12 Dec, 2005

Early Warning Against The Liberalisation ‘Tsunami’

Imtiaz Muqbil

When Executive Director of the Hong Kong Hotels Association James Lu spoke at the October 2005 summit of the Institute of Peace Through Tourism in Pattaya, he referred to the anti-globalisation protestors in Hong Kong this week as being “armed thugs.”

Had he been paying closer attention to their views – which lead to tragedies like the death of a South Korean rice farmer at the APEC talks in Busan, South Korea, last month – he may have been inclined to show them more respect.

In this dispatch:

1. EARLY WARNING AGAINST THE LIBERALISATION ‘TSUNAMI’

2. BACKGROUNDER — GENERAL AGREEMENT ON TRADE IN SERVICES

3. CORPORATE CEO’s vs CIVIL SOCIETY NGO’s

4. CHIRAC TAX: BITING THE HAND THAT FEEDS DEVELOPMENT

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1. EARLY WARNING AGAINST THE LIBERALISATION ‘TSUNAMI’

When Executive Director of the Hong Kong Hotels Association James Lu spoke at the October 2005 summit of the Institute of Peace Through Tourism in Pattaya, he referred to the anti-globalisation protestors in Hong Kong this week as being “armed thugs.” Had he been paying closer attention to their views – which lead to tragedies like the death of a South Korean rice farmer at the APEC talks in Busan, South Korea, last month – he may have been inclined to show them more respect.

At stake at the World Trade Organisation ministerial summit in Hong Kong this week is nothing short of the future of the travel & tourism industry. Awaiting signature is an agreement that includes the entire package of services like tourism, finance, telecommunications, insurance, health and education and infrastructure facilities like water and electricity. If approved in its current forum, the so-called Generalised Agreement on Trade in Services will pave the way for en masse privatisation, liberalisation and deregulation of all these vital ‘software’ public service utilities.

According to Focus on the Global South, a non-governmental organisation based at Chulalongkorn University in Bangkok, “For the developing world, the draft Ministerial text for Hong Kong is a recipe for creating industrial graveyards, destroying small farmers’ livelihoods and their production capacity, and decimating local services suppliers. It forces open the agricultural, industrial and services markets of the global south, way before these producers and suppliers are able to withstand the rigorous competition from the giant multinationals of the US, EU and others. Indeed, it is a step by step guide to widespread unemployment and eventually, political instability and conflict in the South.”

This early-warning is not very well known in travel & tourism industry. The very substantial issues at the WTO ministerial summit have not figured in any of the international travel industry conferences over the last year. The feeling is that “liberalisation, privatisation and deregulation” is the best way forward and that multinational companies and governments can be trusted to act in the best interests of the industry. But because it has made little attempt to better understand the issues and influence the outcome, the industry is going to be influenced by it, perhaps in ways that it may regret.

One of the clearest examples of how these issues are becoming increasingly inter-twined is in the area of aviation. For years, it has been widely advocated that liberalising the aviation industry is a major component of promoting travel & tourism growth. Organisations like the World Travel & Tourism Council and International Air Transport Association argued vigorously that removing restrictions on aviation flows and dismantling the traffic rights regimes was the best way forward.

While that may have proved true in the short-term, industry consultants are warning that the downsides are only emerging, with the best example being provided by the liberalised and deregulated U.S. aviation industry itself. At a conference in Kuala Lumpur, Peter Harbison, Managing Director of the Centre for Asia Pacific Aviation described the present-day aviation scenario in North America as being “ugly.” In a three-point summary, he said: Half the (U.S. airline) industry is bankrupt; Most fleets are elderly and (future) investment is uncertain.” Furthermore, he asked, “Is the U.S. about to export the problems?”

Echoing the concerns was Andrew Herdman, Director General, Association of Asia Pacific Airlines, who noted that U.S. aviation policy is mainly driven by its domestic political concerns with little sensitivity to the extra-territorial impacts of its unilateral actions. Safety issues are led by the Federal Aviation Administration. Security issues are led by the Department of Homeland Security and Transportation Security Administration. At the same time, the U.S. Department of Transport is constantly demanding open skies from other countries, while continuing to maintain restrictions on access to U.S. points and investments in U.S. airlines.

