? Any obstruction to the introduction of new export restrictions, the elimination of existing restrictions, or the prohibition of their use will severely limit Africa’s policy space to define its own development strategies (Ramdoo, 2010). Secondly, the EU is concerned with the rapid erosion of its historic and neocolonial privileges with Africa since the appearance on the scene of new emerging powers and their increasing interest in accessing resources. It is important for Africa to understand that trade agreements such as EPAs have become a space for the EU to deal with emerging powers like China, India and Brazil. It is not coincidental, for example, that the EU is insisting that the Most Favorable Nation (MFN) clause be part of EPAs to ensure that any preferential agreement negotiated with emerging countries or with African countries are automatically extended to the EU. The MFN clause will undermine South-South economic privileges and African regional economic integration. It is clear that in their current form, EPAs and the RMI will reinforce the character of an unequal EU-Africa trade regime. The EU is also using foreign direct investment (FDI) as a means to freely access resources in Africa. African countries continue to be forced to open up their market if they want to attract FDI. FDI is being used to lower and undermine Africa’s right to levy import and export duties. Using the same misleading ideology of attracting FDI, African countries continue to grant tax holidays to foreign investors. Fiscal incentives may not be the best mechanism for attracting FDI and in most cases the cost of incentives to attract FDI outweighs the benefits. African governments are foregoing millions of dollars in tax revenue from the mining industry because of generous tax concessions, usually granted discretionally in secret mining contracts. EU mining companies have been pushing for mining tax breaks in secret mining contracts amounting to an aggressive tax avoidance strategy. The RMI will expand and consolidate an already existing policy. Africa, if it wants to emulate other continents and countries that have benefited from their resources, must fight to protect its interests in international trade negotiations.
Africa’s economic & trade agenda In the natural resource sector, Africa is increasingly focusing on beneficiation and value addition 2.This policy is in tune with the continent’s need to industrialise. All African countries want multinational companies to add value to their minerals in the country before exporting. EU mining companies, unfortunately, are refusing to beneficiate minerals in African countries where they are produced. To force these companies to add values to the minerals, African countries are contemplating introducing export taxes. The judicious use of tariffs in this case does not mean protection which allows permanent rent-seeking by inefficient industries, rather it means creating the space and time to allow such industries to develop or to restructure themselves in the face of global competition (Davies, 2008). For the EU, sadly, this is viewed as restrictive and trade distorting measures which need to be aggressively combated. The EU argues that export bans or quotas may lead to the temporary or even definitive closure of production units in the EU (European Commission Directorate-General for Trade, 2009). This may be true, but African countries want to industrialise and diversify their economies away from raw material export. This is becoming important if African countries are to increase their intra-regional trade. There is no doubt that beneficiation could reduce the access of EU companies to inputs they need to remain competitive. But the EU must understand that export tax in this case is not aimed at maximising the market power of exporting countries, but at developing the domestic industry as a part of Africa industrial diversification efforts. This is not unique to Africa. Countries have introduced restrictions on raw materials exports as part of their industrial strategy; Russia imposes export duty of 50 per cent on scrap aluminum, India taxes iron ore export at 50 rupees a ton, and China has introduced an export tax of 120 percent on yellow phosphorous and increased export duties on coke to 40 percent (Kabemba, 2010). Africa has no option but to introduce changes to its mineral production after centuries of mineral economies that have only produced questionable welfare gains and development outcomes for the majority of African 2 In mining, beneficiation is a variety of processes whereby extracted ore from mining is separated into mineral and gangue, the former suitable for further processing or direct use. Based on this definition, the term has metaphorically come to be used within a context of economic development and corporate social responsibility to describe the proportion of the value derived from asset exploitation which stays ‘in country’ and benefits local communities. For example, in the diamond industry, the beneficiation imperative argues that cutting and polishing processes within the diamond value chain should be conducted in-country to maximise the local economic contribution.
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BOX 3: DENYING BLACK AFRICA TO INDUSTRIALISE Even the apartheid regime in South Africa was allowed by the EU to introduce tariff protection. The apartheid government identified strategic industrial priorities (such as iron and steel production and oil from coal), which were generally relatively capital intensive upstream industrial activities. These priority sectors were accorded tariff protection, as well as other forms of support and nurturing. Apartheid policy on minerals was nationalistic in nature. The main reason for this was that precious metals, in particular gold, were the most important means of foreign exchange and a crucial reserve asset. But this changed with the advent of democracy and black majority-rule in 1994, when the Africa National Congress (ANC) government was forced to liberalise the sector. The EUâ€™s behavior could signify a deliberate attempt to deny Black Africa to industrialise.
citizens. The EU must refrain from tax retaliation if developing countries introduce export taxes on strategic resources. African countries are aware that export restriction in one sector can induce responses from importing countries in an area where individual African countries are vulnerable. Equally, Africa is aware of the possibility that high prices that might be caused by export restrictions can encourage production in countries where such restrictions are not applied, thereby increasing supplies, which in turn will reduce prices in the long term (OECD, 2010). But, the EU must not use its economic power to force African countries to sign mining contracts and trade agreements that do not take into account best practices and which are not open to scrutiny by national parliament, civil society and communities. In a competitive world where accessing Africaâ€™s resources has become imperative, there is a possibility that the EU could use threats to impose its will on developing countries. In 2010, for example, the European Commission (EC) said that it would withhold trade benefits from developing countries that restrict raw material export. It is clear that the EU is using trade and investment agreement to secure cheap access to raw materials and unfair preferential treatment for EU multinationals, at the expense of economic development and poverty eradication in Africa (see Box 3). This must change.
C. The search for Alternatives Happily, in recent years, many campaigners and activists for mining justice, both internationally and on the African continent, have brought to bear considerable pressure on national governments and mining companies to disclose information of their contractual agreement. These efforts have borne some fruits. We can distinguish efforts which are being deployed at the national and international levels. The following section of the paper examines international initiatives.
International initiatives for transparency and accountability The United States and the European Union have taken unprecedented steps to promote transparency in the extractive industry. In July 2010, the U.S. Congress passed Section 1504 of the Dodd-Frank Act, a measure requiring companies registered with the Securities and Exchange Commission (SEC) to publicly report how much they pay governments for access to oil, gas and minerals, country-by-country and project-by-project. In October 2011, the European Commission issued a draft Directive requiring companies listed on EU stock exchanges and large private companies based in member states to disclose their payments to governments for oil, gas, minerals and timber, country-by-country and per project3. This EU directive also covers forestry, while 1504 is limited to oil, gas and mining. These two pieces of regulation circumvent clauses of confidentiality in contracts as well as the regulations of host countriesâ€™ regulations which prohibit disclosure. The EU Transparency Directive set out minimum transparency requirements for listed companies. It requires issuers of security in regulated markets within the EU to ensure appropriate transparency for investors 3 See
proposed amendment (in Oct. 2011) to the existing directive: Directive 2004/109/EC: Available: http://ec.europa. eu/internal_market/securities/isd/mifid_en.htm
Alternatives on Resource Trade & Access to Information in Africa 9
through the disclosure of regulated information and its dissemination to the public through the EU. The Directives do not only focus on finance, they also call for listed companies to make periodic non–financial disclosures, generally in connection with the annual financial report, such as the so called Corporate Governance Statement. The Transparency Directives also make reference to the disclosure of Environmental, Social and Governance (ESG) data made by listed companies (EC, 2010). The EU Directive unfortunately does not make reference to companies’ responsibilities towards communities. The US Dodd Frank Act and the EU Directive will complement the effort already in place under the Extractive Industries Transparency Initiative (EITI). The EITI is a global initiative working towards the regular publication of payments and receipts from extractive companies with a view to promoting transparency, good governance and sustainable development4. It is a process by which government revenues generated by extractive industries are published in independently verified reports. Most of the implementing countries are in Africa. If properly implemented, the EITI could lead to the following benefits: improved governance, improved revenue collection, provision of a forum for collaboration, improved sovereign and corporate rating leading to increased investment, provision of a basis for public engagement, improved corporate risk management and reduced risk of capital conflict. The Publish What You Pay (PWYP) campaign was pioneered by George Soros and it has been central to the promotion of the EITI. As George Soros puts it “The free and open participation of civil society is critical to the integrity of the EITI process” (2009). It is therefore deeply disturbing that some implementing countries have violated this founding principle of EITI – in fact and in spirit. Mozambique failed its validation in 2011 primarily because of poor civil society engagement. The voluntary nature of the EITI is its weakness. In addition, the EITI has a narrow focus on revenues while neglecting other important elements such as contract negotiation, environmental accountability and corporate social responsibilities. The biggest weakness of the EITI, however, is that major EU countries whose mining companies have invested massively in Africa have refused to become EITI implementers. The spirit of the EU Transparency Directive is unfortunately in contradiction with and undermined by other EU initiatives such as the Raw Materials Initiative (RMI), and Economic Partnership Agreements (EPAs) which the EU has been negotiating with most 4
The EITI brings together a coalition of resource-rich countries, civil society groups, donors, extractive companies, and investors.
African countries since 2002. In 2008, the European Commission presented its RMI and has been working to implement it (Sydow, Fuhr and Straub, 2011). The RMI is being promoted in terms of being a strategy focused on securing EU access to raw materials worldwide. It has raised legitimate criticism that the EU will use bullying tactics to coerce developing countries into opening up their markets, as it is doing with the Economic Partnership Agreements (EPAs), in order to gain unprotected access to resources in developing countries without respect for transparency, development, and social and environmental accountability. How will the EU marry two initiatives, one which promotes transparency and accountability, and the other which forces developing countries to allow the EU free and unregulated access to resources? The RMI lacks coherence with development policy goals and sustainability and has the potential to undermine development prospects in resource-rich poor countries (Ibid.). The EU has also refused to include development benchmarks in EPAs. Accountability must ensure that resource rich countries are able to use their minerals to promote their internal economic growth and development. This means that developing countries should have the policy space to introduce policies that will ensure that the extractive sector contributes to domestic growth and economic development.
National initiatives for transparency and accountability Significant initiatives which promote transparency and accountability have emerged in many developing countries since the democratic dispensation of the early 1990s. Below is a outline of initiatives that have a direct bearing on combating the scourge of secrecy in the extractive industry in Africa. 1. Information Bills: Most African countries have adopted Access to Information Bills, and the few that haven’t, are under pressure to do so. The Bills state that every citizen has the right of access to information held by the state. Access to information has been an issue of concern in many developing countries. In Southern Africa for example, the Media Institute of Southern Africa and Article 19 have been leading a regional campaign around it. Unfortunately, in most cases these Bills have been shelved for many years as governments developed cold feet. Where they are being implemented, the implementation has been selective and does not cover extractive industries. For access to information to become a reality, African citizens, civil society, labour and social movements must form a common front to
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demand from their governments the right to know. In extractive industries all operations must accept the principle of continuous free, prior and informed consent throughout the life of operations ensuring that the impacted community is fully informed of both hidden and visible impacts and costs of all stages of extractive operations, including direct and indirect costs. In the same vein, citizens have the right to know how their government is negotiating and selling their resources5. The principle of complete public transparency must operate prior to the awarding of contracts and contracts themselves must be made public. This transparency requires equal opportunities for citizens to monitor payments, receipts and utilisation of mineral tax revenues. In this struggle, communities, especially those around mining activities are receiving attention. Communities are now being organised and structured to engage with companies and government. In South Africa, the Bench Mark Foundation has created a community research and monitoring team in the North West Province which has been very active in engaging platinum mines. The Southern Africa Resource Watch has developed a community training tool kit which will help build the capacity of mining communities to do their own advocacy. In this same perspective, it is important to engage traditional leaders in an effort to mobilise communities.
The Southern Africa Resource Watch (SARW) is also leading the way in helping traditional leaders in Southern Africa understand their role in ensuring good governance of resources and ensuring their people benefit from any extractive work undertaken in their community. In 2011, SARW organised a workshop with eight Zambian traditional leaders and Zambian civil society. 2. Litigation: Litigation is also increasingly being used as an entry point for increasing transparency and accountability. Civil society organisations have taken companies to court for violating the rights of local communities, polluting their environment without compensation, and displacing people without prior consultation. There are a number of litigations against government and companies across the continent (see Box 4). 3. Sensitisation: There is also a sensitisation drive taking place to help political parties to start reflecting on how resources can be better managed. Transparency and accountability must be a policy orientation for all political parties vying for power. This is why, increasingly, election campaigns are being targeted as an entry point for increasing transparency and accountability in management of resources. Political parties are now forced to articulate their policy on resource governance in their manifestos. In October 2011, ahead of the 28
Box 4: HOLDING COMPANIES TO ACCOUNT IN ZAMBIA In Zambia, a case of environmental pollution taken to court by a group of citizens6 against Konkola Copper Mines (KCM) based in the Mining Town of Chingola in the Copper belt has produced an unprecedented result. On November 10, 2011, five years after the case was taken to court, the High Court of Zambia found the company guilty and has asked KCM to pay US $ 2 million in reparation to 2,000 community members who have been affected by water pollution. Although the company has promised to appeal, the court decision sets a new precedence that communities can take a company or government to court and win. However, many people think that the Court verdict was too lenient. This is how one Zambian citizen interprets the case: “The KCM has seen that Zambia has a very dull government and as such it can pollute at will. Zambia is full of dull creatures in government which do not care about the lives of the poor people. The dull creatures care only about KCM filling their pockets. Why can’t they fine KCM in millions of dollars? Look at what Obama did to BP, BP is paying billions of dollars ….this is how great leaders think. Not this government of dull creatures.” In the meantime, attempts by the company to resolve water pollution have failed. The three boreholes in Shimulala provided by the company are rarely used by the community because they contain Copper, Iron, Acid and other minerals from underground. 6 About 2,000 community members suffered and were attended to by the local hospitals. These people contributed legal fees amounting to K10,000 equivalent to USD $ 2.00 per person and managed to raise about K20,000,000 (Twenty Million Zambian Kwacha), equivalent to USD $ 4,000.00.
most countries around the world, sub-soil resources such as minerals, oil, and gas are the property of the nation, not the individual property of the owner of the surface rights.
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November Presidential and Parliamentary elections in the Democratic Republic Congo (DRC), the Southern Africa Resource Watch (SARW) organised a conference where all political parties were invited to present their policy and strategies to resolve the country’s resource curse. It was clear that the ruling party and all the opposition parties had not given the issue serious time and thought. This is what one participant had to say about the initiative, “SARW should have ensured that the conference is broadcast live on television and radio so that Congolese people can follow and witness for themselves the inability of political parties to manage their resources”. 4. Legislative oversight: We are also seeing parliaments using their oversight role in the extractive industries. Generally, parliaments’ oversight has been weak in most countries. Parliaments have been unable to use their oversight to promote transparency and accountability in the extractive industries mostly for political expediency. In most countries there exists an unwelcome pattern of executive interventions to blunt effective oversight. This situation is fast changing. Each parliament has established portfolio committees on extractive industries (mining, oil, forestry) and environment. There are efforts by civil society organisations in many developing countries to engage and train parliamentarians to get involved in monitoring extractive industries. 5. Activism: There is also a proliferation of civil society networks working on issues that are directly related to the extractive industries, especially calling for transparency and accountability. These organisations are focusing on contracts and revenue transparency, environmental protection, corporate social responsibilities of companies, and budget analysis. Publish What You Pay (PWYP) chapters in countries where they have been established are playing a key role in ensuring revenue transparency in the extractive industries. The philosophy behind these local initiatives is that the state cannot stand above and outside of “society”. This false dichotomy has contributed to opaque management of resources which has resulted in what is called the resource curse. The emerging initiatives, in general, speak to the concept of the “public sphere” and of “popular participatory” activism. Increasingly, in Africa, democratisation is moving beyond just elections, it is becoming an affirmation of the public sphere, thus increasing the prospects for mining justice for all. See Box 5 for an example initiative.
Box 5: ACTIVISM IN ZIMBABWE In Zimbabwe, the Zimbabwe Environmental Lawyers’ Association (ZELA) has established a close relation with the Parliamentary Portfolio Committee on Mines and Energy. In 2010, ZELA, SARW and RWI trained parliamentarians to prepare them to engage with the mining legislation which was to be tabled before parliament. In 2011, ZELA continued with an outreach programme for members of the Parliamentary Portfolio Committee on Mines and Energy. The outreach focussed on platinum mining areas along the Great Dyke which is home to Zimbabwe’s mineral base. President Mugabe’s government has proposed an indigenisation policy whereby foreign-owned mining companies have to sell 51% of their worth to locals. On the other hand, some economic scholars caution that such a policy risks destroying the already vanquished industry. Parliamentarians have been taken on study visits to understand the real dynamics on the ground and prepare themselves to make informed decisions on key policy issues such as indigenisation.
