Following the 2008 financial crisis, trade, investment and tax rules still favour elites and transnational corporations, Public Symposium hears.
Political will and the continuing influence of transnational corporations on policymakers came under the spotlight during a discussion on how to tackle widening inequality, at UNCTAD's Public Symposium on 19 June.
The round table, titled From Best Policy Practices to Global Transformation, looked at how different countries and regions are trying to tackle inequality and the lessons for policy makers.
Experts cited a range of measures that developing countries were using to tackle inequality. One was the Bolsa Familia cash transfers to poor families in Brazil, which had been very successful in reducing poverty, said Rubens Ricupero, former Finance Minister of Brazil and former Secretary-General of UNCTAD.
Zhongxiu Zhao, Vice-President of the University of International Business and Economics in China, said that the country was making the transition to a market economy gradually, based on a partnership between government, business, labour and, increasingly, civil society. This partnership had helped to drive investment in skills and capital, and in social protection - a model that could be pursued by other developing countries, he said.
However the panel also discussed many policies that contribute to widening inequality, both within and between countries.
WTO rules often constrain the policy space for developing countries to improve wages, raise tax revenue and provide social protection to the poorest sections of the population. Bolivia, for example, had a new constitution that enshrined the universal right to healthcare. It was trying to revise the terms of its WTO TRIPS agreement, in order to restrict foreign healthcare companies from entering its market, but faced fierce opposition from countries including the USA.
The WTO requirement that developing countries cut agricultural tariffs and subsidies while the richest countries subsidise their own farmers continued to be a major driver of inequality at the international level, said Martin Khor, Executive Director of the South Centre.
Khor also called for a debt resolution mechanism that allows developing countries to restructure, "Like companies restructure when they go bankrupt, and get back on their feet" said Khor. The recent US Supreme Court decision to force Argentina to repay its debts in full to foreign "vulture funds" showed how much power the finance industry wielded over developing countries.
Many speakers said that the biggest challenge was the lack of political will to tackle inequality. Civil society would play an import role in building this political will, he said, and encouraged non-governmental organisations and other civil society groups to reach a consensus on alternative solutions that would help governments.
Deborah James, Director of International Programmes at the Centre for Economic and Policy Research spoke of the "vast inequality" in lobbying power and political influence of transnational corporations and banks, at the expense of "people, communities and states."
Despite its responsibility for the 2008 financial crisis and global recession, the financial industry still enjoys "veto power" over policies on investment and capital markets, as do corporations over trade and tax policy.
"Corporations insist that trade rules have to be binding, but the Sustainable Development Goals, the Millennium Development Goals… a global climate agreement: that is all voluntary."
Roberto Bissio, Global Coordinator of the NGO network Social Watch, warned that inequalities in the global financial system could drive a wedge between developed and developing countries.
The BRICS group of large developing economies had announced their own development bank and were expected to announce their own currency pool soon. "These problems… can lead to a new polarization in the world, and it can be risky," he said.