“Where international issues are taken into account, the focus tends to be on the U.S. and European aviation scenario,” Mr Herdman said. “There is insufficient recognition of Asia-Pacific role and views.”

That’s not all. Hasty and imbalanced aviation liberalisation and privatisation has created a major conflict between airlines and airports. National carriers, under pressure to privatise, are getting increasingly caught in the pincer of competition from low-cost airlines on one hand and high-cost oil prices on the other. Privatised airports are hitting up the airlines because institutional investors and shareholders no longer wish to subsidise the operations.

In short, the aviation industry is in chaos. The International Air Transport Association has also awoken to the linkages with other sectors of the global economy, but only when it found itself having to pay for poverty alleviation programmes. In a statement last month, IATA said it opposed French President Jacques Chirac’s proposal to make air passengers pay a tax to fund poverty alleviation programmes.

“If France is truly interested in solving the problems of developing nations, it should start by eliminating the problems that it creates,” said Giovanni Bisignani, IATA’s Director General and CEO. “The tax is political posturing to divert attention from France’s failure to take down trade barriers that limit access to its markets,” Instead, he suggested that Europe stop the agricultural subsidies to its farmers and give the farmers of the “developing world a better chance to compete fairly in global markets.” (see full text of the IATA statement below.)

Certainly, the chaos in the aviation industry is an indication of what could happen in other service sectors, too – the short-term gain of lower fares and more competition could well be overtaken by long-term pain of higher fares, monopolies and less competition. The people who are keeping a watch on this and provide a tsunami-style early warning are the people that Mr Lu referred to as “armed thugs.” They are anything but. A list of 142 civil society movements which are providing a very useful check and balance mechanism against the future downsides of liberalisation can be seen below.

Their positions can be summarised thus:

<> A critical component of the new emerging global world order that the developed countries want to dominate, along with their companies, all the various components of the global trading system, including agricultural products, non-agricultural products and services (such as health, education, finance, telecommunications, transport, travel and tourism, etc).

<> The complex internal WTO procedures and mechanisms are cleverly used to serve the interests of the transnational corporations (TNCs) that dominate the global economy and are constantly seeking to open up markets.

<> The push to include services within the GATS framework is the result of pressure and lobbying efforts by the US financial services sector. Its aim is to promote unrestricted trade in all types of services and to remove all forms of governmental intervention that may be viewed as “trade restrictive.”

<> The primary interest of the TNCs and the developed countries is to secure access to the cheapest possible products and processes from the developing countries, and facilitate the transfer of its own technologies and standards, thus making the developing countries more dependent upon them.

<> As the developing countries are largely disunited and in disarray, there are ways of playing them off against each other. The classic divide-and-rule strategy that worked very well in the days of old-fashioned colonialism and works equally well in the neo-colonialism of today.

<> The developed countries are in a hurry. They want to speed up negotiations and ‘conclude the talks’. Various ‘incentives’ are being used to achieve this, such as Japan’s latest offer to donate $10bn over three years to help promote developing countries’ exports. Japan says it will provide duty-free and quota-free market access for essentially all products originating from the world’s least-developed countries, along with $10bn in aid. But it has not said what it wants in return, and there’s the catch.

There is no denying that liberalisation and deregulation produces short-term gain. It is the long-term pain that the civil society movements are warning about. Their position: No deal in Hong Kong is better than a bad deal. Once signed, there will be no return.

The travel & tourism industry is seen as a bit player in the wider scope of things and has not been involved in the many consultative processes. However, it must not lose sight of the fact that a Korean farmer committed suicide last month against the opening of the Korean rice market to foreign competition, mainly from U.S. rice exports. These people are not throwing away their lives for nothing. If that is how strongly people feel about what’s going on, the travel & tourism needs to wake up and pay attention.