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C. Towards full disclosure of resource contracts and trade policy What Africa needs to benefit from its abundant mineral resources is transparency and accountability in the sector. Resource contracts must be in line with countryâ€™s overall economic development strategy and must be in tune with broader international trade agreements. The RMI and EPAs will have a bearing on how resource contracts are negotiated in the future. Therefore, there must be a greater scrutiny of trade agreements that African countries are currently negotiating with the EU. African citizens through their parliaments, civil society and social movements must be allowed to review any trade agreement before it is finalised. This is the only way African people will protect their resources against any kind of spoliation from either local or outside actors. It is imperative that African governments appropriate the Dodd-Frank Act and EU Directive by domesticating them. The disclosure of revenues and information on the extractive industries must be led by national regulations. This paper argues that efforts for transparency and access to information must be led by internal regulations; external initiatives (such as the Dodd-Frank Act and EU Directives) must simply play a supportive role. Transparency in the extractive industries should not be an end in itself. It should lead to economic growth, development, and poverty reduction. Many countries are now disclosing mining contracts. Liberia has implemented contract disclosure requirements as part of the EITI Act, allowing citizensâ€™ access to resource contracts. In May 2011 oil contracts pertaining to the Jubilee Field in Ghana were made public. The Democratic Republic of Congo, under pressure from civil society and international partners, has made public all mining contracts. These disclosures must translate into better management of revenues and produce tangible benefit for citizens. Transparency and accountability cannot happen without consultation with communities. While legislations such as the Dodd-Frank Act, the EU Directive and the EITI force companies to publish their payments and other information, they fall short of forcing companies to consult with communities on all aspects of their activities including carrying out Environmental Impact Assessment, corporate governance and practices, and procurement policy. This must change; voluntary codes on corporate social responsibility alone do not work (War on Want, 2007). Secrecy contributes to the exclusion of communities from participating in the management of their resources (see Box 6). Full disclosure, including the potential for increased burdens on the environment, has to be made
before mining starts so that the public may decide whether permission can at all be granted for carrying out mining activities. The importance of full disclosure should not only be limited to foreign companies, but national companies must be also subject to the same requirements of transparency and accountability.
BOX 6: IMPACT OF OPACITY FOR LOCAL COMMUNITIES In Mozambique in the case of Riverdale, a subsidiary of Rio Tinto, the community of Capanga in the Tete was displaced 40km from their land to Mualadzi to give way to coal extraction. The community is unhappy that the discussion was not fair and transparent. The community informed SARW that it was not involved in the discussion with the company and the individuals who represented it in the land resettlement discussion with the company were not selected by the community. Many compromises were made which the community is not happy with. For example, the community was moved before water, electricity, schools and clinic were provided for. The community also complains that the new area does not provide enough land for agriculture and grazing.
Alternatives on Resource Trade & Access to Information in Africa 13
Recommendations Below are a series of recommendations that are needed to move to a more transparent and equitable future, and bring benefits of natural resources to the people. The EU must make it mandatory for all EU companies involved in resource extraction to disclose contracts. Contrary to the belief that contract disclosure will undermine the competitiveness, disclosure can in fact increase competitiveness in the international market.
African governments must build efficient administration. It is clear that institutional constraints are the principle stumbling blocks to improved management and oversight of the extractive sector.
The EU must promote binding standards for corporate accountability. Relying on voluntary codes of conduct and self-regulation to police the extractives industry has been shown to be ineffective.
African countries must increase their geological capabilities. Countries must be in possession of correct data on their mineral resources. This will eliminate the asymmetry of information that exists in the sector between the state and multinationals.
The EU must ensure that there is no contradiction between its development policies and access to raw material strategies (RMI and the EU Directives). The two must speak to each other.
The EU must promote win-win instruments in resource trade with Africa. The EU must allow African countries policy space to initiate their own policies, including export tax, and value addition that would boost industrialisation, economic development and regional integration.
The EU must not use the threat of withdrawing FDI as a weapon to discourage developing countries from introducing progressive legislation in the extractive industry, such as stringent environmental standards and performance or local content clauses.
African governments must ensure that FDI is not to the detriment of African growth and development. Companies that invest in the resource sector must be obliged to procure services and goods locally and from local companies in a transparent manner.
African governments must promote local beneficiation in order to unlock the intrinsic value of minerals. Efforts should be made to export minerals in value added form as far as possible. Africa must not wait for the EU to give a green light to implement her own policies which are in the interest of the continent.
The Africa Mining Vision must become the reference document for resource trade negotiation. The Mining Vision raises critical issues of value addition and industrialisation. The African Union must give life to its policy document by moving from formulation to implementation.
The regional blocs Southern African Development Community (SADC), Economic Community Of West African States (ECOWAS), The Common Market for Eastern and Southern Africa (COMESA), and The West African Economic and Monetary Union (UEMOA), must quickly harmonise their resource policies and avoid countries entering into bilateral negotiation with the EU. Africa is weak when countries negotiate individually.
The African state needs to play a prominent role in resource management. It is at each country’s level that actions for transparent and accountable resources management must take place.
All African countries must investigate the possibility of joining the EITI. The EITI has proved to be an effective tool in the promotion of transparency and accountability.
African countries need to remain vigilant to the terms and conditions of their international trade agreements to ensure that they are consistent with the developmental agenda of the continent expressed in the African Mining Vision.
African countries must continue to make the case, at both multilateral and bilateral level, of why development considerations are critical for developing countries and for a sustainable trade regime. As such, development benchmarks must be included in EPAs, the RMI, and resource contracts.
African civil society must continue to build its knowledge and capacity to hold governments and companies to account.
Citizens must be allowed to have complete access to information on their resources and the manner in which they are managed. The clause of confidentiality must be eliminated in all contracts.
Consultation with local community and local community participation in resource management must be mandatory. African governments must include these issues in all contract negotiations and trade agreements.
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ReFERENCES AngloGold Ashanti (2007) Country Report South Africa: Vaal river [Online] p.56. Available: http://www.anglogold. co.za/NR/rdonlyres/8E6B8C1D - 05C4-43E0 -B63E8CD8ACD12391/0/vaal.pdf [19 April 2012] Anglo Platinum (2007) Sustainable Development Report [Online] p.34. Available: http://angloplatinum. inv e s to r ep o r t s.c o m/a n g lo p l a t inu m _ s d r_ 20 07/ downloads/anglo_sdr_2007.pdf [19 April 2012]. Chêne, M (2007) ‘Corruption and the renegotiation of mining contracts’, U4 Expert answer, Transparency International [Online]. 20 Nov 2007. Available: http://www.u4.no/publications/corruption-and-therenegotiation-of-mining-contracts/ [19 April 2012]. Davies, R. (2008), ‘Deputy Minister of Trade and Industry Rob Davies’s address on the fifth anniversary of the International Trade and Administration Commission (ITAC)’ [Online] 17th Oct. Available: http://www.info.gov.za/ speeches/2008/08103109451002.htm [20 April 2012] European Commission Directorate-General for Trade (2009) Raw Materials Policy Annual Report. Available: http://trade.ec.europa.eu/doclib/docs/2010/june/ tradoc_146207.pdf [20 April 2012]. European Commission (2010) ‘Operation of Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market’, SEC(2010)611, Brussels, 27.5.2010. Available: http://ec.europa.eu/internal_market/securities/docs/ transparency/directive/com-2010-243_en.pdf [20 April 2012] Harmony (2007) Sustainable Development Report, [Online], p.42. Available: http://www.harmony.co.za/im/files/ reports/2007/files/Harmony_SD07.pdf [20 April 2012]. Impala Platinum, Annual Report 2008 [Online], p.31. Available: http://www.implats.co.za/im/files/ar/2008/ files/implats_ar08.pdf [20 April 2012]. Kabemba, C (2011) ‘European Union Raw Material Initiative: Trade Restrictions and Access to South African Minerals, Southern Africa Resource Watch. Johannesburg: Southern Africa Resource Watch. Mwitwa, C. and Kabemba, C. (2007), ‘Copper Boom in Zambia: Boom for Whom?’, Resource Insight, 3: 1-20. Johannesburg: Southern Africa Resource Watch. OECD (2010) Summary Report of the Raw Materials
Workshop [Online] 27th Jan. Available: http://www.oecd. org/dataoecd/7/52/44489848.pdf [20 April 2012]. Ramdoo, I. (2010) ‘Implications of the EU Raw Materials Initiative on ACP countries: Status of the Mining Sector in Trade Negotiations’, European Centre for Development Policy Management [Online] pp. 1-7. Available: http:// w w w. e c d p m . o r g / W e b _ E C D P M / W e b/C o n t e n t / Download.nsf/0/42CE0C6334649F2AC12577FB004 4D659/$FILE/Implications%20of%20the%20Raw%20 Materials%20Initiative%20EN.pdf [20 April 2012]. Soros, G. (2009) Remarks of George Soros to the Plenary of the 4th EITI Global Conference Doha, Qatar 17th February 2009 9:30 – 11:00am The Ritz-Carlton Hotel. Available: http://eiti.org/files/Remarks%20of%20 George%20Soros%20to%20the%20Plenary%20of%20 the%204th%20EITI%20Global%20Conference.pdf [20 April 2012]. Sydow, J.,Fuhr,L. & Straub, U. (2011) Analysis of the EU Raw Material Initiative, Heinrich Böll Stiftung [Online] 4th Feb. Available: http://www.boell.eu/web/116-661.html [20 April 2012]. War on Want (2007) Fanning the Flames: The role of British Mining Companies in conflict and violation of human right, [Online] 20th Nov. Available: http://www. fataltransactions.org/Publications/Fanning-the-FlamesThe-role-of-British-mining-companies-in-conflict-and-theviolation-of-human-rights [20 April 2012].
Bibliography Graham J, Amos B and Plumptre T, (2003), Governance Principles for Protected Areas in the 21st Century Canada: Parks Canada and Canadian International Development Agency. Lissakers K. (2011), “The Cost of Closed”, Revenue Watch Institute, [Online] 20th Sept. Available: http:// www.revenuewatch.org/news/costs-closed Richard, K. (2010), European Union Fisheries Agreements: The Case of Angola and Mozambique Johannesburg: Southern Africa Resource Watch. Third World Network Africa (2011) ‘Key areas of Divergence between the EU and Africa EPA regions’, TWN Africa, [Online] 8th July. Available: http://www.twnafrica.org/index. php?option=com_content&view=article&id=520:keyareas - of- divregence - bet ween - the - eu - and - africa e p a - r e g i o n s & c a t i d = 3 4:e c o n o m i c - p a r t n e r s h i p agreement&Itemid=81 [20 April 2012]
Mining, people and the environment 1
Mining, people and the environment The Implications of the EU-India Free Trade Agreement Chandra Bhushan and Sugandh Juneja
2 Southern Alternatives to EU Trade Policy
Chandra Bhushan is Deputy Director General of the Centre for Science and Environment, New Delhi. He can be contacted at firstname.lastname@example.org. Sugandh Juneja is Programme Officer, Policy Advocacy and Community Support, Centre for Science and Environment, New Delhi. She can be contacted at sugandh@ cseindia.org.
Mining, people and the environment 3
Contents Introduction 4 A. Mining industry in india
B. Mining, people and the environment
C. Indiaâ€™s mineral policy
D. Raw materials initiative and EU-India free trade agreement E. The way ahead
Recommendations 11 References 12
4 Southern Alternatives to EU Trade Policy
Introduction India is a mineral rich country and a leading world producer of some key minerals such as coal, iron ore, chromite and bauxite. According to the Geological Survey of India, the national exploration agency, the country is yet to tap into its complete potential: it has huge reserves of important minerals awaiting exploration and exploitation. Unfortunately for India, almost all its minerals are in the same regions that hold its greenest forests and most abundant river systems. These lands are also largely inhabited by India’s poorest and most marginalised people. Mining in India, therefore, is not a simple ‘dig and sell’ proposition. It is, in fact, a highly complex socio-economic and environmental challenge: at stake are natural resources, people, forests, wildlife, water, environmental quality and livelihoods. The issue requires balancing the imperatives of industrialisation, on one hand and the ecological and livelihood security of millions on the other. Considering this, the Union Cabinet of India has recently cleared a new mining law – The Mines and Minerals (Development and Regulation) (MMDR) Bill, 2011 – that includes many pro-people and pro-environment provisions which could go a long way in ameliorating the negative social and environmental externalities of mining projects. Some of the progressive provisions are sharing profits from mining with local communities, participation of communities in the decision-making process, tightening of environmental regulations, etc. However, all these provisions could come to naught if the proposed European Union-India broad-based trade and investment agreement (EU-India FTA) is concluded in the current form. The EU’s Raw Materials Initiative (RMI) acknowledges that access to ‘affordable’ raw materials is crucial for Europe’s economy. Hence the EU is making a big push to help its companies and investors access cheap raw materials in developing countries, in line with the RMI, by signing free trade agreements. The proposed EU-India FTA includes provisions like national treatment, most favored market access conditions without any ‘limitation’, curbs on the use of performance requirements or economic needs test and investor-tostate dispute settlement mechanism through which foreign investors can invoke arbitration against the host governments. All these provisions have the potential to undermine the draft MMDR Bill, 2011. For the EU-India FTA to contribute to sustainable development and inclusive growth in India, it must make compliance with the draft MMDR Bill, 2011 mandatory.
A. Mining industry in India India is a mineral rich country with more than 20,000 mineral deposits. India produced 841 minerals in 201011, valued at Rs 2,006,090 million (€29,289 million2) (Ministry of Mines, 2011a: 9). The contribution of the sector to Gross Domestic Product (at constant prices) has stood at about 2.2 - 2.5 per cent in the last decade (Bhushan et al., 2008: 47). The average daily employment of labour engaged in the sector stood at half a million in 2008-2009 (Minsitry of Mines, 2011b). The effective tax rate (includes all taxes, cess, levies and duties) on mining industry in India is 44 per cent (Bhushan et al., 2008: 54). This is lower than the effective tax rates in other major mineral-producing countries in the world – Canada 60 per cent, Papua New Guinea 55 per cent, South Africa 45 per cent and Indonesia 50 per cent (ibid.).
B. Mining, people and tHE environment Wealth generated by the mining sector comes at a substantial development cost, along with environmental damages and economic exclusion of the marginalised. This has been exhaustively documented in India. Almost all of the country’s minerals are spread in regions that hold its greenest forests and most abundant river systems. These lands are also largely inhabited by India’s poorest and most marginalised people – the scheduled tribes and scheduled castes – who depend on the very same forests, lands and watersheds for their survival. The major mining districts of the country are not only ecologically devastated and polluted, they are also the poorest. Of the 50 major mining districts, 60 per cent figure among the 150 most impoverished districts of India. The wealth generated by the mining industry is therefore not being converted into sustainable development benefits for local communities (see Box 1).
Excluding 3 atomic minerals At exchange rate of 1 INR = 0.0146 Euros (as on November 17, 2011)
Mining, people and the environment 5
Box 1: Parej perishes The World Bank, in 1997, supported Coal India Limited (CIL) in expanding coal mines and production in 25 mines in Hazaribagh’s Parej area (Jharkhand state), under the Coal Sector Rehabilitation Project (CSRP) with an International Bank of Reconstruction and Development loan of US $530 million (€385 million*). A study by two NGOs in India found that displacement due to mining has greatly impacted annual incomes in Parej. Every acre (0.4047 hectare) of land in Parej used to sustain the land-owning family for six months, and landless families for 3-4 months. A family owning three acres got a net income of Rs 2,600 (38 Euros) a year after taking care of its consumption needs. It also made Rs 5,000 (73 Euros) working as wage labour for a minimum of 100 days. From the nearby forests, a family earned Rs 2,000 (29 Euros) a year. Thus, each family used to make Rs 9,600 (140 Euros) a year – which placed it much above the poverty line for rural areas. Even the landless earned Rs 7,400 (108
Euros) a year from these sources. All this changed with the coming of CIL. For every three acres of land that it took away, the company compensated a family with a job. The study found that after a landholding family shifted to resettlement colonies or other places, its net cash inflow went down. The net annual loss in cash inflow was Rs 9,260 (135 Euros) for landed families and Rs 7,060 (103 Euros) for landless families. Families now spend more money on buying foodgrains, which they were earlier growing on their own lands. The only employment is in the coal mines, while forest access has been barred. As a result, both landowning and landless households are spending the same – about Rs 8,200 (120 Euros) – per month. * At exchange rate of 1 USD = 0.727 Euros (as on November 19, 2011) Source: Bhushan et al. 2008: 19.
