Debate | Commodity Trading

 Policy Coherence in a Top Trading Hub: Switzerland
This policy debate blog opened with a discussion on commodity trading and policy coherence in a top trading hub: Switzerland.

 

 

 

Initial contribution:
Werner Thut, Senior Policy Adviser at the Swiss Agency for Development and Cooperation (SDC)
Commodities and Switzerland: Development Policy Challenges and Policy Options

Reactions and analysis:
Alexandra Gillies, Revenue Watch Institute, New York
Crafting a Strategic Response to the Commodity-Development Conundrum
Prof. Humberto Campodonico, Universidad Nacional Mayor de San Marcos, Lima
Going Beyond Transparency and Good Governance
Stéphane Graber, Secretary General, Swiss Trading & Shipping Association (STSA)
Reassessing the Merchants’ Role in a Globalized Economy

Download the whole debate (pdf)See Werner Thut’s answer and leave a comment
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4 réponses

  1. Maren Schulte dit :

    Trafigura, one of the world’s leading commodity trading firms, announced on 18 November 2014 that it will join the Extractive Industries Transparency Initiative (EITI, https://eiti.org/), the global standard for improving transparency of revenues from natural resources.

    Read a comment on the announcement by Alexandra Gillies: http://www.resourcegovernance.org/news/blog/trafigura-announces-disclosures-big-step-should-be-first-many

  2. Marc Denoyer dit :

    Really an enlightening piece of writing. Helped a lot in making me know the things. Thnx a lot for sharing this.

  3. Werner Thut dit :

    Moving towards Policy Coherence for Development
    Response by Werner Thut

    Since the completion of my article in December 2012, the state-of-affairs evolved in many respects, internationally as well as on the national level in Switzerland. On 27 March 2013, the Swiss Government approved a Background Report: Commodities (hereinafter the Report), which includes an analysis of the sector’s significance and related risks as well as an outline of the Government’s position including 17 recommendations. It recalls a number of principles to safeguard the economic competitiveness of Switzerland and further proposes measures to promote the transparency of financial markets, taxation, and physical trading; measures to strengthen corporate responsibilities; and an increased level of international cooperation efforts in developing countries. Moreover, it calls on stakeholders to reinforce the dialogue in finding pragmatic solutions to the problems identified. The report has sparked a public debate and a process of reviewing public policies is currently ongoing.

    The commentators have raised a number of considerations which coincide with the Government’s implicit or explicit positions or have been discussed in the subsequent public debate. Humberto Campodonico rightly stresses the particular profile of Switzerland and its role as a country which is not a major consumer of commodities but, in contrast, one of the most important trading hubs. In line with this, the Foreign Affairs Committee of the National Council on 29 April 2013 invited the Government to include transparency of the trade activities in its overall analysis – a vision which was accepted by the Government (13.3365 – Postulat APK-N – Mehr Transparenz im Schweizer Rohstoff-Sektor). In the same spirit, the Government is expected to take a decision on the publication of detailed statistical data of gold trade activities on a country level since the early 1980s (which it had stopped publishing around that time).

    Stéphane Graber, representing Geneva`s commodity traders, stresses a point which is widely shared by an important number of other stakeholders, including the Government and parliamentary bodies: According to him, a Swiss policy on its own would have little impact on the globalized economy. Therefore, a multilateral and international approach should be favored which aims at developing a level playing field, including local governments. Contrary to his view, Swiss civil society organizations underline the dominant role of Swiss traders in world trade. Accordingly, they advocate for Switzerland to take the lead in regulating the sector, thereby strengthening Switzerland’s position to ask for similar multilateral or international rules. Even more contentious, however, are the questions concerning what a level playing field actually includes, and how to get there.

    In this context, the Swiss Government, in its Report and in response to parliamentarian interventions, has acknowledged that there is a problem of informational asymmetries – raised by Alexandra Gillies – which need more attention. It tasked the relevant ministry to further analyze and, if need be, to submit a bill related to mandatory disclosure standards for payments of commodity companies. Likewise, revisions of legal provisions to combat corruption, money laundering and tax evasion are under way. Eventually, in addition to solid analytical work of specific commodity trading issues, the Government is prepared to analyze the phenomenon of illicit financial flows given the evidence on linkages between natural resource exploitation, commodity trade, and financial flows from resource-rich to OECD countries (13.3533 – Postulat J. Fehr – Unlautere und unrechtmässige Finanzflüsse aus Entwicklungsländern).

