Confronting global trade as a root cause of the financial crisis!

23 June 2009
Article

Some Key Points for Member Groups of the Our World Is Not For Sale Network [OWINFS] at the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development, June 22-24, 2009.

Some Key Points for Member Groups of the Our World Is Not For Sale Network [OWINFS] at the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development, June 22-24, 2009.

Ever since the ‘Battle of Seattle’ almost ten years ago, the international network of civil society organizations and social movements known as Our World Is Not For Sale [OWINFS], has been vigorously engaged in the promotion of global trade justice through campaigns contesting the World Trade Organization [WTO] and bilateral free trade regimes. One of OWINFS major priorities has been to expose how the deregulation of financial services through the liberalization of trade worldwide has been a major cause of the current global financial crisis. From this perspective, we call on officials at the highest level of this United Nations Conference to take the following positions:

  • Affirm that the global financial and economic crisis is structural in nature and that the current free trade paradigm is a major part of the problem. For example, the liberalizing of financial service providers as well as trading in (risky) financial products, which was made possible under the General Agreement on Trade in Services [GATS] and the Financial Services Agreement of the WTO, allowed for securities and derivatives based on US sub-prime mortgages to be sold and bought worldwide, thereby precipitating the current crisis
  • Reject the position that concluding the Doha Round of global trade negotiations at the WTO is the solution to the crisis. On the contrary, continuing liberalization of the financial sector of national economies through the GATS of the WTO and the FTAs will only serve to worsen the crisis. Once financial services are liberalized, foreign banks typically refuse to provide credit or capital to small farmers and local industries while financing mega industrial and resource projects that do serious damage to the environment. Moreover, the banks are free to speculate in risky ventures while governments are forbidden to pass laws protecting consumers.
  • Ensure that all countries, especially developing nations, retain the policy space they need to regulate their financial sectors and manage their economies in order to achieve their development goals and priorities. In particular, financial services must be regulated and developing countries need to have the policy space required to ensure that banks and other financial institutions contribute to the development of equitable and sustainable societies [including action on overcoming poverty and climate change].
  • Remove from the WTO and all free trade agreements those mechanisms which compel countries, especially developing countries, to liberalize and deregulate their financial services and capital flows. In particular, developing countries must be permitted to roll back trade commitments they have made to liberalize financial services and products [e.g. under the GATS or the WTO Financial Services Agreement] or other sectors of their economies that may be harmful to their recovery.
  • Strengthen the role of the UN in overall global economic governance and crisis resolution. Unlike the G-8 or the G-20, the UN is the most representative institution of all nation states and governments in the world today. It is, therefore, imperative to strengthen the role and capacity of the UN to oversee and coordinate global economic institutions like the WTO, World Bank and the International Monetary Fund by supporting the creation of a Global Economic Council.

Finally, it is the duty and obligation of governments to ensure that their economies are developed in such a way as to serve the basic economic, social and environmental needs of their peoples. To do so, governments must regain control over their finances in the public interest. Instead of trade regimes designed to protect banks and corporations, we need trade rules that promote and protect the development equitable and sustainable societies.