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India demands reforms to end job-killing barriers

India calls for reform in global economic governance to bring down "subtle trade barriers" that destroy jobs.

india Updated: Feb 10, 2007 12:22 IST

India has demanded a fundamental reform of global economic governance ensuring changes in voting structure and accountability to bring down "subtle trade barriers" that destroy jobs.

"The job destruction through the inability of many developing countries' farmers to compete, as a result of subsidies in the developed world, is well-known," India's Permanent Representative to the United Nations, Nirupam Sen, said on Friday.

Taking part in a debate on 'Promoting Full Employment and Decent Work for all' at the 45th session of the commission for Social Development, Sen recalled Indian Commerce Minister Kamal Nath's lament: "We can deal with a flood of goods coming in but we cannot deal with a flood of subsidies."

In fact, World Economic Situation and Prospects 2007 report makes the point that one of the reasons why unemployment is not really decreasing significantly in spite of growth is the shift away from agriculture, including from food crops, said Sen.

In the case of non-agricultural goods, fair trade liberalisation could have offset the unemployment-creating effects of liberalised imports because exporters are more productive than non exporting plants and higher exports mean more job creation and less job destruction for the economy, but this effect is impeded by what have been described as "subtle trade barriers".

Trade barriers for developing countries remain - even the tariffs, in actual terms, imposed by the developed on developing countries are far higher than on fellow developed countries, Sen said.

Unemployment can be even more wasteful not just economically but in terms of wasted lives, "so many strong men's courage broken, so many hands numbed as though by nightshade", he said.

Externally, globalisation means that inefficient enterprises have to close down under competitive pressure, which causes unemployment. The IMF programmes combine encouraging privatisation with high interest rates.

This makes job creation more difficult. Sequencing is critical and has often been ignored and hence a fast pace of liberalisation before ensuring social security, training in new skills and an adequate regulatory framework has often created problems.

The IMF therefore needs to update and integrate even into its current activity its original Keynesian mandate of providing resources to strengthen aggregate effective demand, Sen said.

The Indian delegate welcomed the Secretary-General's affirmation of the need for creating an enabling environment at the international and national level as a key challenge for realising full employment and decent work.

"We hope that the current session of the Commission for Social Development would provide more insights into the effective realisation of the Millennium Development Goals, particularly to halve extreme poverty by 2015 and foster social integration by making employment a central objective of national and international macroeconomic policies" he said.