[stop-imf] IMF, WB Join Forces with WTO

[Robert Weissman]

To see the statement underlying this article, go to:

http://www.coc.org/resources/articles/display.html?ID=484



Published on Tuesday, May 13, 2003 by the Inter Press Service
IMF, World Bank Join Forces with WTO
by Emad Mekay
http://www.commondreams.org/headlines03/0513-04.htm

WASHINGTON - Attempts by global financial institutions to synchronize
their policies on developing nations threaten to further entrench a
one-sided approach to development, fuel instability and widen the gap
between the world's rich and poor, watchdog organizations warned Monday.


The alarm comes only a day before two of the world's major wardens of
the global economy, the Washington-based World Bank and International
Monetary Fund (IMF) were to meet in Switzerland with the Geneva-based
World Trade Organization (WTO) to develop a common approach to world
economic policies called the ''coherence agenda''.

The meetings will be attended by senior officials of the increasingly
controversial bodies, including IMF Managing Director Horst Koehler, WTO
Director General Supachai Panitchpakdi and World Bank President James
Wolfensohn.

Prospects of the meeting, under the umbrella of the WTO General Council
- the organization's highest level decision-making body in Geneva -
sends shivers down the spine of critics of the international financial
institutions (IFIs), who see their policies as counter productive and in
the service of a few rich nations and their sprawling corporations.

''This will limit the room of choices and policy space,'' said Aldo
Caliari from the Washington-based Center of Concern, one of 40 groups
that signed a petition opposing the meetings and warning of the possible
consequences.

''It's like being forced to shop from one shop - same policies and same
goods.''

The IFIs say their meeting will help strengthen the global multilateral
trading system, which they consider an anchor of strength and stability
in the world economy.

Developing nations will benefit by getting increased market access for
their products in rich developed countries, they add.

But analysts here say the record and the structure of the
organizations, especially the two Bretton Woods Institutions, the IMF
and the World Bank (named for the place in the U.S. state of New
Hampshire where they were launched in 1944) bode ill for developing
nations.

"When you understand how much power the industrial countries hold in
the governance of the Bretton Woods institutions, you realize why the
trade agenda supported by these institutions tends to be aligned with
the negotiating interests of those same countries within the WTO," said
Caliari.

The voting structures of the IMF and World Bank are heavily biased
towards rich countries. Their leaders, for instance, are chosen through
processes open only to U.S. and European citizens.

The IMF and the Bank have for years been peddling trade liberalization,
deregulation, privatization and budget austerity to developing
countries, and the results, critics say, are disappointing.

Feverish privatization urged by the Bank and the Fund, especially of
public services like water and utilities, has smoothed the way for
foreign corporations to supply these services and introduce commercial
pricing systems, which have often led to higher rates for poor citizens,
jeopardizing their access and pushing them further into poverty.

''Economies of developing countries have been characterized by slow and
erratic growth, increased instability and rising income gaps,'' said the
groups in their Monday statement.

''With the WTO, such misguided and failed policy reforms are being
progressively locked-in through trade law backed by the threat of
economic sanctions through its dispute settlement mechanism.''

Under the new distributions of roles to be discussed Tuesday, the IMF
and the Bank would help ease the way for full liberalization of trade by
offering ''technical and financial support''.

The Washington-based organizations would ''assist'' developing nations
to manage lower revenues because of reduced tariffs, withstand a period
in which their trade preferences in industrialized nations are
eliminated, secure funds to support increased trade and, finally, help
create export oriented economies.

The IMF and the Bank would also raise the profile of trade in borrowing
countries' Poverty Reduction Strategy Papers (PRSP) and Country
Assistance Strategies (CAS), documents developed with the support of the
two lenders that function as borrowers' economic roadmaps.

In return, the IMF and World Bank will receive observer status in the
trade negotiations committee, which handles individual negotiating
issues at the WTO and its subsidiary bodies, coupled with a role at the
WTO secretariat, a body often accused of bias on disputes between rich
and poor countries.

Critics say these plans should cause even more concern.

They say so-called ''technical assistance'' is really one way to
force-feed the same policies on developing nations rather than give them
the tools to develop independent views and, possibly, development
options.

''Technical assistance is being used as a political tool to win support
for a 'development agenda' that is heavily disputed in the WTO,'' said
Shefali Sharma from the Geneva office of the Institute for Agriculture
and Trade Policy in a statement.

''No amount of technical assistance in implementing policies that, in
effect, handicap and shackle developing countries in the WTO can improve
gains towards development.''

Cooperation between the three bodies is not new. The WTO director
general often attends meetings of the IMFC - the assembly of the IMF and
Bank governors - and of the development committee, the senior decision
making body of the institutions.

Most recently, he attended the IMFC meeting in April 2003 and briefed
finance ministers on the Doha trade negotiations and work program,
according to WTO documents.

The IMF and the World Bank have also been paying greater attention to
trade issues in the past few years, both in the course of their regular
country work and research papers. Documents have been flooding out of
the two organizations in support of ''free'' trade.

In 2002, they issued a joint staff paper on "Market Access for
Developing Countries' Exports", which examined patterns and costs of
restrictions and distortions on developing countries' exports.

Copyright 2003 IPS
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