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2. BACKGROUNDER — GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)

The following backgrounder offering an alternative view on the General Agreement on Trade in Services (GATS) has been extracted from a presentation by Focus on the Global South.

Q. What is the GATS?

A. The World Trade Organisation (WTO) describes the General Agreement on Trade in Services (GATS) as ‘perhaps the most important single development in the multilateral trading system since the GATT1 itself came into effect in 1948’. The GATS is one of 18 agreements that fall within its ambit.

The focus of the GATS is on the liberalisation and deregulation of the services sector. The scope of what is defined as services is deep; over 160 services sectors fall under its jurisdiction.

Almost no service sector is excluded. It includes basic services such as water, education and health. It also covers infrastructure services such as energy, transport and telecommunications. Critical sectors such as finance fall within its ambit. The world’s largest industry – travel and tourism – is also included under GATS. These sectors represent the era of deep liberalisation and the next frontier for corporate-led globalisation. The subject matter of GATS is incredibly broad as there is yet no consensus on its coverage.

According to David Hartridge, former Director of Services Division of the WTO, ‘the push to include services within its framework is the result of pressure and lobbying efforts by the US financial services sector’.

The aim of the GATS is to promote unrestricted trade in all types of services and to remove all forms of governmental intervention that may be viewed as “trade restrictive.” The GATS identifies four modes (or types) of supply of a service:

Mode 1: Cross Border Supply (where the service is supplied remotely from one country to another). Example: Citibank customers in the US get service help from a call center based in the Philippines.

Mode 2: Consumption Abroad (movement of individuals to a country to consume a service). Example: Tourists travelling overseas or patients taking advantage of cheap health-care abroad.

Mode 3: Commercial Presence (where a foreign company sets up a subsidiary or branch within another country in order to deliver the service locally). Example: Foreign Direct Investment in banks, hospitals and power plants.

Mode 4: Presence of Natural Persons (where individuals travel to another country to supply a service there on a temporary basis). Example: Software programmers, nurses or doctors working in another country. This is different from immigration because GATS explicitly deals only with temporary movement.

GATS has been promoted as a “bottom-up” treaty rather than a “top-down” treaty since in theory it allows governments to select which sectors they will open up and when. This is called the request-offer model, whereby WTO Member governments can submit requests on which service sectors they want another country to open up and in the offers, a government can list which service sectors they choose to liberalise. This model of negotiations is currently under threat, with proposals from developed countries requiring all countries, including developing countries, to open a minimum number of services sectors and to a minimum extent (see below for further details).

Q. What does GATS mean for developing countries?

A. Once a country agrees to liberalise a service sector under the GATS, it has certain obligations from which they cannot deviate:

1) National treatment. Once a country has fully committed a sector to liberalisation under the GATS, it is prohibited from discriminating against foreign companies and corporations that provide services in that sector, even if such services are currently provided domestically by public or private means.

National treatment is an extremely important commitment in the GATS and addresses qualitative restrictions that a government may place on service provision in a committed sector. Concretely, this means that governments cannot set performance requirements specifically for foreign companies. This includes, for example, domestic environmental or labour laws, quality standards, obligations to hire and train local staff, or requirements to build local/domestic capacity in their particular areas of operation. Nor are they required to source raw materials, goods or support services domestically.

2) Market Access. Market access rules cover all quantitative limits on services, whether they apply to foreign or domestic firms. They also provide opportunities for foreign firms to challenge domestic regulation if these regulations are perceived as restricting the entry of firms into domestic markets. Once a government has committed a sector to full liberalisation, it must provide foreign corporations access to domestic markets through “least trade restrictive” business and investment policies.

3) Most Favoured Nation (MFN) Status. Host governments must provide equal market access to all trading partners in a service sector that has been opened up — i.e., they must provide Most Favoured Nation (MFN) status to all WTO members. This means that the national treatment must be applied “horizontally,” or across the board to service providers of all WTO member countries. Host governments cannot choose which foreign entities get national treatment and which do not. Governments then, lose their rights to develop preferential trading arrangements for social or political reasons, or to enter into special service agreements with regional partners.

