Bridges Weekly Trade News Digest • Volume 7 • Number 34 • 15th October 2003

Report Highlights Sustainable Coffee Market Growth

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  EU MOVES TO CONTROL ILLEGAL LOGGING

Meeting on 13 October, EU farm ministers instructed the European Commission to draft legislation to allow only certified legal timber imports to enter the region. This was an initiative to clean up the estimated €1.2 billion in illegally sourced timber imports that cross EU borders. Outlining the problem, an EU official said that "in some forest-rich countries, the corruption fuelled by profits from illegal logging has grown to such an extent that it is undermining the rule of law, principles of democratic governance and respect for human rights". Under the plan, countries or regional bloc are expected to sign up to a "Forest Law Enforcement, Governance and Trade" (FLEGT) agreement, initially launched in May 2003, and the EU will only accept the legally certified imported timber. Implementation measures include improved governance initiatives and voluntary partnerships with wood-producing countries, in conjunction with international collaboration to combat the trade in illegally harvested timber. Addressing this issue of illegal logging is an EU’s priority in follow-up to the 2002 World Summit on Sustainable Development and included in its new natural resource strategy.

ICTSD reporting; "EU Aims to Stem Illegal Rainforest Timber Trade," REUTERS, 14 October 2003; "EU Plan on Illegal Logging: now it’s time to legislate!" WWF RELEASE, 14 October 2003.

INDIA AND CHINA TO STRENGTHEN TRADE TIES

The heads of India and China met on 12 October to discuss ways to strengthen their trade ties. Before leaving the ASEAN summit in Bali, Indonesia (see related story, this issue), Indian Prime Minister Vajpayee and Chinese Premier Wen Jiabao agreed to set up a joint study group on economic cooperation to identify areas of interest in trade in goods and services, investment and joint production ventures. Vajpayee said meeting with Wen Jiabao represented "substantive forward movement in our bilateral relations". It followed a meeting between the two in June this year, considered a turning point, bridging past differences on how to allocate areas in their shared border. India and China still have territorial disagreements over areas of Aksai Chin in Kashmir and Arunachal Pradesh, India’s far eastern state. However, both leaders have agreed to appoint special representatives to resolve the issue. India’s exports to China this year have been growing by more than 100 percent, above the 96 per cent growth seen last year. Both countries are targeting US$ 10 billion in trade figures by 2004.

"India and China propose negotiations on free trade pact," CANADA.COM, 13 October 2003; "India, China to move fast on free trade," THE TIMES OF INDIA, 13 October 2003.

A study released on 9 October highlights the production of, and the growing market for sustainable coffee — ie organic, eco-friendly, and fair trade coffee — in Europe and Japan. It follows an earlier study focussing on the North American market. The share of sustainable coffees is small, but growing. According to the report, "The State of Sustainable Coffee: A Study of Twelve Major Markets," the average sales growth of sustainable coffee has been five times larger than for conventional coffee over the last years. In Europe sales ranged from a low of 0.3 percent of the market to 3.4 percent. The 2002 market share in Japan was 1.2 percent. However, nearly a million small farming households were benefiting from the price premiums paid for sustainable coffee, and this at a time marked by a "coffee crises". Real prices of the commodity have reached their lowest point in 100 years, with devastating effects on small coffee growers.

The report calls for stricter guidelines and policies on sustainable coffee. It notes that while sustainable coffee is no panacea to address the coffee crisis, these products can make a difference. According to Panos Varangis of the World Bank’s Agriculture and Rural Development Department, "coffee is arguably one of the world’s most important cash crops and is vital to the livelihood of more than 25 million small coffee farmers. Sustainable coffees can provide such benefits as improved natural resource management; fewer agrochemicals used in production, which decreases costs and health risks; and increased use of rural labour, which provides more jobs for those in desperate need".