C. India’s mineral policy
Draft MMDR Bill, 2011
The Mines and Minerals (Development and Regulation) (MMDR) Act 1948 was the first legal framework for regulation and development of mines in independent India. Enacted in 1957, the MMDR Act has been amended four times since. But in all these amendments the issues of land accession, displacement, rehabilitation and resettlement and rights of communities were never addressed.
The MMDR Bill 2011 is a major attempt to bridge the gap between the need for mining on one hand and the need to address and internalise the social and environmental costs of mining on the other. It recognises that mining has had huge ecological impacts and that people in mineral rich areas have not benefited from mining. It also recognises the weaknesses of the regulatory institutions and the need to strengthen public participation in the decision making processes related to mining. Some of the key provisions of the draft MMDR Bill, 2011 are:
In 2005, following the mid-term appraisal of the Tenth Five Year Plan, the Planning Commission of Government of India constituted a High Level Committee to review the mining policy of the country and recommend changes. This came in the wake of rising protests across the country against the mining industry. The committee report was published in July 2006 with wide ranging recommendations like institutionalising a Sustainable Development Framework (SDF) to address social, economic and environmental issues arising out of mining. Based on the report, the government came out with a new National Mineral Policy (NMP) in 2008. Following the NMP 2008, the Ministry of Mines (MoM) has framed a new MMDR Bill to replace the MMDR Act 1957. This bill was cleared by the Union Cabinet of India in September 2011.
I. What benefits go to communities/mining affected people
Preferential treatment: The draft bill allows states to make provisions for ‘preferential’ grant of mineral concession to cooperatives of Scheduled Tribes (STs) in the fifth and sixth schedule areas for small deposits (MMDR Bill 2011, s.6 (7)). Compensation to persons holding usufruct, occupation or traditional surface rights of the land: > Compensation for undertaking high technology reconnaissance cum exploration (HTRE) (MMDR Bill 2011 s.43 (1)) as well as compensation for damage to land during HTRE (ibid.). > Leaseholder to provide employment, compensation for acquiring land and other assistance as per the resettlement and rehabilitation package of the states (MMDR Bill 2011, s.43 (5)).
6 Southern Alternatives to EU Trade Policy
> After the termination of a mineral concession, the state is to assess damages to the land, and determine the compensation payable by the licencee or leaseholder. This compensation is to be paid to persons holding occupation or usufruct or traditional rights of the surface of the land and they are to be consulted in the process of deciding the compensation (MMDR Bill 2011, s.43 (7)). > A Corporate Social Responsibility (CSR) document has to be attached with a mining plan. This shall comprise of a scheme for annual expenditure by the lessee on socio-economic activities in and around the mine area for the benefit of the host populations and for enabling and facilitating selfemployment opportunities, for such populations (MMDR Bill 2011, s.26 (3)). P rofit sharing: The mine leaseholder has to share a proportion of the profits/royalty with the local community. A District Mineral Foundation (DMF) will be constituted in each district to distribute the share of the profits within the affected communities. A mine leaseholder is to pay annually to the DMF (MMDR Bill 2011, Ss. 24, 56, 43). > An amount equal to the royalty paid during the financial year in case of major minerals. > An amount equal to 26 per cent of profit after tax in case of coal and lignite. The Central government has been given the authority to review this profitsharing percentage and, > In case of minor minerals, profit-sharing percentage is to be decided by states.
II. Rights of communities
T he Gram sabha (village council) or district council in fifth and sixth schedule areas3 and the district panchayats4 in non-scheduled areas is to be consulted before issuing notification of public lands for inviting applications to bid for prospecting license, large area prospecting license or mining lease (MMDR Bill 2011, s.13 (11)). T he Gram sabha or the district council is to be consulted before granting mineral concession for minor minerals in a fifth or sixth schedule area (ibid.). T he concerned panchayats are to be consulted before approving or disapproving the progressive mine closure plan (MMDR Bill 2011, s.32 (5)). This is to be done within a period of 90 days from receipt of the plan.
3 Scheduled areas as declared under the Indian Constitution are those with tribal population, under-developed nature of the area and an evident disparity in the economic condition of people (http://tribal.gov.in/index3. asp?subsublinkid=305&langid=1 as viewed on December 19, 2011) 4 The gram sabha, district council and the district panchayat are all forms of local self government. These are usually at the village or the district level.
T he final mine closure plan has to be based on the planned land use for the lease area after its closure. For deciding the planned land use, the concerned panchayats are to be consulted (MMDR Bill 2011, s.32 (8)).
III. Regulatory reforms The MMDR Bill has introduced a number of steps to strengthen the existing regulatory regime in the country.
A National Mineral Fund has been created to strengthen the capacity of the Indian Bureau of Mines (IBM) – the premier regulatory agency. This fund will also be used for Research & Development in sustainable mining, developing, detecting and preventing illegal mining, etc. A National Mining Regulatory Authority is proposed which will review royalty and cess rates, suggest penalties regarding non-compliance in royalty payments, settle disputes in matters of inspection (states vs IBM) etc. A National Mining Tribunal is to be set up to hear matters from affected people on various issues and dispose of applications where the governments have failed to do so.
Overall, the draft MMDR Bill 2011 is a vast improvement over the existing mining laws of the country and makes a serious attempt to safeguard the economic and social well-being of the local community as well as environmental protection of mining areas. For the first time, communities are being involved in governance of the mining industry5. The most important concept introduced by the draft MMDR Bill is profit sharing. If it is implemented as per the spirit of the law, it will go a long way in ameliorating the negative social and economic externalities of the mining industry (see Box 2).
5 Provision for consultation with gram sabha/district council/ panchayats before granting the concessions and on mineclosure have been provided in the draft Bill. However, what this consultation means and how it will be conducted have not been defined. What will be the relationship between consultation and consent has not been explored.
Mining, people and the environment 7
BOX 2: What does the profit sharing provision mean for the local communities? The government’s proposal to include a specific provision for sharing profits with local communities in the MMDR Bill 2011 is an important step ahead in building an inclusive growth model. The profit sharing provision is in line with the famous 1997 judgement of the Supreme Court of India on the matter of mining in Schedule areas (also referred to as Samata Judgement). In the judgement, the Supreme Court directed that in Schedule five areas of the country, only the government can undertake mining and at least 20 per cent of net profits would be set aside as a permanent fund for development needs. Calcite mining in Nimmalapadu village of Andhra Pradesh would have led to the displacement of a large tribal population had it not been for the Samata judgement. The residents of Nimmalapadu are agriculturists who harvest three crops a year, having managed to divert a small stream into the village. In 1987, a few men descended on the village and started to dig. Soon, revenue officials appeared on the scene and asked the villagers to vacate. They offered Rs 5,000 (73 Euros) per family. People realised that “development work” was in progress to mine the abundant mineral deposits in the area. Birla Periclase, owned by the Aditya Birla group, wanted to mine calcite from this tribal village to manufacture magnesia at its factory located 110 km away in Visakhapatnam. Determined not to allow mining in their village, the people of Nimmalapadu began a struggle against the government and one of India’s leading business houses. Samata, an NGO based in Hyderabad, helped the villagers in organising the agitation. On the advice of Samata, the villagers filed a case in the High Court, which they lost in 1995. But Samata took up the cause and filed a case in the Supreme Court on behalf of the villagers and this judgement is a result of that.
According to the Delhi-based non-profit organisation, Centre for Science and Environment (CSE), if this profit sharing provision comes into effect at the present level of mining in the country, it will generate close to Rs 105,000 million (1.53 billion Euros) as share of profits for the local communities. A major portion of this will be available to the top 50 mining districts of the country, which together will get as much as Rs 90,000 million (1.3 billion Euros). As per CSE’s estimation, if the share of profits from mining is equally distributed to all the directly affected people in the top 50 districts, everyone could get as much as Rs 38,000 (550 Euros) per year. This is more than five times the official poverty line in India. The provision of profit sharing will go a long way in reducing large-scale poverty and deprivation, as is illustrated by the following examples: Dantewada (Chhattisgarh), the most severely leftwing extremism affected district of the country, produced minerals worth Rs 39,610 million (578 million Euros) in 2010-11. More than 80 per cent of the population lives below the poverty line. If draft MMDR provisions were implemented, the mining affected population of the district could have got more than Rs 4,000 million (58 million Euros) in 2010-11 as profit share. Every household in Dantewada could have been given Rs 40,000 (584 Euros) annually.
Keonjhar, Odisha produces more than Rs 70,000 million (1.022 billion Euros) worth of minerals, mainly iron ore. More than half the population lives below the poverty line. If draft MMDR provisions were implemented, the directly affected people could have got more than Rs 7,500 million (110 million Euros) in 2010-11 as profit share. In other words, every directly affected person would have got more than Rs 60,000 (876 Euros) annually.
Source: Bhushan and Juneja (2011)
8 Southern Alternatives to EU Trade Policy
D. Raw Materials Initiative and EU-India Free Trade Agreement
EU-India Free Trade Agreement
Raw Materials Initiative The EU is making a big push to help its companies and investors access cheap raw materials in developing countries (Curtis, 2010). The Raw Materials Initiative (RMI), launched in 2008 by the European Commission (EC), is an integrated strategy of the EU to secure affordable, reliable and undistorted access to raw materials (ibid.: 4) on which the EU economy is argued to depend on for its future competitivenes (EC, 2008). The EU sees little scope in ensuring a sustainable supply of raw materials from European deposits. The RMI is, therefore, largely targeted to ensure access to raw materials from international markets, especially from developing countries. According to the EC, the key problem with securing access to these materials is the ‘proliferation of government measures that distort international trade in raw materials’ (ibid.: 4) like export taxes, quotas, subsidies and restrictive investment rules (ibid.). Important steps that the EU plans to take to access ‘affordable’ raw materials include:
The EU’s quest for raw materials, as laid down in the RMI, is evident in the range of free trade agreements (FTAs) it is negotiating with various developing countries, including India. India and the EU have been negotiating a FTA since 2007 covering trade in goods and services, investments, intellectual property rights and government procurement (Singh, 2011: 1). The FTA, termed EU-India Broad based Trade and Investment Agreement, which is likely to be concluded in 2012, contains many features that could undermine the pro-people and pro-environment provisions of the draft MMDR Bill 2011. These features include national treatment and most favoured market access conditions without quantitative limitations or the use of performance requirements or economic needs test. In addition, the EU proposal includes investor-tostate dispute settlement mechanism through which foreign investors can invoke arbitrations against the host governments.
I. National treatment
P romoting new rules/agreements on ‘sustainable’ access to raw materials and ensuring compliance with international commitments T o try and eliminate measures that restrict access to raw materials and to act against export restrictions T o ensure that dual pricing of raw materials is addressed T o ensure that an open and well functioning market for raw materials exists using different trade policy instruments, and T o assess ways of lowering import restrictions for raw materials.
The EU is promoting the RMI despite recognising that ‘many emerging economies are pursuing industrial strategies aimed at protecting their resource base to generate advantages for their downstream industries’ (ibid.: 4) and therefore are an integral part of their development strategies. To illustrate, the average daily earning in the iron ore mining sector in India stands at Rs 100 (1.5 Euros) while that in an iron and steel factory is Rs 163 (2.4 Euros)6. Also, downstream integration creates more jobs (an iron ore mine along with an iron and steel plant creates 5-10 times more jobs than a stand-alone iron-ore mine) and leads to the development of ‘under-developed’ areas. The Initiative is, therefore, likely to hinder developing countries’ economic prospects by reinforcing their dependence on unprocessed raw material exports (Curtis, 2010). http://labourbureau.gov.in/OWS%20New%20Table.htm viewed on November 19, 2011 6
As per the draft FTA between EU and India, EU companies should get the best treatment given to an Indian company down to the regional and local level and it should cover both pre- and post-investment/establishment aspects (Article 3) and vice-versa. The ‘similar treatment’ is not to be applied to government owned companies of either country. The principle of national treatment is highly contentious in the case of the mining sector since it essentially means exercising control over vital national resources. In addition, giving national treatment to a foreign private sector company without performance requirements7 will be detrimental to the developmental goals of the country.
II. Market access As per the EC proposal in the draft FTA, India is to accord EU investment and investors favourable market access without limitations on:
t he number of establishments or total value of transactions or assets, whether in the form of numerical quotas, monopolies, exclusive rights or other establishment requirements such as economic needs tests (ENT); t he total number of operations or on the total quantity of output expressed in terms of designated numerical
7 Performance requirements are certain conditions that may be laid down which a business needs to fulfil in order for it to be able to operate. These essentially are pre-requisites.
Mining, people and the environment 9
units in the form of quotas or the requirement of an ENT; t he participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment; and measures which restrict or require specific types of establishment (subsidiary, branch, representative office) or joint ventures through which an investor of the other Party may perform an economic activity.
Many of the above-mentioned are problematic provisions as far as mining sector is concerned. For instance, the demand for no restriction on size and type of investment/ establishment is in line with the EU’s RMI 2008. However, this provision will promote monopolies, as EU companies with deep pockets supported by lending from European Investment Banks will start buying Indian mining companies that are essentially smaller in both size and turnover. The other problem with the market access provision is the environmental impact of large mining projects or number of mining projects in a region (cumulative impact). For the sake of managing social and environmental fallouts, India will have to have a provision in the FTA that allows it to restrict the size of mining projects or restrict mining itself in certain areas and in certain situations, irrespective of the risks it entails to the investors. The provisions of market access can be used for uncontrolled exports of minerals from India to the EU, which is again one of the key objectives of the RMI. Exporting minerals does not lead to the development of the mineral bearing areas in terms of employment, secondary and tertiary sector development and tax revenues. It also promotes predatory mining. Take for example, the surge in iron ore exports to China from India for their Olympics preparation. Owing to the Chinese price rise of iron ore, Indian companies started exporting huge quantities of iron ore out of the country. The prices shot up from Rs 1,200 (17.5 Euros) per tonne in 2000 to Rs 5,000 (73 Euros) per tonne in 2003 (Down to Earth, 2011). This led to an immense amount of illegal mining operations in Bellary district of Karnataka. The amount lost by the state exchequer due to illegal mining is to the tune of Rs 160,850 million (2.35 billion Euros) in a period of four years (ibid.). Farmers lost agriculture as the mining mafia started digging up land everywhere and pollution levels increased tremendously (ibid.). Because of the large-scale environmental and forest destruction, the Supreme Court of India has ordered a halt to all mining operations in Bellary. Several mining related problems exist in other states (see Box 3).
The desire of the EU to have an unfettered access to minerals from India can be gauged by the fact that it is proposing to keep out all economic needs tests (ENTs) for establishments. An ENT helps to understand the project in economic terms. In a way it is the economical justification of the project elaborating on its economic viability and need (UNCTAD, 1999). For example, if an EU company wants to start iron ore mining in a particular location, the economic needs test may include aspects like: existing mining operations in the region, impact of existing operations, demographical attributes of the region’s population, employment creation, existing infrastructure, market need and location, etc. Thus it incorporates aspects of site assessment and justification, impact of similar existing operations and the need for new operations. To keep all EU investments/companies under the FTA free of an ENT would hamper assessing the project activity better and will serve to India’s disadvantage. Hence an ENT should be mandatory for all or at least big investments/ projects under the FTA. Under Article 12 (e) of the draft FTA, India can overlook these provisions on virtually no size restriction in relation to ‘conservation of exhaustible natural resources’. However, this is possible only if India decides to restrict domestic production and consumption as well. In essence, the domestic mineral policy of India will become hostage to the FTA.