Q. What’s wrong with the GATS?

A. The GATS has proven to be one of the most controversial of the WTO agreements and going through it shows the many dangers that it poses to people of both the developing and developed world if fully implemented.

1.) What was once public becomes private: The GATS threatens public services including health, social welfare, energy, education and water. The agreement opens up these sectors to transnational corporations and accelerates the process of privatising essential public services. This is done under the guise of promoting ‘efficiency’ and ‘conservation.’ For example in Cochabamba, Bolivia, the World Bank encouraged privatisation of water which resulted in water prices reaching $20 per month, compared to the minimum average wage of $100 per month.

2.) Loss of national control: Because of the national treatment clause, governments are prevented from exercising national regulation especially on foreign direct investment. In some cases, governments would have to rewrite their constitutions in order to adhere to this. For example, the Philippines has a 60-40 regulation, which requires at least 60 percent of a foreign company to be owned by a Filipino and a maximum of 40 percent to be owned by a foreigner. This will no longer be allowed under the national treatment clause of the GATS.

3.) Investment Rules: The WTO calls the GATS the world’s first multilateral agreement on investment, since it includes the right to set up Commercial Presence (Mode 3 in GATS language) in another country. The National Treatment clause prohibits WTO members from treating foreign investors less favourably than domestic service suppliers. The clause on market access ensures effective market entry provisions. Once countries make binding commitments under these two clauses, GATS rules can reduce the ability of countries to use policies that ensure equity ceilings, obligations on technology transfer, universal services provision (legislation that obliges private providers in basic services such as health, education, water to supply services to marginalised sections of the community) and employment of local labour. The GATS framework maximises investor rights at the cost of development.

4) Locking bad policies into place: A government cannot reverse a commitment made under the GATS even if it proves detrimental to its national economy. Developing countries are already grappling with the adverse impacts of privatisation.

Take the example of telecommunications in India. India reoriented its Telecom policy in 1994 and argued that liberalisation and private participation would provide the additional resources for connecting all its villages by 1997. More than 10 years after this there are nearly 70,000 villages without telephones. The rural – urban divide is growing with a dismal teledensity of less than 2 phones per 100 in rural areas.

The private players have provided only about 14,000 Village Public Telephones and met only about 10 per cent of their license commitments. The benefits of liberalisation have been concentrated in big cities and larger towns – which is only 20 percent of the country. Binding commitments under national treatment and market access will not allow the Indian government to use such policy mechanisms.

>From Doha To Now

The Doha Ministerial was responsible for fast-tracking the GATS negotiations. The Doha Declaration set dates for when the request phase of negotiations would commence and when the offers phase would start. To date, 92 of 148 member countries have already submitted offers in the GATS, while all developed countries have made offers.

Developed countries are fast overhauling this request-offer framework, which offers some degree of flexibility to developing countries. Developed countries, led by the European Union (EU), are now proposing a “benchmark” approach to speed up the negotiations.

This new approach aims to identify 10 key sectors in the GATS, from which developing countries will be asked to choose 6-7 sectors in which they must make minimum commitments on. The EU is also demanding that countries bind sectors already liberalised through autonomous national policy or under structural adjustment policies of the International Monetary Fund (IMF). This means that these levels of liberalisation outside of the GATS will automatically come under GATS rules in the future.

These new proposals, also called “complementary approaches,” have been met with tremendous opposition from developing countries because they:

<> Remove the flexibilities originally available under the request-offer framework;

<> Require all developing countries, including Least Developed Countries (LDCs), even if their economies are not ready, to commit a significant number of commercially-important sectors to liberalisation and to deepen these commitments by removing restrictions on market access and national treatment; and,

<> Are one-sided as they largely focus on Mode 3 (commercial presence) where corporations have an interest, asking for a minimum of 51% foreign ownership.