The 200-page study, published by the World Bank, the International Institute for Sustainable Development, the International Coffee Organisation, and the UN Conference on Trade and Development (UNCTAD), is currently available at http://lnweb18.worldbank.org/ESSD/sdvext.nsf/43ByDocName/SustainableDevelopment

"The State Of Sustainable Coffee - Ground-breaking study takes in-depth look at trends in coffee market," WORLD BANK RELEASE, 9 October 2003.

SUPERMARKETS - A NEW THREAT TO SMALL AFRICAN FARMERS

According to a new study from the UN Food and Agriculture Organisation (FAO), small farmers in Africa risk being marginalised as supermarkets spread. New supermarkets are being established at a rapid rate across urban areas and rural centres in Eastern and Southern Africa, and the traditional supply and distribution systems for food, in which small farmers play an important part, are being disrupted. Millions of small farmers need to adapt to survive. In the words of Kostas Stamoulis of the FAO, "if we don’t help small farmers tap into the supply game and become players in this new market they will be left on the sidelines". In terms of benefits, the spread of supermarkets could provide a stable market for farmers’ produce, as well as create transport and distribution jobs. In order to enjoy these benefits, however, the small farmers need assistance and resources to, for example, set up cooperatives and associations to meet the volume of supply requested by the supermarkets, and learn to negotiate with large companies. Further, credit schemes could be set into place to allow small farmers to buy technology they need in order to meet new food quality and safety standards. In South Africa, 55 percent of food is sold in supermarkets, and in Kenya 200 supermarkets and 10 hypermarkets account for the same amount of sales as 90,000 small shops. The trend is unlikely to be reversed; hence the need for small farmers to adapt.

"Rise of supermarkets across Africa threatens small farmers," FAO Release, 8 October 2003.

TRANSPARENCY INTERNATIONAL RELEASES CORRUPTION REPORT

The 2003 Corruption Perceptions Index (CPI) by Transparency International (TI), a non-governmental organisation devoted to fighting corruption worldwide, was launched on 7 October. According to report, corruption is a problem in both rich and poor countries, with countries such as Myanmar, Tajikistan, Georgia, Cameroon, Azerbaijan, Angola, Kenya, and Indonesia hitting the bottom of the list. Speaking at the event, Chair Peter Eigen warned that if corruption in government procurement was not contained, poverty would grow. According to Eigen, it was in less-developed countries’ interests to introduce transparency measures in public procurement "because the waste of their own scarce resources is at stake". He favoured launching WTO negotiations on a multilateral framework agreement on Transparency in Government Procurement, and said it was time to close the rift between rich and developing countries at the WTO Ministerial in Cancun. He felt that the unwillingness of many countries to enter into negotiations on transparency in government procurement had marked a "missed opportunity to establish transparency standards". Meanwhile in Bogota, TI’s Vice- Chair Inés Ospina Robledo added that international support, especially for transparency in public contracting, was essential.First launched in 1995, the CPI reflects perceptions of resident and non-resident business people, academics and risk analysts on corruption and draws on 17 surveys from 13 independent institutions.

To view the 2003 CPI, visit http://www.transparency.org/cpi/index.html#cpi.

"Nine Out of Ten Developing countries urgently need practical support to fight corruption, highlights new index", TI PRESS RELEASE; "WTO must address corruption in procurement", TIQ, September 2003.

CIVIL SOCIETY PROVIDES INPUT ON UNCTAD REPORT

UNCTAD’s Division on Investment, Technology and Enterprise Development held an informal meeting on 14 October focussing on the preparation of the 2004 issue of its flagship publication, the World Investment Report. The 2004 World Investment Report will analyse the links between investment and trade in services. Civil society actors were invited to identify issues and concerns important to their constituencies with regard to investment and trade in services, and to provide their views and input on the report. A total of nine civil society organisations attended the informal session. Among the issues raised, the chief concern focussed on the need to preserve "policy spaces" and governments’ right to regulate. Participants stressed the distinction between vital public services such as provision of water and healthcare, and other services, such as corporate and financial.

ICTSD reporting.