THE BIG READ: Trade winds of change

25 March 2013 - 03:06 By Zwelinzima Vavi
Cosatu general secretary Zwelinzima Vavi. File photo.
Cosatu general secretary Zwelinzima Vavi. File photo.

Though Brics countries are at different levels of development and industrialisation, they have a shared interest in changing international trade relations, and challenging the traditional powers and their monopoly over global governance.

It is self-evident that countries - developing and developed - that have industrialised their economies have done so by protecting domestic industries against imports and by promoting exports.

But the critical problem now is that the World Trade Organisation agreements give little room for members to industrialise their economies using traditional instruments of protection such as quotas, tariffs and subsidies.

The WTO Safeguard Agreement prohibits members from using voluntary export restraint as a measure to protect domestic industries against imports. The Brics countries should advance the principle of mutually beneficial trade.

Differential and favourable treatment of less developed members, within the spirit of the 1979 decision on differential and more favourable treatment reciprocity, and fuller participation of developing countries, would enhance the struggle for fair trade and development.

The danger is that trade among Brics members might still be characterised by the colonial relations of extraction, use of cheap labour and exports, and the importing of manufactured products, which reproduce unequal development and disadvantage smaller economies.

Some critical considerations in the direction of consolidating just and fair trade relations between our countries could include the following key elements:

  • Brics, working with other developing countries of the global south, should call for an overhaul of the WTO trade agreements and the fundamental transformation of the whole world trade and economic system;
  • Brics should act as a unit, but not to the exclusion of other developing countries, whenever negotiating before WTO, or presenting common policy proposals or at least commonly enhanced positions;
  • Trade should be based on import substitution, environmental sustainability, beneficiation at source and an independent, developmental trade and industrial policy;
  • Trade policy should prioritise domestic industrialisation, not world economic welfare;
  • Developing countries should be allowed to deviate from WTO agreements if these limit their policy space, particularly if the challenges of transforming the organisation and changing its rules prove to be protracted;
  • Brics members and other developing countries should be allowed to enter into voluntary export restraint agreements to safeguard domestic industries against imports;
  • Members should desist from tariff-reducing trade agreements; and
  • International commodity arrangements should be implemented to ensure that poor countries benefit from their natural resources.

In the post-colonial period many countries, particularly in Africa, have experienced a shortfall in funding of government activities, including government budgets. Developed countries have used their financial power to recolonise developing countries through conditional aid and loans, as well as neo-liberal policy.

Linked to this is that developed countries have a disproportionate say and voting rights in the World Bank and the IMF, resulting in their dominance over the global financial and economic architecture.

Aid through loans from developed countries is usually based on conditions such as that the recipient country will adopt macroeconomic policies that support liberal economic policies, will import goods and services from the donor and will reduce government budget to be spent on workers and the poor. This perpetuates the underdevelopment of the recipient country.

The loans are given usually in exchange for payment in kind: for example raw materials, or land and other natural and strategic resources. This has resulted in poor countries giving more and getting less for their raw materials.

On the other hand, the IMF promotes export strategies to the detriment of development and the environment, resulting in the weakening of governments and trade unions, and of other progressive and community movements, which are critical to the building of an alternative power to capital.

Cosatu welcomes the idea of an alternative model of development financing, the context in which the mooted Brics Development Bank is being viewed.

This must be free from the stranglehold of a few powerful countries, within or outside Brics, and based on a fundamentally different model, which prioritises the developmental interests and needs of the poor majority.

No country must be forced to lower its standards - or the living and working standards of its people - to attract foreign investment.

We must fight for trade unions to participate fully in all multilateral processes and institutions and for the voice of workers to be hegemonic.

Brics has a duty to the peoples of the world to fight for their rights and freedom from imperialism and occupation.

  • This is an edited extract from Cosatu general secretary Vavi's speech at the Brics Trade Union Forum at the weekend