The new proposals sideline developing countries’ demands on operationalising the mandated assessment of the GATS before they are asked to further open up.

Like all WTO agreements, GATS is being negotiated with little public oversight. The conclusion of these negotiations in favour of multinational corporate interests will mean the death knell for public services. The entire GATS package is serious setback to public participation and democratic oversight in the formulation of national policies, laws and regulations.

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3. CORPORATE CEO’s vs CIVIL SOCIETY NGO’s

The following two viewpoints were published in the Financial Times Letters, 8 November and 15 November 2005. The underscore the hugely controversial differences in perspectives.

THE CORPORATE CEO’s VIEW

‘Last and best chance to move Doha round to a successful conclusion’

Financial Times, November 8, 2006

We the undersigned are chief executive officers/chairmen of some of the world’s leading corporations. We have supported the Doha round of trade negotiations since its inception and many of us have given advice on its substance to our governments. At the initiative of the International Chamber of Commerce (ICC), we are writing to member governments of the World Trade Organisation (WTO) to convey our mounting concern that these crucial negotiations are in serious trouble. The original date agreed at Doha for completion of the negotiations has been missed; and the continuing snail’s pace of progress is jeopardising the prospect of meeting the revised deadline of end-2006.

We strongly believe that the WTO-based multilateral trading system is one of the central pillars of international cooperation. Multilateral initiatives to liberalise world trade and improve market access for goods and services are a major driving force for global economic growth, job creation, and wider consumer choice – as well as keeping in check the ever-present threat of protectionism. We underline our conviction that a successful Doha Round is vital to enable business to continue to play a leading role in the eradication of poverty and the raising of global living standards.

A major milestone is looming which may very well be decisive in determining the ultimate fate of the Doha Round. In the middle of next month, WTO member governments will be meeting in Hong Kong for their Ministerial Conference – the WTO’s supreme decision-making body. WTO Director-General Pascal Lamy has emphasised that Hong Kong will not be just another checkpoint in the negotiations; “it is our last and best chance to move this Round to a successful conclusion by the end of 2006”.

We agree with Mr. Lamy that much will be at stake in Hong Kong. Up to now, however, we do not see that urgency reflected in a firm determination by governments to make the solid, substantive progress before Hong Kong that will be essential to enable the Ministerial Conference to propel the negotiations to a successful outcome a year later. And we know from experience that ministerial meetings left with too many decisions to take at the last moment usually break up in disappointment or failure.

We therefore call upon WTO governments to redouble their efforts to break out of the current impasse in the Doha negotiations and accomplish the various breakthroughs still required to make Hong Kong a defining moment in a positive sense.

We believe that the challenge is political more than technical, and requires the commitment of governments from the highest levels to break the logjams. It particularly requires the personal attention of the leaders of the WTO governments represented at the G8 Gleneagles Summit last July who pledged themselves to work for the success of the Round. The need is for strong political leadership. And the time for it is now!

Given the slow progress to date, it will be an uphill task to conclude the Doha Round on time. But it is by no means mission impossible. Success will be within reach if the political will is found to make the compromises in the few months ahead that recognise the common interest in success and the collective price of failure. Business across the world urges WTO member governments to face up to their responsibilities and re-instil confidence among producers, consumers and investors that the multilateral trading system – which has done so much to raise global living standards over the past half-century – is still safe in their hands.

Jean-Rene Fourtou, Chairman of the Supervisory Board, Vivendi Universal, France; and Honorary Chairman, ICC

Marcus Wallenberg, Chairman, Skandinaviska Enskilda Banken, Sweden; and Vice Chairman, ICC

Josef Ackermann, Chairman of the Group Executive Committee, Deutsche Bank, Germany

Michael Frenzel, Chief Executive Officer, TUI, Germany

Peter Brabeck-Letmathe, Chairman and Chief Executive Officer, Nestle, Switzerland

Victor Chu, Chairman and Chief Executive Officer, First Eastern Investment Group, Hong Kong, China