III. Performance Requirements The EC would like to ‘impose disciplines on performance requirements’ under the proposed FTA with India (Singh 2011: 2). Performance requirements with respect to mining projects could include preference to local people in employment, development of the mining areas, sharing profits with the local communities, restrictions on exports, technology transfer, value addition on the minerals in terms of setting-up of upstream/ downstream operations, etc. All these could contribute significantly towards India’s economic development, especially the development of ‘underdeveloped’ areas. In the absence of performance requirements, a foreign corporation is likely to exploit the minerals of a country without contributing to the development of the mineral bearing areas. In fact, without appropriate performance requirements, EU-India FTA will completely reverse the progressive provisions of the draft MMDR Bill 2011.
IV. Investment protection and dispute settlement The draft FTA incorporates provisions on investment protection including clauses on expropriation and dispute settlement that are contentious. The fact that
10 Southern Alternatives to EU Trade Policy
Box 3: Iron ore’s red haze Everything in Lamgaon village in Goa is coated with a fine layer of red earth – part of the environmental price paid by the community for the nearby iron ore mine. “Look at this muddy water flowing into my farm now,” says 48-year-old Shantabal Hoble, a member of the Lamgaon Citizen’s Committee. “It disgorges so much silt that the level of my field has risen by about a third of a metre. The fertile land that once yielded more than two tonnes of paddy is buried under the clay from the mine on the hill and now I get less than a tonne of paddy from the field.” The channel that brings water to her two hectare field is chocked by silt. Other mine debris has affected the fertility of the farms in the village,
the draft FTA does not exclude ‘speculative investment’ from protection is another area of concern. Article 20 of the draft FTA relates to ‘investment disputes’ between party and an investor of the other party (investor-to-state dispute) causing loss/damage to the investors/ investments. As per its provisions, if a dispute does not get resolved through ‘consultation and negotiations’ within a period of six months, it may be submitted to a court or the International Conciliation for resolution. The investor-to-state dispute settlement mechanism, therefore, gives rights to investors to completely bypass the domestic legal system and seek redressal before a panel of international arbitrators without any public participation or accountability and public scrutiny. Modeled on the controversial Chapter 11 of North American Free Trade Agreement (NAFTA), investor-state dispute settlement mechanism has been exploited by private companies to challenge a wider range of regulatory measures on health, environment and public safety that infringe on their expansive investment rights (Singh 2011: 5). This could be problematic in the case of mining projects in India as government intervention (and regulation) in mining projects is very high because of its potential of large-scale social and environmental disruption. In fact the draft MMDR Bill aims to tighten the regulatory framework including the role of the local communities in governance of the mining sector. The investor-state dispute settlement mechanism could nullify all these by challenging the domestic mining law in case it affects profitability of the company.
30 km east of Panaji. But Lamgaon is not alone. Many villages have been hit by the activities of the iron ore mines in the state. All over Goa, pollution caused by the transportation of mined material is causing havoc. The dust generated by the heavy trucks has reduced agricultural productivity, apart from causing significant congestion problems. At least 7,000 trucks travel every day in Goa – through villages, forests, wildlife sanctuaries and farmlands. And the impact on this small state, with a delicate ecosystem, is enormous. Source: Bhushan et al. 2008: 145
V. Disclosure of information As per Article 14 of the EU-India FTA, information disclosure has been restricted in the name of confidentiality and to protect public interest and the legitimate commercial interests of enterprises. What is ‘public interest’ or what constitutes ‘legitimate commercial interests’ has not been defined. For mining projects this information disclosure provision will not only lead to huge corruption but will also have immense social and environmental ramifications. For instance, a wholly owned EU company might refuse to share information on profits therefore jeopardising the entire profit sharing provision of the draft MMDR Bill, 2011. Similarly, they might refuse to share crucial social and environmental information in the name of protecting ‘legitimate commercial interest’. Article 14 of the investment chapter of the EU-India FTA must be modified to facilitate information disclosure and transparency.
Mining, people and the environment 11
E. The way ahead
There are many provisions in the EU-India FTA that could nullify various progressive environmental and social provisions of the draft MMDR Bill as well as jeopardise the sustainable development and inclusive growth agenda. In fact, the Members of the European Parliament (EP) too have raised concerns over the EU-India FTA, which are especially relevant to mining projects.
The EU-India FTA should be suitably modified to include the following provisions in the investment chapter with respect to mineral exploration and mining projects:
C onsultation with and obtaining consent of local communities before starting the mineral exploration and mining project;
MEPs tabled amendments to the draft report of the EU-India FTA (EC Committee on International Trade, 2008) and voted on these way back in February 2009. Some important concerns raised in this draft resolution (December 2008) by Parliamentarians then were:
P rofit sharing with local communities;
D isplacement should be minimised and people should be resettled and rehabilitated in such a way that their social and economic conditions are better than before. In other words, displacement should be used as an opportunity to improve the socio-economic status of the population;
P reference to local communities in employment and contracts;
V alue addition to minerals and therefore, performance requirements of upstream/ downstream linkages;
P erformance requirement on technology transfer in mineral exploration and mining;
R emoval of the clause on international arbitration in investor-to-state dispute settlement. All disputes should be settled under the domestic law taking into consideration the social, economic and environmental conditions;
P rotection of investment/investors in mining projects should be at par and not above the protection to local communities and environment from the activities of these mining projects. In other words, if the negative environmental and social externalities of a mining project are very high then the investment protection clause of the EU-India FTA should not come in the way of mitigating those impacts or even closing down the project.
N o provision under the EU-India FTA should prevent the disclosure of social, economic and environmental information related to mining projects. EU-India FTA should facilitate disclosure of information and transparency.
A ppropriate Economic Need Tests must be included for big investments/projects under the FTA.
“ FTA should include ‘commitments’ on social and environmental standards and sustainable development” (ibid.: 6). F DI “is not encouraged at the ‘cost of lowering environmental, labour or occupational health and safety legislations and standards” (ibid.: 13). T he “benefits of the FTA reach dalits/adivasis and other marginalised tribes and caste” (ibid.: 9).
The latest position of the EP on the EU-India FTA was released in May 2011, under which the Parliament has asked the EC to include an ‘ambitious’ chapter on sustainable development as part of the FTA to promote sustainable development and inclusive growth (EP, 2011). An ambitious chapter on sustainable development would help, but for EU-India FTA to contribute to sustainable development and inclusive growth in India, it must be draft MMDR Bill, 2011 ‘compliant’.
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ReFERENCES Bhushan, C., and Juneja, S. (2011) Sharing the Wealth of Minerals: A report on Profit Sharing with local communities, NewDelhi: Centre for Science and Environment.
Singh, K. ( 2011) India-EU FTA: Policy Implications of Unfettered Investment Flows, Briefing Paper # 2, New Delhi: Madhyam.
Bhushan, C., Zeya Hazra, M., Banerjee, S. (2008) Rich Land Poor People – Is Sustainable Mining Possible? New Delhi: Centre for Science and Environment.
UNCTAD (1999) Lists of Economic Needs Tests in the GATS Schedules of Specific Commitments, New York: UN.
Committee on International Trade (2008) Draft Report on an EU-India Free Trade Agreement (2008/2135(INI)). Available:ht tp://w w w.europarl.europa.eu/sides/ getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE409.788+02+DOC+PDF+V0//EN&language=EN [24 April 2012] Curtis, M. (2010) The New Resource Grab: How EU Trade Policy on Raw Materials is Undermining Development, [Online], Traidcraft Exchange, Oxfam Germany, WEED, AITEC, and Comhlamh. Available: http://www. s2bnetwork.org/fileadmin/dateien/downloads/The_ new_resource_grab.pdf [24 April 2012]. Down To Earth (2011) ‘Picture imperfect’, Down to Earth [Online] 31st Aug. Available: http://www.downtoearth. org.in/node/33863 [29 October 2011]. European Commission (2008) The raw materials initiative – meeting our critical needs for growth and jobs in Europe, Communication From The Commission To The European Parliament And The Council, Brussels, 4.11.2008 COM(2008) 699 final. European Parliament (2011) European Parliament resolution of 11 May 2011 on the state of play in the EU-India Free Trade Agreement negotiations. P7_ TA-PROV(2011)0224. Available: http://www.europarl. europa.eu/document/activities/cont/201202/2012020 7ATT37518/20120207ATT37518EN.pdf [24 April 2012]. Mines and Minerals (Development and Regulation) Bill 2011, Draft. Available: http://pib.nic.in/archieve/ others/2011/sep/d2011093002.pdf [23 April 2012]. Ministry of Mines, Government of India (2011a) ‘Mineral And Metal Scenario’ in Annual Report 2010-2011, [Online] 29 March]. Available: http://mines.nic.in/index. aspx?lid=549&level=1&chk=24dfe45y5edf5e3 [23 April 2012]. Ministry of Mines, Government of India (2011b) Indian Minerals Yearbook 2009, Nagpur: IBM Press.
Transitions towards post-extractive societies in Latin America An answer to the EU Raw Materials Initiative Carlos Aguilar
2 Southern Alternatives to EU Trade Policy
Carlos Aguilar, originally from Costa Rica, is a researcher at the Brazilian Institute of Social and Economic Analysis (IBASE) in Rio de Janeiro. During 2011 he was coordinator to the Brazilian Extractivism Industries and Pre-Sal Observatory in IBASE-Rio de Janeiro at IBASE.
Transitions towards post-extractive societies in Latin America 3
Contents Introduction 4 A. Increasing pressure for raw materials and the role of Latin American countries 5 B. Latin American extractive activities and the new social-environmental conflicts 7 C. Transition to post-extractivism: A Latin American contribution to the global debate on raw materials and development 8 Recommendations 12 References 13
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Introduction This paper aims to serve as an introduction for those who are interested in studying the impact of the current international demand for raw materials. EU policies are partly responsible for new social-environmental conflicts in places such as Latin America. It goes on to provide details of some innovative initiatives based around implementing social alternatives which depend less on extractive industries. Despite a long period of extractive policies which started with the Spanish and Portuguese conquest and colonisation of the Americas, it is remarkable that the growing demand for raw materials is not coming from those countries who have them in abundance but from those vying for global hegemony. It is well known that the EU’s integrated strategy on Raw Materials (2008), brings together a number of policies focused on securing EU access to raw materials in the international markets, and consequently guaranteeing a more intensive exploitation of raw materials and reducing the current dependency by local industry on the importation of strategic raw materials. As a strategy, it reflects the EU’s increasing tendency to link investment to international trade negotiations and European policies of growth and employment. In this context, practices such as so called “sustainable mining” are quickly abandoned in favour of a strategy whose explicit goal is to guarantee competitiveness and growth of the European economy without any regard for the social and environmental impact of those measures in other countries. These policies are very telling of the politics of the EU authorities, giving a strong backing to multinational companies operating in resource rich countries in order to guarantee access to key raw materials. Over the last years several communities in Latin America have been suffering from the devastating impact of extractive activities, whether through the direct effect of companies or through the support of governments who promote intensive extraction of natural resources as a way to attract investment. A new political and social environment and above all, the determined mobilisation of local communities, have helped develop alternative proposals and ideas to this extractive type of development. This paper intends to highlight some of the characteristics of the current extractive models in order to support a debate around development models, and EU trade and investment policies. It attempts to broaden the post-extractive debate towards the development of a framework which supports alternative democratic and autonomous societies that respect the cultural and biological diversity so necessary for the well being and survival of our planet.
Transitions towards post-extractive societies in Latin America 5
A. Increasing pressure for raw materials and the role of Latin American countries Large scale extractive activities are not new to Latin America. They can be traced back to the Conquest and Colonial periods that began towards the end of the 15th Century. The historical competition for natural resources, and more specifically for precious metals such as gold, has left a trail of destruction and brutality which continues to leave a mark on its population and environment to this day.
As a consequence, the majority of Latin American countries have been specialising in raw material exports, as shown by the increase of these in terms of exports and the growth of Foreign Direct Investment (FDI) in the area of natural resources, which reached 43% in 2010 according to ECLAC1, 2010. See Box 2 for further details.
The result has been devastation and injustice, and the presence of an ecological debt unrecognised by the vast majority of developed nations (see Box 1). Intensification of extractive activities has been fed by global market demands and the rising prices of minerals and hydrocarbons during the last decade.
BOX 1: environmental debt TO the Global South “Environmental Debt is about the historical demand of the debt that industrialised countries in the Global North have to developing countries because of the plunder, destruction and devastation that the former countries caused since the invasion, conquest and subsequent period of colonisation of the latter. In colonial times, European countries exploited minerals such as gold, silver, precious stones, timber and genetic resources, which were looted from American colonies. On top of this, tax was imposed on local populations by European conquistadores. They also imposed models of extraction and production based on the needs of the European economy, which made the Industrial Revolution possible. All this happened at the expense of the death and enslavement of the native population. At the time of the arrival of the Spanish conquistadores, it is estimated that the American continent had 70 million inhabitants. A mere century and a half later, it only had 3.5 million. On the other hand, it is estimated that slave traders captured some 70 million people, of which only 10 million reached the American continent. Conquest was rooted in violence and domination, in the desecration of life.” Source: Southern People’s Ecological Debt Creditors Alliance (2012)
BOX 2: Foreign Investment and Neo-extractivism in South America In 2010, the oil and gas sector in Brazil amounted to 22% of total FDI, and metal mining 14%. In Chile, about 41% was concentrated on mining, and in Bolivia, between 2004 and 2008, extractive activities accounted for 56% of FDI – exploitation and prospecting of mines and quarries (34%), the exploitation and prospecting of crude oil and natural gas (22%). In Colombia, the oil industry (42%) and mining (30%) represented 74% of the FDI (ECLAC, 2010).
1 The UN Commission for Latin America, 2010
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The EU The statistics show an important correlation between foreign investment, trade and intensive exploitation of natural resources, with a remarkable presence of European companies in the oil, energy and service sectors. In an effort to secure economic growth and the competitiveness of European industry globally, the European Commission (EC) has designed an integrated strategy for raw materials (also known as the Raw Materials Initiative, RMI) based on three pillars:
ecure access to raw materials in international S markets
et conditions for a better use of raw materials of S European origin
educe the consumption of raw materials as a way to R limit dependency on key imports (EC, 2008).
It expresses real concern that over half of the known sources of minerals are located in countries which have deficient infrastructure and which suffer from extreme poverty and violence. In many of those countries, investment and trade with the EU is already taking place, through diverse mechanisms, such as investment and association agreements, or what is often called “raw materials diplomacy”. In practice, this means policies are being effectively coordinated for the use and direct exploitation of available resources, without taking into account the social and environmental cost in those countries where the extractive activities take place. The RMI identifies that Brazil, Peru, Bolivia and Mexico are turning into key providers of strategic minerals, as mentioned in the list of 14 raw materials considered to be vital by the EU2. It is therefore not a coincidence that in the face of this scenario, Brazil appears as the biggest destination for FDI in Latin America, thanks to the discovery of the Pré-Sal oil fields and to the fact that it is the biggest exporter of iron in the region (see Box 3). Brazil receives 43% of the total FDI in the region (U$48 million), followed by Mexico, Chile, Peru and Colombia, who all have Trade Agreements with the EU and an increasingly important extractive sector in their economy.
According to the EC (2008) report the EU is highly dependant on imports of metals (especially those required in high tech such as cobalt, platinum, rare earth and titanium), and has a very high dependency on secondary raw materials.
BOX 3: Discovery of Pré-Sal: An urgent debate in Brazil The discovery of massive oil deposits (the biggest such discovery in the world for the past decade) in the South-East coast of Brazil, has created great national and regional expectation because of what it means in terms of income and investment. Chinese and Norwegian companies such as Statoil are already part of a joint venture with Petrobras in the area of prospecting. The first shipment was sent to Chile in April 2011 from this so called “Lula Field” operated by a consortium between Petrobras, BG Group (UK) and Galp Energia (Portugal). Until now, the national debate has been centred on issues such as royalties, and little attention has been paid to the social and environmental impact of the escalation of extractive activities in Brazilian society (Mineiro & de Lourdes Deloupy, 2012).
