Rethinking Bretton Woods | Wed, Apr 29, 2009
On April 25, 2009, the Center of Concern and the Commonwealth Foundation co-organized "The Financial Crisis and Trade: Towards an Integrated Response-a Consultation with Commonwealth Finance Ministers." The meeting was chaired by the Honourable Pierre Titti, Minister Delegate, Ministry of Finance, Cameroon, and Chair of the Commonwealth Ministerial Debt Sustainability Forum.
Opening the meeting, the Chair noted the significance for the Commonwealth of the meeting between civil society representatives and Commonwealth Finance Ministers as an important step towards the strengthening of ties between the official and unofficial Commonwealth.
The event, held on the eve of the 2009 Spring meetings of the World Bank and the International Monetary Fund, relied also on the generous support of the Ford Foundation and the Swedish Ministry for Foreign Affairs.
The consultation brought together about forty participants from civil society, academia, and government, including African Finance Ministers and senior officials.
Nowhere are the impacts of the financial crisis felt more, and with more dramatic consequences, than in Africa, where the crisis threatens to undo the modest progress achieved after long years of efforts to reduce entrenched levels of poverty and achieve the Millennium Development Goals.
Commenting on the linkages between the global crisis, finance and trade, Dr Ransom Lekunze, from South Centre, noted that the global economy faced an unprecedented downturn, with major financial institutions and countries in recession. He added initially the belief had been that Africa would be protected against the crisis because of its low integration into the global financial system. Today, the analysis is very different. According to figures released by the African Development Bank, growth rates for the continent estimated at 4.8% in 2008 were set to fall to about 2,8% by the end of 2009 (AfDB, 2009), clear evidence that Africa is more integrated into the global economy through trade, foreign direct investment, and remistances.
The financial crisis offered an opportunity to re-examine the potential that an integrated approach to trade and finance may have to improve the design of development policies. Indeed, trade factors are central to the effects that the ongoing financial crisis is having on a large number of developing countries. This is in evidence through a number of trade-related channels such as commodity prices, export-driven investment, infrastructure and debt sustainability, macroeconomic imbalances, exchange rate fluctuation, trade finance, and credit for export-oriented production.
In November 2008, leaders of the G20 countries gathered at an economic summit in Washington DC to launch a process to implement reforms of the international financial system. The meeting pledged co-ordinated action to tackle the downturn. The UK government, which currently holds the rotating presidency of the G20, convened a follow-up meeting on 2 April 2009, in London. A similar process is taking place in the context of the UN system where a high level conference held last June has launched a global consensus on responses to the crisis and a process to follow up on it.
With so much attention focused on the response of the financial crisis, it would be easy to assume trade issues will take a backseat to financial ones. "For African countries, this would be a tragedy," noted Aldo Caliari, from Center of Concern. "It is their trade structure that is heightening their vulnerability in the downturn. How to overhaul a trade structure that is the result of years of trade liberalization, that should be the key concern if we want to support these countries' efforts to overcome the crisis."
Click here for an agenda of the event.
Click here for a background note for the sessions.
A press release on the meeting is available here