Forum to call for transparency in commodities trading
GENEVA: The prospects for greater transparency in the commodities trading sector will be examined at the UNCTAD’s Global Commodities Forum (GCF) 2014, part of the event’s overall theme of ‘Global value chains, transparency and commodity-based development’, at the Palais des Nations on April 7-8.
Since 2010, legislators in the US and Europe have enacted strict new disclosure rules for payments made to governments by companies involved in oil, gas, mining and forestry projects – the so-called extractive sector. The reform movement now looks set to turn its attention to the traditionally secretive trading sector, which buys commodities from producers in developing countries, and sells them to markets around the world.
The Forum will focus on the challenges faced by commodity-dependent developing countries (CDDC), or countries for which raw commodities, such as oil, gas, minerals or grains, represent more than 60 per cent of exports. Transparency and accountability are ongoing concerns for commodity-dependent developing countries, which, despite the boom in commodity prices that began in 2003, have been unable to convert these windfall revenues into durable development outcomes for their citizens. In 2011, for example, nine of the 12 countries at the bottom of the Human Development Index (HDI) were rich in natural resources.
Dr Peter Eigen, delivering the keynote address on the GCF’s transparency sub-theme, will outline developing countries’ need for enhanced transparency and accountability in the global commodities trade, and will propose a way forward that forum participants will debate over the two-day event.
Dr Eigen founded Transparency International and is currently one of the ten members of Kofi Annan’s Africa Progress Panel.
The commodities trading sector is linked to the challenges facing commodity-dependent developing countries through illicit physical and financial flows. For example, in recent years and months, civil society organizations and members of the press have alleged that there is widespread abuse by trading companies of so-called transfer pricing, which involves a company underreporting profits in a developing country where it operates, so as to pay less income tax there, and instead shifting its tax burden to countries with lower rates, some of which are in Europe.
For commodity-dependent developing countries, the governance challenge of ensuring more equitable outcomes in the commodities sector links the first day of the GCF’s programme, devoted to global value chains, to its second day, devoted to transparency. The meeting will therefore emphasise the importance of commodity-dependent developing countries adopting robust, transparent governance institutions to guide their involvement in the global economy, be it by participating in global value chains or by exporting their natural resources.
The 2014 Global Commodities Forum will open on April 7 with addresses by UNCTAD secretary-general Mukhisa Kituyi and UNCTAD Trade and Development Board president Triyono Wibowo of Indonesia.
Plenary themes to be considered through panel discussions and open debates over the two-day are Global value chain participation as a component of the wider development and industrial strategies of commodity exporting countries, Country and sector experiences with global and regional value chains, Policy tools to ensure transparency in the governance of resource wealth, Prospects for transparency-themed governance reform in the commodity trading sector and The Extractive Industries Transparency Initiative experience and its lessons for strengthening resource wealth governance in developing countries.