Michael L. Eskew, Chairman and Chief Executive Officer, United Parcel Service, United States

Jurgen Hambrecht, Chief Executive Officer, BASF, Germany

Charles O. (Chad) Holliday, Chairman and Chief Executive Officer, Dupont, United States

Franz B. Humer, Chairman and Chief Executive Officer, Hoffmann-La Roche, Switzerland

Leif Johansson, President and Chief Executive Officer, Volvo Group, Sweden

Walter B. Kielholz, Chairman of the Board of Directors, Credit Suisse Group, Switzerland

Klaus Kleinfeld, Chief Executive Officer, Siemens, Germany

Gerard Kleisterlee, Chief Executive Officer, Royal Philips Electronics, Netherlands

Alan G. Lafley, Chairman, President and Chief Executive Officer, The Procter & Gamble Company, United States

Ulrich Lehner, Chief Executive Officer, Henkel, Germany

Andrew N. Liveris, Chief Executive Officer, The Dow Chemical Company, United States

The full list of the 62 global CEO’s who signed this letter is available at:

http://www.iccwbo.org/uploadedFiles/ICC/ICC_Home_Page/ICC_letter_to_the_editor_of_the_FT_08-11-05.pdf

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THE CIVIL SOCIETY NGOS’ VIEW

‘Global Trade: Look At The Facts Rather Than Heed Corporate Lobbying’

Financial Times, Tuesday 15 November 2005

http://news.ft.com/cms/s/fb197350-5582-11da-96fc-00000e25118c.html

-From 142 civil society organisations

We, the undersigned organisations and individuals, represent tens of millions of workers and farmers, landless and unemployed, human rights , development and environmental campaigners, women, students, academics and citizens from all corners of the earth.

We are writing in response to the letter signed by the CEOs and chairmen of the world’s “leading corporations” in which they urge WTO member governments to conclude the Doha round of negotiations “on time.” (“Last and best chance to move Doha to a successful conclusion”, November 8)

Although we have no illusions about why the corporations are so eager to see the round concluded, their argument that trade liberalisation is a “strong driving force for global economic growth, job creation and wider consumer choice” is utterly misleading.

Their first claim about growth is questionable. A recent report from the Center for Economic Policy Research (CEPR) compares average growth rates in 175 countries between 1960-1979 and 1980-2000, divided into five groups according to their per capita income at the start of each period. In the top four groups, average growth rates fell by more than half, from averages of 2.4 to 3.1% in 1960-1979 to averages of .7 to 1.3% in 1980-2000. Only the group with the lowest per capita GDP showed a tiny increase, from 1.7 to 1.8%, even though it includes fast growing China and India. (“The Scorecard on Development: 26 years of Diminished Progress”, CEPR, September 2005, www.cepr.net, p.7)

Figures from the ILO tell the same story: the mean world GDP per capita growth fell from 3.6% in 1961 to just 1% in 2003. (“A fair globalisation”, World Commission on the Social Dimensions of Globalisation, ILO, 2004 , p. 36)

Latin America shows the most dramatic reversal of fortunes: between 1960 and 1979 the region grew by more than 80%, however this has dwindled to just 11% by 1980-2000 and 3% for 2000-2005 . This is the worst economic performance in modern Latin American history, even including the Great Depression. Although the world’s “leading corporations” argue that further trade liberalisation would reverse this trend, the reality is that during the past 25 years Latin America has already undertaken across-the-board and unilateral liberalisation of goods and services, in addition to wholesale privatisation, under the guidance of more than 80 International Monetary Fund programmes. (CEPR, p. 8)

In contrast, 1980-2000 was a period of accelerated trade liberalisation: the average contribution of trade to GDP went from 40% to almost 60% (ILO, 2004, p. 25). There does not appear to be a strong correlation between growth and increased trade flows.