The intensification of extractive activities in Latin America, mostly in mining, oil and gas is increasing the pressure over resources and redefining the role of the State. Thus, countries such as Ecuador and Mexico have advanced the renegotiation of oil contracts or the approval of contracts for operational services with incentives. Some other governments have focused more on discussing the distribution of income created by extractive activities, such as those of Brazil, Chile and Colombia. Others such as Venezuela or Bolivia have implemented a greater involvement of the State in defining the scope of extractive industries, putting in practice programmes of profit transfer. Generally speaking, debates around these neoextractive activities are focused on plans by these governments to obtain a bigger share of the profits created by the high prices of raw materials in the international markets. This, of course, has a lasting impact on governance policies and social cohesion. On the other hand, it needs to be taken into account that this increasing exploitation of natural resources takes place in deeply unequal countries, with high levels of unemployment and hunger, and where insufficient spending in public services directed towards eradicating poverty are at the heart of escalating social conflicts caused by territorial fragmentation and impact of projects of investment in extractive sectors such as agriculture, fishing, natural resources and other national industries. This model of development therefore creates new unresolved conflicts.
Transitions towards post-extractive societies in Latin America 7
B. Latin American extractive activities and NEW socialenvironmental conflicts In Latin America, governments have implemented differentiated strategies in relation to extractive industries. There are some governments that have followed the pattern that natural resources should be granted on concession to multinational companies, as a means to significantly increase national income, such as Peru and Colombia.
This is why there is an increasing number of conflicts with local communities – mostly indigenous groups – trying to prevent the destruction of their livelihoods. According to the International Labour Organisation (ILO), which demands that states ratify and apply Convention 176 on Health and Safety in the Mining Industry, this industry has just 1% of the world’s workforce, and yet it is responsible
Box 4: Main features of Latin American Neo-extractivism I. It reinforces the extractive area of economy as fundamental to a predatory development model, based on raw materials exports. II. It combines elements of an intensive and multinational model of extractivism, with strategies aimed at attracting foreign investment to the exploitation of natural resources. III. In some cases, it does not exclude nationalisation of resources and legislation –often fiscal – in order to intensify the presence of the State in extractive enterprises mostly as joint-ventures.
V. It has a strategic importance for the “developmentalist” and clientelist agenda of Latin American governments, making it difficult to debate about conflict and the social and environmental impact of this policy. Additionally, it is difficult to debate its impact on public policies in relation to poverty eradication. VI. It deals with conflict by criminalising communities and social movements. VII. It promotes a form of insertion in the world market of highly dependent economies, weakening autonomous projects of regional integration.
IV. It is part of a model of economic growth and development based on the notion of an unlimited availability of natural resources.
for 8% of deaths in the workplace, thus being one of the most dangerous industries in the world. It goes without saying that people are often employed informally, without social protection and without meeting proper safety standards. According to the official figures provided by the Colombian government, over the last three years there have been 216 victims in 23 mining accidents.
this model of expecting exports and foreign investment to solve historical and structural problems of inequality, inequity, and above all, the destruction of the environment. Other than stimulate and intensify social and environmental conflicts, this model does not create jobs, and does not solve food and justice related issues for communities in the affected territories.
On the other hand, so called ‘neoextractivism’ refers to new policies which strengthen the role of the state in the exploitation and ownership of resources, while at the same time developing public policy addressing problems such as poverty and inequality, as is the the case with countries such as Bolivia and Venezuela.
A strong case study for examining conflict between foreign investment and indigenous communities, is Peru, where the Public Ombudsman wrote a report in mid 2011, recording at least 227 conflicts, the vast majority of them due to environmental and social causes (Peru Indigenous and Civil Society Organisations, 2011). This is further discussed in Box 5.
Both examples can contribute towards understanding new social and environmental conflicts and new proposed transition alternatives towards societies which depend less on the exploitation and export of raw materials (see Box 4). Over the last number of years, Latin American neoextractivism has demonstrated the limitations of
In most cases, the nationalisation of investments and / or industries, currently being promoted in several Latin American countries, is reinforcing dependency patterns and a tendency towards repression of the people. It is also increasing the social and environmental cost of the model, displacing communities, polluting and
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BOX 5: The Gas War in Peru (The CAMISEA case) One of the most important gas sources in Latin America is to be found in the fields of San Martin and Cashiriari in Peru. The project, known as CAMISEA is being exploited by a holding company called Peru LNG which has companies from the US, Europe (REPSOL) Korea and Japan. It is estimated to be in operation for 40 years. Even though this project has been praised as a source of employment and was originally thought as a way to cover the gas needs of industries in Lima and Callao – through the construction of a gas pipeline of more than 60 kms – further negotiations identified that the main aim of this project would be gas supply to external markets such as Mexico and the USA. Over the last three years, more than 7 communities in Vinchos and Ayacucho, have been protesting over their lands being affected by the
destroying water sources, while also having an impact on the pattern of undue appropriation of public funds by national authorities and foreign companies. The main reason for this fragility lies in the fact that current strategies of development do not solve traditional sources of conflict; they even create new ones, as transnational mining in Central America has done. It also makes local communities pay for the environmental and social costs of extractive activities, while reinforcing a very dangerous type of development that is dependent on exports and income derived from extractive activities. This is why the nationalisation of companies and the implementation of focused public policies are not enough to promote an alternative model which can strengthen an autonomous political space and a regional process of integration based on ideas of equality and justice.3
3 All of this pressure, plus that from European Multinational Companies in the area of oil exploitation (REPSOL, SHELL), mining (Monterrico Metals) and natural resources, have been discussed and denounced by the Permanent Tribunal of the People (TPP) as politically incoherent with the discourse on trade and sustainability of the EU.
pipeline of the project CAMISEA II. In April 2011, a peasant delegation went to Lima seeking dialogue with the company and government officials in the Ministry of Mining and Energy. After months of fruitless negotiations however, new clashes with the police erupted in November, which left three peasants wounded and eleven arrested. In 2010, conflict with communities in Cusco caused more than 18 wounded and a general strike in Quillabamba. The locals were protesting against the export of gas which was badly needed by local communities. Currently the Peruvian government and the holding company are in negotiations to make sure that the gas from that field will be used exclusively for the internal market so that exports by companies such as REPSOL are reduced.
C. Transition to post-extractivism: A Latin American contribution to the global debate on raw materials and development This criticism and questioning of the current extractive cycle in Latin America is coexistent with interesting debates in many countries on the potential impact and the sustainability of development strategies which rely on economic growth increasingly based on the export of raw materials and foreign investment in areas linked to the exploitation of natural resources. There is growing concern about the current forms of extractive industries in the region and their relation to social and environmental conflicts. Latin American post-extractivism stands, in this light, for the very possibility of thinking of strategies that go beyond the predominant western economic model, giving thought to the serious social and environmental consequences caused by an economic model dependent on the development of extractive industries. Post-extractivism is trying to articulate an alternative vision of Latin American societies in the face of limited resources, and build within its framework the rights of Nature and a new epistemic practice and understanding of “transitions towards alternatives to development” (Gudynas, 2011). Such a transition aims to eradicate poverty concede rights to Nature, which necessarily a reorientation of production to give priority ecosystem and to create regulations and public
and to means to the policies
Transitions towards post-extractive societies in Latin America 9
which deal with issues such as land tenure, disproportionate accumulation of wealth and use of the commons. In Latin America this transition needs to be thought of in terms of at least three extractive models which are intertwined in the region. First of all, there is a form of predatory extractivism, usually large scale, which produces an enormous dependency on the income generated by activities which are highly polluting, risky and destructive to the environment. Usually, this form of extractivism combines an intensification of social problems related with displacement of communities, repression and systematic violation of social, economic and cultural rights, with environmental degradation. Predatory extractivism has especially negative impact on water sources (because of the use of highly toxic materials) and on the labour conditions of those communities close to the area of prospecting projects. The exploitation of over 900,000 tonnes of limestone by the French company Lafarge in the region of Intag in Ecuador, is a good example of predatory extractivism. An environmental audit in 2010 blamed the company for risking the security and health of the population, particularly on the grounds of sonic and air pollution, but also for abandoning machinery on the banks of river Quinde and for poisoning its waters with fenol (a dangerous toxic waste). These types of projects have no effective mechanisms for social control or transparency, so communities tend to organise in order to defend their rights. For instance, the Association of Perugachi occupied the premises of the company to protest over its impact on their health, on the environment and on the archaeological legacy of the local communities. Secondly, there is a form of moderate extractivism, which supposes a slightly more active form of control in terms of environmental and social legislation on the scope, risks and magnitude of extractive projects. They have effective mechanisms for citizens’ participation for decision making and there are also up to date technologies in order to reduce the environmental impact. In some cases, the combination of these mechanisms of control can delay or suspend some extractive projects. A recent case in Costa Rica which resulted in the permit to a company intending to exploit some 700,000 ounces of gold in the northern region of the country being suspended is a good example of how citizens’ control can force a government to pass legislation against some forms of predatory mining. The final result, a reform to the Mining Law, declares the country free of open cast metal mining. Apart from the legal prohibition and the suspension of the rights of exploitation, the legal decision also demanded economic reparations from the multinational company for environmental damage
caused by clearing woods. These sorts of measures have a significant impact on other countries in Latin America, such as Peru and Argentina, where there are already debates going on about the risks of open cast mining. Finally, we can also assume the existence of forms of extractivism which are linked to local and regional demands on resources and low intensity projects which control the social and environmental impact. Postextractivism, thus, does not mean a total disappearance of extractive activities, but a reduction in their current intensity and scale, and attempts to control them beyond the global demand for raw materials. It means a possibility to think of extractivism in a broader framework of a diversified economy, with employment alternatives and a tax policy which can be applied in favour of systematic programmes for profit transfer in order to eradicate poverty. The idea is to break the cycle of specialisation in raw materials and the high cost in social and environmental terms for the communities. Although the Ecuadorian government does not have a general perspective about this transition phase, maybe the most important debate at international level has been the attempt by its Energy and Mining Minister in 2007 not to allow the prospecting of oil in a part of the Yasuni National Park (the field of Ishpingo-TambocochaTiputini). Box 6 reviews the current extractive models and proposes a transition for Latin America. This proposal fits the parameters for the debate on post-extractive transitions we have developed for a number of reasons. Firstly, it questions the developmentalist logic of resource exploitation as we know it. Apart from the value of oil, it also acknowledges other values which are as or more important, such as nature, and cultural elements. The ‘no exploitation’ area advances the consolidation of a new alternative geography for extractive activities and the debate on the economic measures needed to compensate for the impacts on the potential diminishment of income and investment affecting those countries highly dependent on raw material exports4. The Ecuadorian government’s decision was also based on considerations further added to the Constitutional Body of the Reform of 2008, above all those related to “Nature Rights” and Good Living. Other than the 4 Some European governments promised financial support for this proposal. This was particularly the case of the German parliament in 2008 and the Norwegian government through the European Fund for the Reduction of Emissions by Deforestation and Erosion. Currently, there is over US$100 million gathered through EU cooperation. A remarkable case is that of the Viva Yasuni Association in France, which collect funds from citizens while it puts pressure on the French government to commit internationally to this initiative. The region of Meurthe and Moselle has already funded the initiative with €40,000. There are similar efforts taking place in Spain and Italy.
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BOX 6: Extractive Models, proposal for a transition in Latin America Model
• E xtensively practised, large-scale • It creates an economy of enclaves • High level of dependence on foreign investment • No social control/ transparency
• Pollution and destruction of water sources and forests • Displacement of communities • Source of rights violations (Convention 169 and 176 ILO) • Semi-slavery working conditions
• Opencast Mining • Soybeans Monoculture
• Medium to low scale activities • E xistence of environmental, social and fiscal regulations • More adequate use of technologies • It has mechanisms to consult citizens and for their participation
• Moratorium on the expansion of extractive activities • It links with local and regional industries in the productive process • Transparency in investment and social control over income created
• Legislative decree which forbids opencast mining in Costa Rica
• Small scale extractive activities driven by local and regional market demand • Special regulation on health and employment • Strong fiscal and environmental legislation • Community participation and social control • Diversification of the economy and reinforcement of local and regional markets
• Protection of the ecosystem • Initiative for not exploiting oil of ITT-Yasuni • Decrease in labour accidents and poverty reduction • Diversified exports and investment
Source: Gudnyas (2011) *In the classification used by E. Gudynas, moderate extractivism is defined as “Sensible”. What we have called basic extractivism is defined as “Indispensable”. This is a semantic difference which does not affect the content of the features and impacts described for each model. pragmatic value of this proposal, there is a need to take into consideration the important symbolic-political meaning of a measure that goes against the grain of current expansive tendencies towards predatory extractivism. Secondly, the initiative is an alert sent out about the limits of an economic growth model based on the increasing use of raw materials and an open debate on dogmatic conceptions ranging from neoliberalism to
modern tendencies of the green economy. It represents a differentiated understanding on public policies and the constitutional-regulatory framework towards a balanced view on social and environmental justice. Thirdly, the proposal being on a geographic region in the Amazon basin represents the chance of strengthening those regional instruments (such as the Amazon Cooperation Treaty) from a different angle to that of the neo-developmentalist projects of the Brazilian
Transitions towards post-extractive societies in Latin America 11
government and the attempts at regional integration through mega-projects. The transition proposals are not at all a novelty developed in the context of Latin America’s dependant type of capitalist development, but have also been spurred on by the climate crisis and the rise in the price of commodities in international markets. There are certainly strong economic components, derived from the debate on growth and on the use of resources from extractive activities experienced over the last years, but it also takes into account important public policy debates and political factors, above all in relation to the most recent political transformations happening in 5 some Latin American states . In the political-cultural front, other world views, which we could call peripheral or subdued to a dominant Eurocentric vision, have started to dispute the hegemony of the Western modern paradigm of progress. The emergence of proposals from the Andean and Amazonic peoples has led even to the change of legal and constitutional frameworks, such as in the case of Bolivia and Ecuador. New ways of thought such as the Sumak Kawsay or Sumaq Qamaña 6, to mention but two most debated proposals in a Latin American context, are revealing alternative understandings in the face of developmentalist paradigms, particularly in areas such as the relationship with nature and territorial-community based proposals of autonomy. These worldviews integrate elements that question the paradigm of economic growth and progress as understood in modern Eurocentric views. For instance, they integrate elements of community life and a new relationship with nature, which are impossible to guarantee according to the prevalent framework of extractive development. They have a strong emphasis on the value of territory as the basis of life and integrate the relationship between the spiritual and material, as opposed to the binary concept which views them as opposites. Its foundation is satisfaction and harmony with life, and supposes dignity and respect for biological and cultural diversity. All of this, plus mass mobilisations of communities, provide the ground for demands of autonomy and the emergence of new paradigms to face the challenge of development and its impact over nature. In some 5 Maybe the most interesting element of the debate is that of Multinational Status which has been started in the Andean region. 6
These aspects of the Quechua and Aymara view of the World in the Andes have been translated as Good Living. This translation is inaccurate for political-cultural purposes, for it drains of content the history and meaning of potentially revolutionary expressions which exist in alternative culture. However, this cultural appropriation has produced new understandings and elements that are to be found today in constitutional and social policy. In these cases, the expression Good Living has been widely used.
Peruvian communities, local governments are working on participation in decision making that have a huge impact on the lives of local populations, for instance, when it comes to water sources or in terms of agricultural and fishing activities. In Cerro Escalera, the local government of San Martín stopped an oil concession on the banks of the main river; in Panama the indigenous and peasant communities have carried mass protests throughout 2011 to stop the reform of the Mining Code which was aimed at expanding mining exploitation in the country. Other Latin American countries, such as Argentina, have developed legislation in order to protect the glaciers and their surrounding environments in the Andes. From March 2011 there has been in effect a government decree for the protection of the glaciers that has served as a wall of containment against the Chile-Argentina binational mining project of Pascual Lama. The legal framework still is insufficient, but they prove a growing awareness about extractive activities at a hemispheric level. It is more and more evident that there’s a need to radically question current extractive strategies, promoting alternatives in order to diversify production and to advance proposals towards food sovereignty and energy sovereignty. There are new urgent challenges to connect these proposals and alternatives of regional autonomous integration with ideas of balance between regional biodiversity and the material and cultural needs of the people. Particularly, the debate on the sources of energy and the relationship between the urban and the rural worlds in a context of geographic fragmentation promoted by the logic of new patterns of capital accumulation and distribution. The urban context being produced as a result of the displacement of communities, the destruction of woods and native species and the increasing demand of energy and resources such as water, is creating a new geography of conflict, where the battle is being led by those social sectors who are the most vulnerable to social and environmental crises. This is a warfare for access to resources which perversely pits the impoverished urban inhabitants against the displaced and dispossessed inhabitants from the countryside. It is derived from the way in which the extractive industries work and their logic of employment. Because of the way the system works, it needs to be structured from a local and regional level in a way which allows for employment and income sources which do not depend exclusively on extractive activities. They compete in some regions for access to biodiversity and territory used by the peasantry, indigenous communities and Afro descendants. This pressure for resources has
12 Southern Alternatives to EU Trade Policy
also pushed forward the debate on new forms of local and regional autonomy, with proposals ranging from Multinational States to the autonomy of indigenous communities in the Amazon basin. There is a need for effective legislation in order to exercise rights such as consultation (informed and prior) or new regional powers to rearrange production in extractive areas. As has already been stated, the debate on postextractive alternatives should begin with a recognition and analysis of the impact that development policies, based on the dogma of progress and the endless availability of natural resources, have had on the current world map of access and use of natural resources. The type of territorial fragmentation promoted by the advance of particular economic interests over the commons is destroying any chance of regional integration based on a multi-dimensional view of geography (local-regional) that makes the best use of the enormous riches in terms of ecosystems and biomes which exists in regions such as Latin America. The main concern of governments should be to address the imbalances caused by the hegemony of multinational corporations and the vulnerability of communities and countries in the face of the social and environmental impact of extractive activities. There can be no meaningful proposals for social inclusion without a greater involvement and participation by organised communities, or without reinforcing their mechanisms of cohesion and advocacy in the face of the prevalent global logic of appropriation of the commons and life.