    With a focus on developing countries that are resource-rich, the three reactions to my text call for efforts that strengthen not only state actors in resource-rich exporting countries. In their opinion, in order to expand democratic control and allow for a more diverse distribution of natural resource revenues, (non-state) accountability actors and sub-national state entities need to be strengthened as well. The Swiss Agency for Development and Cooperation is currently planning activities and partnerships to support capacities beyond partner governments and state structures. In this respect, Latin American countries will certainly be of particular interest, given the long presence of Swiss Development Cooperation in this region.

    At the same time, certain comments only partially capture important features of the Swiss Government’s policies. In the Report and beyond, the Government has clarified that extractive activities and commodity trading are not an issue of management of reputation risks alone but a real global challenge deserving attention and political action. While stressing the importance of dialogue with the trading sectors and the implementation of soft law instruments, the Government does not exclude a smart combination between regulatory measures on the one hand and soft law instruments on the other – in particular when implementing the UN Guiding Principles on Business and Human Rights (12.3503 – Postulat A. von Graffenried – Eine Ruggie-Strategie für die Schweiz; 13.3423 – Interpellation M. Ingold – Rohstoffbericht. Unternehmensverantwortung als freiwillige Selbstbindung oder verbindliche Vorschrift?). At the same time, based on a comparative study, the Government and the Parliament will discuss whether and, if so, how corporate board members of companies resident in Switzerland could be subject to a legal obligation to exercise due diligence and/or to report on human rights and environmental standards with regard to their companies’ overseas operations (12.3980 – Postulat APK-N – Rechtsvergleichender Bericht).

    In fact, the Report, with its analytical perspective and willingness for an impartial reassessment of a number of political issues, essentially represents a new Government approach in a field that is economically vital to Switzerland. Notably, the Swiss Government is also clearly guided by its duty and commitment to reconcile global and national perspectives as well as long- and short-term considerations, with the aim to minimize the risk that its different public policies negatively affect each other and therefore reduce or neutralize their respective effectiveness. In line with the Report and the Government’s commitment to strengthen policy coherence for development (12.029 – Botschaft über die internationale Zusammenarbeit 2013-2016), development perspectives are not limited to operational efforts at the level of resource-exporting countries only. They are also part of the discussions on the adaption of the regulatory framework for multinational enterprises located in Switzerland as well as on the design of national tax policies and international tax agreements. While it remains to be seen whether these processes will lead to more policy coherence for development, an important step has been taken towards it: The development perspective is now part of the political agenda within the Government as well as on the Parliament’s side.

    The discussion is not likely to come to an end in the near future. The price formation of commodities (including of soft commodities) will inevitably become another contentious issue on the Swiss political agenda: With a popular initiative against the speculation on agricultural products likely to reach the needed number of 100´000 signatures in 2013, the Swiss Government will be requested to analyze and take a stand on this issue during 2014, followed by a popular vote at the federal level in the coming years.

  4. Un artículo que salió el lunes 19 de agosto de 2013 en La República (Peru), de Humberto Campodónico
    http://www.larepublica.pe/columnistas/cristal-de-mira/mas-alla-de-la-maldicion-de-los-recursos-18-08-2013

    « Existe una amplia literatura económica que habla de una maldición para quienes poseen abundantes recursos naturales, tales como petróleo, minerales y productos agrícolas: éstos tendrían un menor crecimiento económico que quienes no los poseen. A lo que se agrega una acentuación en la desigualdad en la distribución del ingreso.

    Uno de los males consiste en que la abundante entrada de divisas lleva a una sobre oferta de dólares y, por tanto, a un dólar barato. Por lo mismo, los bienes importados bajan de precio, perjudicando a la industria nacional y desincentivando nuevas inversiones. Esta es la “enfermedad holandesa”, por lo que pasó en ese país cuando se descubrieron grandes yacimientos de petróleo… « 

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