Second, they claim that trade liberalisation will lead to job creation. Again, if we look at the research, between 1990 and 2002 unemployment increased in 7 out of 9 regions. In Southeast Asia unemployment almost doubled from 3.6% in 1990 to 6.5% in 2002. Similarly, in that period unemployment grew by almost 50% in Latin America and even in East Asia, which includes China, unemployment almost doubled from 3.6% in 1990 to 6.5% in 2002. These regions are all experiencing high population growth, so the absolute number of unemployed is growing at an even faster rate. And although the world’s top 200 companies account for one quarter of world economic activity, they employ less than 1% of the global workforce. (Institute of Policy Studies, December 2000)

We realise that the WTO and trade liberalisation has been good for the corporate bottom-line. In fact, 49 of the 63 companies signing the letter are in “Forbes 2000” (2004) which lists their combined profits as $109.29 billion and their total market value as $2,180.5 billion. But, before asserting extravagant claims for the benefits of trade liberalisation, the CEOs of the world’s leading corporations should look at the figures. Otherwise, they risk being charged with distorting the facts in pursuit of their own interests.

In the pressured days before Hong Kong, trade negotiators in Geneva would be well-advised to look at the facts rather than listen to corporate lobbying.

Signed:

ATM Zaffullah Chowdury (Dr), Project Coordinator, Gonoshasthaya Kendra, Bangladesh

Alison Healey, Coordinator, Justice in Trade Agreement Network of The International Grail, Australia

Alessandro Pelizzari, Board Member, ATTAC Switzerland, Switzerland

Ana Maria Nemenzo, President, Freedom from Debt Coalition, Philippines

Andrew de Sousa, National Organiser, Network in Solidarity with the People of Guatemala (NISGUA), USA

Anil Naidoo, Director, Blue Planet Project, Canada

Annelies Allain, Coordinator, International Code Documentation Centre-IBFAN, Malaysia

Anita Normark, General Secretary, International Federation of Building and Wood Workers (IFBWW), Switzerland

Anuradha Mittal, Executive Director, The Oakland Institute, USA

Arsenio Tanchuling, Executive Director, Tambuyog Development Center, and Convenor of Alyansa Agrikultura, Philippines

Azubike Nwokoye, West African Regional Focal Point, Global Youth Coalition on HIV/AIDS, Nigeria.

Benjamin Castello, Chairperson, Coalition Jubilee 2000, Angola

Beth Burrows, President/Director, Edmonds Institute, USA

Bonnie Setiawan, Executive Director, Institute for Global Justice, Indonesia

The letter above and the full list of 142 signatories can be found at: http://www.focusweb.org/mambo-test/index.php?option=com_content&task=view&id=683&Itemid=36

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4. CHIRAC TAX: BITING THE HAND THAT FEEDS DEVELOPMENT

GENEVA (24 November, 2005) — The International Air Transport Association (IATA) continues to oppose French President Jacques Chirac’s tax on aviation for development.

“If France is truly interested in solving the problems of developing nations, it should start by eliminating the problems that it creates. The tax is political posturing to divert attention from France’s failure to take down trade barriers that limit access to its markets,” said Giovanni Bisignani, IATA’s Director General and CEO.

Bisignani suggested that Europe’s Common Agricultural Policy (CAP) offers an alternative. France receives EUR 11 billion of the EUR 50 billion CAP budget. A quarter of this—EUR 3.3 billion—is consumed by 5% of France’s farmers who are the largest and richest.

“CAP does nothing more than subsidise the European farm sector at the expense of developing nations. Diverting even a fraction of France’s CAP budget to development assistance would generate much more than the proposed tax. And it would give the developing world a better chance to compete fairly in global markets,” said Bisignani.

“Not only is the French Government misguided in understanding the needs of the developing world, it does not even have a grip on what is going on in its own backyard. Airlines and their passengers already make a net contribution of EUR 726 million to France through already excessive aviation taxes and charges,” said Bisignani.

“Airlines support the fundamentals of development by bringing tourists to destinations and transporting goods to markets. Making air travel more expensive is akin to biting the very hand that feeds development,” said Bisignani.