Recommendations The following are proposals for a bioregional cooperation between the EU and Latin America in the face of the current extractivist model:
T o advance the preparation of case studies and the creation of proposals to deconstruct the “development discourse” based on increased exports of raw materials and direct investment in natural resources.
A pply pressure to create an international framework of legislation, control and transparency of national and multinational companies involved in extractive activities, and of foreign investment (not only during the phase of the actual extractive process, but from the environmental and social impact assessment of the projects through all of the production process).
T o create an international campaign to dissociate raw materials from Stock Exchange speculation and to move towards global agreements on fair prices, equitable use of resources according to global needs of food, health and environment protection.
T o establish a mechanism to monitor and denounce those EU trade, investment and cooperation practices (including in the Association Agreements) in relation to Latin American countries which do not respect basic principles of human rights, Nature rights and of poverty eradication policies.
T o prepare an annual bi-regional report on direct investment (or private-public partnerships) and environmental and labour practices of extractive companies in Latin America and Europe. This report is to be discussed with the authorities at EC and European Parliament levels, as well as with the international media.
T o promote a debate and to come up with proposals for a post-extractivist society, considering the knowledge and practice developed in other regions including Europe, Asia and Africa. The promotion of diverse regional spaces for debate can be the basis for enhanced proposals, based on concrete experiences, on the road to a transition model.
T o promote and support citizens’ and community referendums, as well as the ratification and adequate implementation by States of the Conventions 169 and 176 of the ILO, dealing with indigenous territories and health and safety issues related to the mining industry.
Transitions towards post-extractive societies in Latin America 13
T o promote regional policies to reinforce policies on energy, gas and food. This is essential for a strategy of South American and European integration. Currently, there are budding markets in South America but they are still unconnected from broader proposals which include a multi-dimensional approach to the use of resources, ecosystems and biomass in the region. The same is also true for the EU. F inally, every effort at mobilisation and information is vital to move forward in the coordination and strengthening of community and citizen initiatives against the power of multinational corporations. Since these are global problems, we need to put in place mechanisms to allow the creation of organisational and epistemic bridges for a new understanding of what kind of life we aspire to in this planet, without losing our difference in the process, since this enriches our human diversity and the environment.
REFERENCES European Commission (2008) The Raw Materials Initiative — Meeting Our Critical Needs For Growth And Jobs In Europe, Communication From The Commission To The European Parliament And The Council. Available online: ht tp://eur- lex.europa.eu/LexUriSer v/LexUriSer v. do?uri=COM:2008:0699:FIN:en:PDF [04 April 2012) ECLAC (2010) Foreign Direct Investment in Latin America and the Caribbean 2010. Available: h t t p : // w w w . c e p a l . o r g / p u b l i c a c i o n e s / xml/0/43290/2011-138-LIEI_2010-WEB_INGLES.pdf Gudynas, E. (2011) “Caminos para las transiciones post extractiveas.” En: Transiciones. Post extractivismo y alternativas al extractivismo en Perú. Perú: CEPES. Mineiro, A.S, & de Lourdes Deloupy, M (2012) ‘Considerações Gerais Sobre A Renda Extrativista No Brasil’ Observatório del Pré-Sal. Available online: www.observatoriodopresal.com.br [16 April 2012] Peru Civil Indigenous and civil society organisations (2011) Peru: Alternative Report 2011: The fulfilment of the agreement 169 of ILO (International Labour Organisation), Lima: Peru Workers General Confederation (CGTP). Southern People’s Ecological Debt Creditors Alliance Debt (2012) What is Historical Debt? Available online: ht tp://w w w.ecologicaldebt.or g /Historical - Debt / [04 April 2012]
14 Southern Alternatives to EU Trade Policy
Bibliography Acosta, Alberto/Sacher, William (2011). “Puede ser sustentable la minería? Ecuador, un caso peligroso.” http://lalineadefuego.info/2011/08/25/¿puede-sersustentable-la-mineria-ecuador-un-caso-peligroso/ CELAM (2011). “Industrias Extractivas (minería e hidrocarburos), la problemática de los recursos no renovables en América Latina y la Misión de la Iglesia. Lima.
Zorilla, Carlos (2011). “Crímenes contra la Naturaleza y complicidad del Estado. El caso de una empresa cementera en Ecuador.” Available online: 2011 http:// campanadefensores.blogspot.com/2011/09/crimenescontra-la-naturaleza-y.html
Websites: Observatorio del Pré-Sal y de las industrias extractives en Brasil: www.observatoriodopresal.com.br
CEPAL (2010). Inversión Extranjera Directa en América Latina, Santiago de Chile.
Observatorio de Multinacionales en América Latina (OMAL): www.omal.info
Comisión Europea (2010). “Europa 2020. Una estrategia para un crecimiento inteligente, sustentable e inclusivo”. Bruselas.
Observatorio de Conflictos Mineros en América Latina. (OCMAL): www.conflictosmineros.net
Comunicación de la Comisión al Parlamento Europeo y al Consejo (2008). “Iniciativa Materias-Primas. Atender las necesidades críticas para asegurar el crecimiento y el empleo en Europa.” Bruselas. Comunicación de la Comisión al Parlamento Europeo, al Consejo, al Comité Económico y Social y al Comité de las Regiones (2010). “Comercio, Crecimiento y asuntos mundiales. La política comercial como elemento fundamental de la Estrategia 2020 de la UE.” Bruselas. Comunicación de la Comisión al Parlamento Europeo, al Consejo, al Comité Económico y Social y al Comité de las Regiones (2011). “Abordar los retos de los mercados de productos básicos y de las materias primas.” Bruselas. Lanuza, Magda. Una aproximación a la deuda ecológica de la Unión Europea con Centroamérica. Ed. Unidad Ecológica Salvadoreña. San Salvador. 2007 Gudynas, Eduardo. “Diez Tesis Urgentes sobre el Nuevo Extractivismo. Contextos y demandas bajo el progresismo actual sudamericano.” En Extractivismo, Política y Sociedad. CLAES-Uruguay/CAAP-Ecuador. 2009 Mira, (2011). “Minería transfronteriza en Centroamérica.” En: Pueblos. Revista de Información y debate. # 47, 3 trimestre, España. Padilla, César, (2011). “Minería y Resistencias en América Latina. Hacia el post-extractivismo y el buen vivir? En: Pueblos. Revista de Información y debate, 47, 3 trimestre, España. Revenue Wacht Institute (2011). Reporte Anual: Tendencias de las Industrias Extractivas en América Latina. 2010. DESCO. Lima.
Extractivismo. Impactos e Alternativas (CAAP/CLAES): www.extractivismo.com
Water Justice and Democracy Alternatives to Commercialisation and Privatisation of Water in Asia Mary Ann Manahan, Buenaventura B. Dargantes, and Cheryl Batistel
This builds on the Springs of Hope: Alternatives to Commercialization of Water Resources and in Asia, in Thisarticle article builds onchapter, the chapter, Springs of Hope: “Alternatives to Commercialisation of Services Water Resources Alternatives to Privatization Public Options for Essential Services in the Global South, David A. McDonald and Greg Ruiters (eds.), and Services in Asia”, Alternatives to Privatisation Public Options for Essential Services in the Global South. forthcoming by Routledge as part of the Routledge Studies in Development and Society series.
David A. McDonald and Greg Ruiters (eds.), forthcoming by Routledge as part of the Routledge Studies in
Mary Ann Manahan is aSociety researchseries. associate with Focus on the Global South. She maybe reached at email@example.com, Dr. Development and Buenaventura B. Dargantes is currently Professor of Socio-ecology at the Institute for Strategic Research and Development Studies (ISRDS) of the Visayas State University (VSU) in the City of Baybay, Leyte, Philippines. He maybe reached at vsuwaterresearch@ Mary Ann Manahan is a research associate with Focus on the Global South. She can be reached at yahoo.com.ph. Cheryl Batistel is a instructor at the Camarines Norte State College. She maybe reached at firstname.lastname@example.org. email@example.com. Dr. Buenaventura B. Dargantes currently Professor Socio-ecology All are based in the Philippines and members of the Reclaiming Public Water is network, a global network ofof activists, civil society at groups, academics, water operators, andand unions promoting progressive models of water as Public-Public the Institute forpublic Strategic Research Development Studies (ISRDS) of management the Visayassuch State University Partnerships. (VSU) in the City of Baybay, Leyte, Philippines. He can be reached at firstname.lastname@example.org.
Cheryl Batistel is an instructor at the Camarines Norte State College. She can be reached at c_batistel@ yahoo.com. All are based in the Philippines and members of the Reclaiming Public Water network, a global network of activists, civil society groups, academics, public water operators, and unions promoting progressive models of water management such as Public-Public Partnerships.
© Comhlámh 2012 Any part of this publication may be reproduced without permission for educational and non-profit purposes if the source is acknowledged. We would appreciate a copy of the text in which the document is used or cited.
Water Justice and Democracy 3
Contents Introduction 4 A. Asiaâ€™s Water Service Delivery
B. Liberalisation in Services and Investment: Enter the EU and its TNCs
C. The Search for Alternatives
Recommendations 12 Annex 1. Tables 13 Annex 2. List of Public-Public Partnerships in Asia
4 Southern Alternatives to EU Trade Policy
Introduction Asia is home to immense natural and productive resources such as land, water, forests and a biodiverse environment. It is a region of tremendous wealth, modern cities, industrial capacity and growing urban centres, especially with China and India as rising economic powers. However, the region can be best described as a paradox: despite the abundance, Asia is known for its overwhelming large populations with deep pockets of poverty and inequalities within and between its rural and urban areas. Income inequalities are severe in sub-regions (Chavez, 2011). At the same time, it is a diverse and complex region, with wide disparities in history, culture, political economy, and current development. This diversity is also reflected in the region’s water resources: Asia is well endowed with water resources but monsoon cycles can induce large inter-seasonal variations in river flows and there are significant variations across the four sub-regions (Central, South, South-east and East). With more than 50% of the world’s population, the amount of water per capita, a standard indicator of water availability, also varies, with Central, East and South Asia typically recording levels lower than the global average. Southeast Asia, on the other hand, has more than twice the world average (World Resources Institute, 2005: 1). As of 2002, water poverty1 in the four subregions ranged from 55% to 62%, with a regional average of 58% (see Table 1 in Annex 1). Hydrological cycles aside, much of the debate about water in Asia today revolves around water treatment, distribution and sanitation, and who provides these services. The Millennium Development Goals (MDGs) provide Asian countries with a quantitative framework for dealing with the challenge of water service provision, with MDG 7, Target 102 calling on nations to halve the proportion of people without sustainable access to safe drinking water and improved sanitation by 2015. Although 10-14% of Asians still did not have access to safe supplies as of 2006, many parts of the region have reportedly met and surpassed their targets. In East Asia alone, over 400 million people were reported to have gained access to improved drinking water sources as of 2006, an increase in coverage by 20% over the 1990 figures (UN, 2008: 52).
Water poverty refers to the order-of-magnitude estimate based on a country’s position as determined by such indicators as resources, access, capacity, use and environment; as a composite measure, the Water Poverty Index (WPI) indicates the impact of water scarcity and water provision on human populations. 2 http://www.unmillenniumproject.org/goals/gti.htm
This paper provides an overview of water issues in Asia, especially in terms of access to water by poor families. It is divided into four sections. The following section of the paper offers a quick scan of the level of water service delivery and type of providers (private vs. public and community in Asia). The second part tackles the problem of liberalisation in services, in particular the role of the European Union and its transnational corporations, or ‘water barons’, as an obstacle to providing universal coverage and access to water for the poor and marginalised sectors of Asian society. The third section addresses the urgency of searching for and building alternatives. It provides examples from the region, especially Southeast and South Asia, with emphasis on the Philippines. The paper concludes with some notes on policy recommendations and advocacy for alternatives.
Water Justice and Democracy 5
A. Asia’s Water Service Delivery Aside from the MDGs, there are a number of regional initiatives to ensure water security in Asian countries. One is the Association of Southeast Asian Nations (ASEAN) Strategic Plan of Action on the Environment (1994-1998) which provides that member states respond to specific recommendations of the United Nations’ Agenda 21. Specifically, ASEAN member states are required that “adequate supplies of water of good quality are maintained for the entire population while preserving the hydrological, biological and chemical functions of ecosystems, adapting human activities within the capacity limits of nature and combating vectors of waterrelated diseases” (UN, 1992: s.18.2). The accord further recognised that “innovative technologies, including the improvement of indigenous technologies, are needed to fully utilise limited water resources and to safeguard those resources against pollution” (ibid.). Another initiative in South Asia is the adoption of the recommendations of the Human Development Report (2006), with emphasis on making water a human right, especially through “enabling legislation to ensure a secure, accessible, and affordable supply of water” (UNDP, 2008). At the heart of this is the necessity of mustering political and economic will to meet such goals.
Levels of water service delivery in Asia Although MDG 7, Target 10 calls for the reduction of the proportion of the population without sustainable access to safe water supply, the report Asia Water Watch 2015 (WHO, 2006) notes that safe water supply has been extremely difficult to assure. In view of this, the phrase “improved water supply”3 has been proposed as a substitute to be “the best measurable standard” to indicate that “water is more accessible, and some measures have been taken to protect the water sources from contamination” (WHO, 2006: 9). Based on this indicator, Asia Water Watch 2015 (WHO, 2006) reported that from 1990 to 2002, water supply coverage in the region improved from 82% to 84%, but the increase was not uniform. East and South Asia reported increases of 5 and 6 percentage points, respectively, but coverage declined in Southeast Asia mainly due to the deterioration of existing facilities and service delivery systems coupled with rapid population
3 According to the World Health Organisation and UNICEF’s Joint Monitoring Programme (JMP) (http://www.wssinfo.org), “access to an improved water source refers to the percentage of the population with reasonable access to an adequate amount of water from an improved source such as household connections, public standpipe, borehole, protected well or spring, and rainwater collection. Unimproved water resources include vendors, tanker trucks, and unprotected wells and springs. Reasonable access is defined as the availability of at least 20 liters a person a day from a source within one kilometre of the dwelling”.
growth (ibid.). Although an additional 100 million persons were provided with improved water supply between 1990 and 2002, such increase in coverage was less than the population growth of Southeast Asia during that period (see Table 2 in Annex 1). By 2006, Asia as a whole surpassed the 2015 MDG target for population with access to improved drinking water source (IDWS), 86% versus the actual 87%. This level of access reflected a tremendous improvement over that of 2004, during which Asia was reporting only 78% of its population with access to IDWS. The 2004 level was even a regression over the 1990 level of 80% access (see Table 3 in Annex 1).
Water service providers: public versus private The United Nations’ Agenda 21 recommends that states “support water-users groups to optimise local water resources management” (s.18.12), and develop and strengthen “cooperation at all levels…including the decentralisation of government services to local authorities, private enterprises and communities” (ibid.). With many states unable to provide centralised government services, these recommendations allowed communities and village-level associations, as well as local governments, to continue performing their role as water service providers to their respective constituencies, thereby increasing the variety of management models for water service delivery. In an effort to map the degree of public versus private sector service delivery in Asia, the authors conducted a survey of 646 listed water utilities, of which 171 (24%) provided information on the number of service connections and the number of people serviced. This is a large and broadly characteristic sample but it should be noted that it is not statistically representative due to data collection limitations, foremost of which was language. Those included in the list from Central and South Asia were large, centralised utilities. In Central Asia, an average water utility would have 103,000 service connections covering more than 1.2 million people. In South Asia, a utility would have an average of 320,000 service connections serving 3.7 million individuals. Those in East Asia have a little less than one million service connections serving an average of five million people. The water utilities in the list in Southeast Asia also covered smaller water districts in the Philippines. They have an average of 62,000 service connections providing water to 240,000 people (see Table 4 in Annex 1). Most of utilities listed are public in nature, either as state-sponsored agencies or as municipal corporations. Although the research found only several private water corporations in the Philippines (Manila Water Company,
6 Southern Alternatives to EU Trade Policy
Inc. (MWCI) and Maynilad Water Services, Inc. (MWSI), and in Indonesia (PT Pam Lyonnaise Jaya and PT Thames Pam Jaya), online information indicated that some private corporations worked for the development of sources of water supply, and for the acquisition of rights or entitlements to the water they were able to produce from their projects. Endowed with legal entitlements for the abstraction of water, these corporations then enter into bulk water supply arrangements with the publicsector or non-profit utilities.
B. Liberalisation in Services and Investment: Enter the EU and its TNCs Despite these leaps and bounds, Asia still has the highest number of people unserved by either water supply or sanitation, according to the United Nations Educational, Scientific and Cultural Organisation (UNESCO) (2003). About 715 million people in Asia have no access to safe drinking water, while 1.9 billion or close to 50% of its population has no access to sanitation. With water fast becoming a critical resource,4 the problem is largely one of ‘governance’, i.e. equitably sharing the world’s freshwater while ensuring the sustainability of natural ecosystems. This balance clearly has yet to be achieved in the region. The increasing scarcity of water has renewed debates on how to best manage this critical resource and effectively ensure “water-for-all”, including guaranteeing all life forms and ecosystems. This global water crisis, unfortunately, has become a staging point for international financial institutions such as the World Bank and Asian Development Bank, and neoliberal governments in the North and the global South to promote and push for privatisation and commoditisation of water as the “best model” that will solve the region’s water crisis. As Naqvi (undated: 7) points out; “according to World Bank philosophy, religious places, helpless poor, birds and animals—all are consumers”; therefore, allow the market as “the most efficient allocator of scarce resources” (ibid.) to be the arbiter of all values. Despite the general recognition that privatisation has failed to deliver on its promise of adequate and effective water services provision, according to McDonald and Ruiters (2012), “a ‘rethink’ of privatisation efforts and 4 There are a number of challenges and factors which hinder the achievement of water for all: population demands, pollution, overextraction, competing use of water for industry, agriculture, mining, tourism, etc., and climate change, among others. The global water crisis is multilayered, multi-level and faceted and comes in many shapes and forms. For more info, see http:// unesdoc.unesco.org/images/0012/001297/129726e. pdf#page=1
renewed explorations continue to seek solutions that provide stronger support to the private sector and/ or deepen the commercialisation of the public sector (i.e. running public services like a private business), especially by the World Bank”. This is not surprising since water is deemed as the “new oil” and therefore, investment in this ‘blue or liquid gold’ is a no-brainer. Water, for the privateers and global capital, is the “perfect commodity”: inflation proof, can be sold anytime, everyone needs it, and demand will continue to grow, especially with populous countries and emerging markets like China and India experiencing severe water crisis.
Enter the EU transnational water corporations About 5% of the world’s population gets their water and sanitation services from private companies. The presence of European transnational water corporations, also called water barons, is definitely felt in the Asian region. Suez, Veolia, Thames Water, SAUR, United Utilities, and Biwater/Cascal have/had various contracts5 in different countries in Southeast, East, and South Asia, either through build-operate-transfer schemes (BOT) or concession contracts and mostly through joint ventures with local private companies. Suez earned €13.89 billion from its water sales in 2010, 4% of which are from its operations in Asia. Suez supplies 91 million people with water and 61 million people for its wastewater treatment services. Veolia, on the other hand, has €13.44 billion for water sales in 2010. It has furthermore set aggressive targets in privatising water and outsourcing management of water and sanitation services including technology and construction of water facilities. According to Public Services International Research Unit’s report “Suez and Veolia continue to treat China as a special case where they wish to invest even in relatively risky projects” (Hall et al., 2004: 4). Thames Water, the largest UK water company, on the other hand, has left China. But the European multinationals still remain interested in investing in the Japanese and South Korean markets (ibid.). These European companies are involved mostly in urban water privatisation schemes, mainly in mega cities with high-income residents. The dominance of the French might have something to do with their solid and protected position in the French home market, where they control 85 percent of the private water markets (The International Consortium of Investigative Journalists, 2003). But the strength in their own turf has already been challenged. The remunicipalisation of Paris’ water services in January 5 Some of these contracts have been terminated and operations sold, e.g. Thames Water’s operations in Indonesia, Thailand and Australia.
Water Justice and Democracy 7
2010 made a significant break from the commercial dominance of the French multinationals in the water sector. By establishing the single public operator, Eau de Paris, the Paris mayoralty were able to restructure, institute important reforms and reclaim public interest. According to Anne Le Strat, the deputy mayor of Paris in charge of water, some initial advantages are already observed with the remunicipalisaton. One is the big profits, an estimated €35 million that the reform has produced and reinvested in water services; two the lowered cost of water per cubic meter (at €1 compared to the 260% increase with the private company); and finally new services are underway. The changing tides have also travelled to Asia (further discussed in the next section). In Indonesia, civil society, unions, and Jakarta’s citizens are calling for the termination of the city’s contract with Suez. Twelve years after the privatisation of water in Jakarta, Suez has failed to deliver its promise of adequate water supply through pipe connections in the city. The residents have resorted to overextraction of groundwater which created new environmental problems. A recent report of the Supreme Audit Board of Indonesia (BPK) concluded that the private contract is untransparent, unfair, and void. Jakarta is the last big city in the global South where Suez still has a concession contract. The termination of this contract, therefore, would have a big political impact not only in Jakarta but all over the world. Apart from this, numerous contracts between European multinationals and Asian governments have failed and eventually terminated. For example, Suez terminated its BOT water supply operations in Thu Duc, Vietnam in 2003 due to dispute over contract terms. United Utilities left Malaysia’s Indah Water when the company was nationalised in 1997. And in 2011, Thames and Veolia sold its BOT water supply to Xian municipality in China (Hall et al., 2004). Furthermore, in China, European water transnationals are losing popularity. This is partly due to the infusion of capital investment in China’s water supply infrastructure by its municipalities and the rise of domestic water giants, which are state-owned shareholding companies or former stateowned enterprises (SOE) (Globalisation Monitor, 2011). One notable example is the Beijing Capital Company Limited, a publicly listed SOE which has 27 water projects across China. It rose to number one position in 2009 (from third place in 2006) in the Top 10 Most Influential Water Companies survey of China Water Net, an authoritative information provider and serial events organiser in China’s water sector. Sino French Water, a joint venture between Suez and Hong Kong’s NWS Holdings Limited, and Veolia ranked fourth and fifth respectively. The other reason for European transnational’s loss of foothold in China is their high premium offered in acquired contracts which can translate to skyrocketing water rates. This raised concerns
over the transnationals’ possible monopoly and gambling with China’s water industry, which eventually led to the central and local government’s policy of no high premium acquisition by transnational corporations after 2008.
Closer ties, more market access While the tides of privatisation and European control in Asia’s water sector are changing, another mechanism for liberalisation of the sector is in the works. Regional and bilateral free trade and investment agreements are the latest tool for the liberalisation in services, which means more market access and corporate control through foreign direct investments. Currently, the European Commission, via the Lisbon Treaty, is designing and negotiating comprehensive investment protection and liberalisation measures with third countries (Olivet, 2010). In Southeast Asia, the EU-ASEAN Free Trade Agreement (FTA) is a comprehensive agreement between the European Union and the ten member country of the Association of Southeast Asian Nations that seeks to liberalise trade in goods, services, and investments (including portfolio investments). The FTA is a region-to-region negotiation that was launched in 2007 and expected to conclude in two to three years time. However, the slowness of the negotiation process prompted the EU to explore bilateral agreements and it recently inked the negotiation with Singapore. The FTA is controversial to say the least, ambitious and far-reaching in coverage. With the World Trade Organisation (WTO) multilateral talks in animated suspension, the EU seeks to obtain WTO plus commitments and negotiate better market access for its investors through non-discriminatory rules in the form of most favored nation (MFN) commitments. The EU claims, based on its commissioned study in 2006, that the FTA would have a “wide range of anticipated positive effects to both parties...boost growth in ASEAN and increase ASEAN’s presence in the EU and enhance inter-regional foreign direct investment flows in both directions” (cited in Minambres, 2009: 4). But the Global Analysis Report admitted that the liberalisation of services would benefit the EU more than its counterpart (ibid.). The ASEAN on the other hand has approached its regional integration vision through the pursuit of free trade agreements and investment treaties (Purugganan, 2011). Apart from the EU, ASEAN has embarked on negotiations with China, Japan, India, the US, New Zealand, Australia and South Korea. According to Jenina Joy Chavez, senior associate with Focus on the Global South and an expert on ASEAN, “as of November 2010, aside from the WTO, ASEAN Members are also involved in a total of 164 free trade agreements or economic partnership agreements, with more than half already in effect or under implementation”. Further, as
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of May 2010, ASEAN countries have inked a total of 352 bilateral investment agreements, with 26 of them between ASEAN countries themselves. According to Chavez, these agreements entail the “increasing blurring of boundaries between and among foreign and domestic corporations and the importance of international norms and instruments viz. national regulations”. Clearly, such a liberalised environment would not only facilitate the commercial presence of European investors and privatisation of essential services such as water but solidify their interests in Asian economies. It will further embolden corporate lobby groups such as AquaFed (International Federation of Private Water Operators), the “voice of the private industry vis-a-vis international organisations”6 to promote private sector participation in water and wastewater management in developing countries. Already, AquaFed is flexing its corporate muscle to influence the European Union’s decision making, an additional lobbying vehicle of the transnationals (Hall et al., 2009). A particularly controversial provision in the EU-ASEAN FTA is the investor-state dispute resolution, which provides the foreign investors the right to take a government to court - either in the World Bank’s International Centre for Settlement of Investment Dispute, international arbitration panel in Paris or the United Nation’s Commission on International Trade Law (UNCITRAL). From practice, this of course has cost governments monies and damages. Further, under the new EU investment regime, developing countries’ capacities and flexibility to maintain policy space and options that allow them to defend their people and public interest will be eroded. It is also questionable whether FTAs and investment agreements will boost growth in ASEAN. The region is characterised by asymmetries—Singapore has the highest per capita income of US$48,893 PPP, which is 31 times than that of Myanmar’s US$1,596 (Chavez, 2011). Without taking into consideration these wide disparities, a blanket agreement would exacerbate already existing inequalities.
C. The Search for Alternatives Public and community responses and alternatives to the commercialisation and privatisation of water abound, especially in the areas of access to control and sustainability of drinking water supply or water service provision in both rural and urban areas. These alternative models of water service provision are very wide ranging, as they depend on the condition and specificities of a particular area or country. There is no ‘one-size-fitsall’ alternative that has emerged. But common among them is responding to the need for people-centered, ecologically sustainable, and progressive public water management and on-the-ground solutions, particularly to the problem of water access and universal coverage, particularly for the poor and marginalised. There are several examples of these models. One is strong and efficient/effective public and community water delivery systems in the Philippines, Malaysia, Hong Kong, South Korea, Cambodia and Japan. Public utilities in Osaka, Japan, for example, have achieved universal coverage for its population, translating into delivery of high quality drinking water, very low leakage levels and good labour conditions for the unions (Tomoko, 2007; Hall et al. 2009). Another public utility, the Phnom Penh Water Supply Authority in Cambodia, undertook a massive rehabilitation of a decrepit water distribution system after the Khmer Rouge reign and embarked on strengthening management capacity to minimse unregistered or unmetered service connection in slum areas and among informal settlers. In India, the Self-Employed Women’s Association (SEWA), a trade union and community-based movement of poor and self-employed women workers in the State of Gujarat, was able to establish, and now continues to operate and maintain a system that provides safe potable water to its members, minimising time spent for collecting water, and giving the women more time for livelihood activities. SEWA provided the communities in Gujarat with safe potable water by digging water canals, laying down pipelines, and chlorinating the water supply. By undertaking chlorination, water quality improved tremendously in comparison to the water that used to be collected from the earthen reservoirs. They formed a village committee to address the acute water shortage and the absence of livelihood options. Members meet regularly to decide water management issues and supervise the work that has to be done. Through their direct management of the water system, SEWA not only ensured operational sustainability and improved availability of water, its distribution and allocation, but also set in place a mechanism for enhancing financial viability. Improvement in the quality
Water Justice and Democracy 9
of service, moreover, gave women in particular more time to devote to their means of livelihood.
strong positive tools for improving public water service delivery and instituting community empowerment.
The second is state-led democratisation experiments. In India where large parts of the population remain without access to water and sanitation, concrete and workable alternatives to privatisation exist. For example, in the state of Tamil Nadu, engineers of the Water and Drainage Board (TWAD) have undergone a democratisation experiment and change management process7. Under the initiative, water supply to 60 million people of Tamil Nadu and the delivery of irrigation water to the farms of more than one million families were undertaken in conjunction with the management of attitudinal change, shifts in perspective, and transformation of the institutional culture of water engineers using a process-oriented participatory training methodology based on the traditional practice of Koodam, a Tamil word for gathering and social space, and for consensus that implies harmony, diversity, equality and justice. The transformation of the institutional culture of water engineers, and the changes in perspectives and relations between local communities and the water utility facilitated the implementation of the joint management of water resources. As an official-to-official transfer of ideas and experiences, the change in perspective gained during the workshops helped transform the engineers into becoming ‘managers of the commons’.
Finally, there are public-public and public-community partnerships, or not-for-profit partnerships between public water operators, communities, trade unions and other social-economic groups. In Thailand, the competing demand for water by households, agriculture, tourism and industry led the different interest groups in the Ping River, one of the two main tributaries of the Chao Phraya River, to negotiate and balance such competing demands. Local NGOs, residents of communities located upstream and downstream of the river, Hang Dong farmers and Hmong Hill Tribe eventually came up with an acceptable system of water allocation. Public-public partnerships (PUPs) in particular aim “to link up public water operators on a non-profit basis to strengthen management and technical capacity. They offer an innovative and practical way of sharing the expertise of public water managers, between South-South or NorthSouth to spread good practice, disseminate good ideas, and drive up performance; in the process, providing the socio-political support needed for such forms of mutual cooperation” (Reclaiming Public Water Network, 2010). It is clearly an alternative to public-private partnerships (PPPs), that has the potential to create a multiplier effect, but is an idea whose time has come.
A partnership was also forged between local communities and the water utility for the joint management of water services based on equity, resource management, reduction of water consumption, improvement of reliability, and reduction in operating and maintenance costs. Detailed discussions on costs and tariffs enhanced the awareness of consumers regarding the need for water conservation and different rationales for setting water fees. Diligent maintenance of records on pumping hours, water supply hours, electricity meter readings, and linking these aspects to the water supply costs, served to spread awareness regarding water tariffs. Further, women in the communities and those marginalised took a pro-active role in taking care of their water sources, ensuring safe and quality drinking water for all members of the community. The communities instituted their own oversight and monitoring system to check the water quality of their water sources. These are 7 A controversy in the case is that the Tamil Nadu democratsation experiment was financed through a World Bank loan. However, through the strong leadership of Vibhu Nayyar, the chief implementer of the project, the conditionalities imposed by the World Bank were rejected. The case highlights the limits and constraints which serve as the starting point for the search for alternative sources of financing, or for the redesign of projects or project components to make them amenable to combinations of funding modalities.
In Asia, there are a number of PUPs - between Southern utilities within a country or between countries, and between Northern and Southern utilities, either in the form of solidarity partnerships, democratisation and labour management cooperation in water and sanitation (see Annex 2). Japan has a long history of solidarity partnerships, which were used extensively to develop its own sewerage systems in the 1960s (Hall et al. 2009: 5). Since the 1980s, Japan’s municipalities conducted training courses in sanitation for other Asian public utilities, financed mostly by its own aid agency, the Japan International Cooperation Agency (ibid.). Further, European public companies are engaged in a number of international partnerships with Asian public utilities. For example, Dutch public water operators have extensive partnerships in Indonesia. In a similar vein, the Finnish bilateral development agency, FINNIDA supported the Hai Phong Water Supply Company in Vietnam with a PUP, i.e. training on improving their performance from 1990 to 2004. This was followed by institutional and organisational restructuring and performance improvement. For a further example of alternatives please see Box 1 for a case study from the Philippines. Within this context, various alternatives have emerged. Using the political criteria of the Municipal Services Project, a global initiative that systematically explores alternatives to the privatisation and commercialisation
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BOX 1: Case study on the Philippines A deeper understanding of the elements and characteristics of the above alternatives can be exemplified through a case study. The Philippines makes an interesting case as it was an â€œearly structural adjustment experiment by the International Monetary Fund and World Bankâ€? (Chavez, 2011) and is one of the most aggressive liberaliser in Asia. But the prospective alternatives, in terms of operations, ranged in scope from village-level systems to those undertaken by a government-owned and controlled corporation and by a national-level association of water service providers (WSPs). The alternatives also had a variety of forms - from targeting service provision to the poor to providing service to all. Considering that many of the alternatives were micro in scope, obtaining the data involved a certain degree of familiarity with the cases, which provided the researchers a better contextualisation of the alternatives, but also limited the completeness by which the alternative could be discussed. Water service in the Philippines is being delivered by water districts (WDs), which are government-owned
of service provision in the health, water, sanitation and electricity sectors, alternatives can be grouped in the following: Innovative models: Some alternatives to the commercialisation of water were found to be new and/ or innovative models of water service delivery that were neither private nor old-style public. When mining companies applied to mine inside the Sibalom watershed located in Central Philippines, community-based water users, village and municipal governments, WSPs and NGOs banded together to oppose the approval of the applications. They also invited researchers to conduct studies to estimate the benefits of watershed protection as a means of opposing mining applications within the watershed area. In doing so, the major beneficiaries of the Sibalom watershed were able to gain deeper insights into the non-use and bequeath values of the ecosystem and effectively opposed the mining application. Defending the public sector against commercialisation: The public water sector union, Alliance of Government Workers in the Water Sector, a PSI-affiliate and the Philippine Association of Water Districts (PAWD) separately firmed up their positions opposing the official policy to privatise financially viable water districts
and controlled corporations, local governmentoperated waterworks, privately-owned, and userand/or community-managed water systems such as cooperatives, village-level water and sanitation associations (BWSAs) and rural water and sanitation associations (see Table 5 in Annex 1). Over the decades, the Philippine government has underinvested in water supply and distribution systems, thereby failing to fully provide safe, adequate and affordable potable water to its citizenry. In 1990, about 87% of the population had basic albeit unreliable access to safe potable water. Data from the Philippine Department of Interior and Local Government (DILG), on the other hand, indicated that, as of 2007, the various water supply providers in the Philippines were able to serve an estimated 9 million people (Interagency Steering Committee of the Philippine Water Supply Sector Roadmap Project, 2008). By 2008, level of access had further declined to 84% (National Statistical Coordination Board, 2010), threatening the achievement of commitments to the United Nations Millennium Development Goal (MDG) to attain 87% coverage by 2015.
(Chiong, 2007: 58). Both organisations believed that water districts, as public entities, were still the best option in the delivery of water services. Moreover, through a series of trainings to enhance the capabilities of labour and management, participating water districts started to evolve a set of performance benchmarks for their own use. The information derived from the initial benchmarking exercises provided both labour and management with insights into their respective financial and operational status, which further strengthened their resolve to retain water districts in the public domain. Reinvigorating public water services: When water utilities are not directly threatened by privatisation or commercialisation they normally are hard pressed to meet their performance targets and improve services or else they come under fire. Under such circumstances, some WSPs embarked on alternatives to reinvigorate service delivery of their public water systems. This was exemplified by the joint efforts of the village and municipal councils, NGOs and academic institutions of Salcedo, Eastern Samar in Central Philippines to delineate the boundary of their watersheds. Through their joint efforts, the village and municipal councils were able to pass appropriate legislation proclaiming the watershed as a protected area. The local legislation
Water Justice and Democracy 11
equipped the village and the municipal governments with the legal mandate to formulate and implement programmes to ensure sustainable water supply and defend their sources against resource degradation. Reclaiming public services: While there were no cases where water services that had been privatised were either renationalised or remunicipalised, as has been occurring in other parts of the world8 there was an opportunity to renationalise the Maynilad Water Services Inc. (MWSI) in the Philippines in 2006 when it declared bankruptcy, and its former owners, the Lopez family, signaled their intention to return the private concession back to the state. But despite this intent, and campaigns by civil society and public interest groups for renationalisation, the Philippine government maintained its position to have the utility operated by a private corporation. However, some communities, although not directly engaged in legally reclaiming public services, established mechanisms to ensure that water services remain in the public domain or under community control. Future alternatives: Some models are still being discussed for implementation. At the community level, the village government/councils of Patag and Gabas of Baybay, Leyte in Central Philippines initiated negotiations with the Baybay Water District to allow both communities to source water from a spring, to which the water district holds a water right. Moreover, the village councils requested to turn over the management of the reservoir, pipelines and other facilities within the village to them. In return, the village would undertake watershed conservation in the catchment that serves as a source of water supply, and protect the facilities installed by the water district for the production, treatment and distribution of water to the municipality of Baybay, Leyte. If implemented, such arrangements could address a major paradox – namely, that communities inside watersheds usually would not be served by the water utility. Moreover, the arrangement could strengthen partnerships between village governments and water utilities in the aspect of watershed management by host communities.
Navigating Critical Waters These alternatives are clearly charting new paths and options for Asia’s waterless population. These highlight the necessity and urgency of “a vote for public”. This means that while there is no perfect alternative, an enabling institutional and policy environment – at appropriate levels – are important for an alternative to develop and flourish. Secondly, articulating and building alternatives are collective processes, most successful when inclusive, gender-just, transparent and 8
participatory. As Vibhu Nayyar, founding mentor of the Center of Excellence for Change, puts it, “through a partnership between people who have suffered from lack of access to water and water agencies who believe in democratic functioning, can we ensure safe, equitable, and adequate water resources and ensuring sustainable water systems”. This was universal, regardless of the type of alternatives. Thirdly, what underpins these alternatives are principles of ‘good water governance’, which include: i. Water justice; ensuring that all communities have equal and equitable access to safe, affordable and sustainable water for drinking, fishing, recreational and cultural uses. At the heart of the issue is the concept of democracy and democratisation, of ensuring that everyone, especially the poor and marginalised, have a say on how they want their water governed. ii. Water is part of the commons and a human right: water is life, a gift of nature and its nurturance remains the responsibility of everyone for the survival of the planet in the present and for the future. This nurturance is rooted in the respect of all living cultures, values, and traditions that sustain the global water commons. iii. These rights can be allocated, framed, protected and realised in an equitable and sustainable way, as long as those who are historically marginalised and poor are part of the process. Finally, creative, appropriate, not-for-profit and mutually beneficial partnerships between Northern, in particular European public water operators, and Southern utilities are possible as exemplified by public-public partnerships. This would be a far more positive interaction than prying open Asian markets through the EU investment and free trade agreements.
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Recommendations The innovative provisioning of water and resource management need only be cultivated, especially amid a neoliberal environment of investment liberalisation and continued privatisation initiatives. An advocacy for alternatives is necessary. In particular, the following recommendations should be explored: Institutional and policy reforms—including legislative reform. With an enabling environment, alternatives to commercialisation of water resources and services can thrive. Policy and institutional reforms become even more relevant when combined with on-the-ground problem solving. As exemplified above, pushing for reforms include creating platforms, spaces, and processes where various stakeholders, including water activists and water justice movements, can come together to promote and advance alternatives.
Civil society organisations in donor countries, should enlighten their respective governments, including international aid agencies, of the impacts of funded projects on local communities and populations from the perspective of water consumers. This mechanism would provide excellent opportunities for local utilities and communities to show existing water resources and services management practices that conform to local conditions. A positive example is the EC’s funding for public-public partnerships in African, Caribbean, and Pacific countries- €40 million from the 2009-2013 EU-ACP Water Facility (EUWF), which is 20% of the total budget. This could mark the beginning of a shift in EU development policies for the water sector. This was the result of years of campaigning of European groups such as Transnational Institute, European Federation of Public Service Unions, World Development Movement, CEO and others against the EU’s use of aid money to promote water privatisation and demanded support for public-public partnerships (PUPs) instead.
Asian utilities and water sector advocates should encourage more study visits among and between water consumers, WSPs, NGO workers and members of academy to strengthen mechanisms for multi-faceted analyses of alternatives. The resulting discourses could serve as a counterbalance to the predominance of neoliberal frameworks without necessarily rejecting them in a knee-jerk fashion, and hopefully introducing alternative perspectives into the sector.
Putting on hold and rethinking existing EU bilateral and regional investment and free trade agreements that intend to pry open Asian markets, especially essential services such as water. Asian countries should be given the flexibility to choose options that are appropriate for their countries. The “Seattle to Brussels Network” in collaboration with campaigns in Asia such as the “EU-ASEAN FTA Campaign” network have developed comprehensive proposals on this critical issue.
On a final note, the alternatives to privatisation and commercialisation of water reflect the need and desire of water justice movements to recreate societies, to collectively come up with a new paradigm and ‘vision’ of how water should be valued and managed, and to fire up a politicised citizenry as well ordinary people to defend public interest through collective action. This new paradigm should reclaim, defend and re-establish water as commons, making this resource not only an issue of social justice but also of democratisation.
Water Justice and Democracy 13
Annex 1. Tables Table 1. Water Resources Profile of Asia Subregion
IRWR* as of 2005 (cu km)
ARWR** as of 2005 (cu km)
Water Resources Dependency Ratio*** as of 2005
Per Capita ARWR**** as of 2006 (cu m)
Water Poverty Index***** as of 2002
Source: World Resources Institute (WRI) in Dargantes et al. 2011
* IRWR refers to the average annual flow of rivers and recharge of groundwater or aquifers as generated by endogenous precipitation or internal rainfall. **ARWR refers to the amount of water that is actually available to a country as indicated by the amount of internal rainfall plus inflows from upstream areas. ***Water Resources Dependency Ratio refers to the ratio between the renewable water resources originating from outside of a country and the IRWR, with the amount of water allocated to countries in downstream areas being excluded in the computation.
****Per Capita ARWR refers to the theoretical maximum amount of water that is actually available per person using the 2006 population as basis for the computation. *****Water Poverty Index refers to the order-ofmagnitude estimate based on a country’s position as determined by such indicators as resources, access, capacity, use and environment; as a composite measure, the WPI indicates the impact of water scarcity and water provision on human populations.
Table 2. Profile of Population Served by Improved Water Supply Subregion
Total Population served as of 1990 (‘000)
% Coverage of Total Population as of 1990
Total Population served as of 2002 (‘000)
% Coverage of Total Population as of 2002
Projected Total Population Served by 2015 (‘000)
% Coverage of Projected Population by 2015
Source: WHO (2006) cited in Dargantes et al. 2011.
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Table 3. Profile of Access to Improved Drinking Water Source in Asia Subregion
% of 1990 Population with Access to IDWS
% of 2004 Population with Access to IDWS
% of 2006 Population with Access to IDWS
MDG Target 10 to be attained by 2015 (%)
Sources: WHO and Unicef, (2004: 24-31); UN (2008: 42) in Dargantes et al. (2011).
Table 4. Water Utilities in Asia Subregion
Number of Water Utilities Listed
Number of Utilities with Data
Average Number of Connections
Average Number of People Served
Source: Authorsâ€™ surveys in Dargantes et al. (2011)
Table 5: Philippine Water Utilities by Type of Management Model as of 2005 Type of Management Model
Water District (WDs)
Local Government-Operated Waterworks
Privately-Operated Water Service Providers
Water Systems Managed by Users and/or Communities
*Source: Southeast Asian Water Utilities Network and Asian Development Bank (2005) **Source: Inter-Agency Steering Committee (IASC) (2008) ***Data as of 2003-2004
Water Justice and Democracy 15
Annex 2. List of Public-Public Partnerships in Asia Home Country
Korea Water (Daejon)
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Phnom Penh Water Supply Authority
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Tokyo Metropolitan Sewerage Bureau
Osaka, Sapporo, East Hiroshima, Kitakyusyu
New Delhi Jal Board
Bogor region, Java
Deli Serdang, et.al. Banten, West Java
PDAM Pantianak Pekanbaru
Indah Water Konsortium
Eau de Paris
Siem Reap China
Int’l Nat’l Int’l
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Osaka, Sapporo, East Hiroshima, Kitakyusyu
Internal Sanitation PuPs
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Eau de Paris
Papua New Guinea
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Visayas State University, AGWWAS, PSIRUAsia
City West Water, Melbourne
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Ngee Ann Polytehcnic, PUBEU (Union)
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Jenine, Tulkeram, et.al.
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Osaka, Sapporo, East Hiroshima, Kitakyusyu
Osaka, Sapporo, East Hiroshima, Kitakyusyu
King County WTB
Osaka, Sapporo, East Hiroshima, Kitakyusyu
Haiphong Water Supply Company
Indah Water Konsortium
BIWASE Binh Duong Da Nang Ha Long Hai Phong Ho Chi Minh City Hue
Finland Bangkok MWA
Yokahama Waterworks Bureau
Hue, Ho Chi Minh City
Yokahama Waterworks Bureau
Source: Hall et al. 2009: pp14-17.
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References Chavez, J. (2011) (forthcoming) ‘Regional Overview: East, Southeast and South Asia’ in McDonald, D.A. and Ruiters, G. (eds) (2012) Alternatives to Privitisation: Public Options for Essential Services in the Global South, David A. McDonald and Greg Ruiters (eds.), Routledge: Routledge Studies in Development and Society series. Chiong, V.G. (2007) ‘Struggles for people-centered models: The case of AGWWAS and its role in the campaign against privatisation in Cebu’. In Manahan, M.A., Yamamoto, N and Hoederman, O. (Eds). Water Democracy: Reclaiming Public Water in Asia. Essay collection presented by the reclaiming public water network, pp. 58-59. Focus on the Global South and Transnational Institute. Available: http:// www.focusweb.org/sites/www.focusweb.org/files/ waterdemocracyasia.pdf [25 April 2012]. Dargantes, B.B. and Dargantes, M.A.L. (2007). ‘Philippine experiences in alternatives to privatisation of water services’. In Manahan, M.A., Yamamoto, N and Hoederman, O. (Eds). Water Democracy: Reclaiming Public Water in Asia, Essay Collection Presented By The Reclaiming Public Water Network. Focus on the Global South, Transnational Institute. Available: http://www.waterjustice.org/uploads/attachments/ waterdemocracyasia.pdf [25 April 2012]. Dargantes, B. B., Manahan, M, and Batistel, C. (2011). (forthcoming) ‘Springs of Hope: Alternatives to Commercialization of Water Resources and Services in Asia’, in McDonald, D.A. and Ruiters, G. (eds) (2012) Alternatives to Privitisation: Public Options for Essential Services in the Global South, Routledge: Routledge Studies in Development and Society series. Globalization Monitor (2011) China’s Water Crisis and the Privatisation of Urban Water in Kunming. Hong Kong: Globalization Monitor Limited. Hall, D., Lobina E., Corral V., Hoedeman O., Terhorst P., Pigeon M., and Kishimoto S., (2009) Public-public Partnerships (PUPs) in Water, Transnational Institute, Public Services International, and Public Services International Research Unit. Available: http://www.tni. org/sites/www.tni.org/files/download/pupinwater.pdf [25 April 2012]. Hall, D. Lobina E., Corral V, and de la Motte, R. (2004), Water privatisation and restructuring in Asia-Pacific. London: Public Services International Resource Unit.
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