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Review and Strategy Meeting. November 8, 2005.

 

Dear friends and colleagues,

 

We (Sony Kapoor, Christian Aid, Emira Woods, IPS, and Jo Marie Griesgraber, New Rules) have been working to put together a coherent afternoon meeting for November 8.  Beginning with a light lunch, we will reflect on what happened at the G-8 Summit at Gleneagles, the Annual Meetings of the World Bank and the IMF, the UN World Summit of September, and the status of preparations for the Hong Kong WTO Ministerial slated for December.  We will then consider what opportunities have opened up because of these events.  Then looking more broadly, we want to know how these opportunities compare with where we would like to go—whether we phrase it as the eradication of poverty, making poverty history, or meeting the Millennium Development Goals. Are we tackling the right issues?  Allocating our resources most effectively?  How can we collaborate going forward?  

 

These same questions are posed below.  You may be interested in knowing that the week after our meeting, the policy directors of many of the UK’s leading development NGOs will be wrestling with these same questions.  Since we are all about the same struggle, how do we collaborate—and win?!

 

Sony Kapoor has provided some background reading to help you prepare:

The event will take place at the Law Offices of Aiken Gump.

1333 New Hampshire Avenue, NW

(Corner of New Hampshire and O Streets, NW,

just South of Dupont Circle)

202-887-4000

Because of security, you must RSVP to:  Seamus Finn, who kindly arranged for the meetings space seamus@omiusa.org

 

AGENDA

 

A discussion divided into four parts

 

12:00 – 1:30

 

1) A brief analysis of the outcomes and expected outcome of various meetings in 2005 and the implications for various development issues

Facilitator:  Debyani Kar, Jubilee USA Network

Report:   G-8 Meeting: Sameer Dossani, Fifty Years is Enough

              World Bank Meetings: Lenny Sapozhnikov, InterAction

               IMF Meetings: Jo Marie Griesgraber, New Rules and Debyani

               Kar, Jubilee USA Network

               UN World Summit:  Juergen Stetten, Friedrich Ebert Foundation

               WTO Hong Kong Ministerial:  Pamela Sparr, InterAction

 

2) A discussion of what, if any progress is expected in the short to medium term and whether this would be enough to achieve various goals such as the MDGs, etc

Facilitator: Jo Marie Griesgraber, New Rules Coalition

 

1:30 – 3:30

 

3) A brainstorm about what lessons have been learned, how these influence the strategy going forward –

 

Have we been going down the right path at all?

Which doors have been closed shut and which new ones have opened?

 

Facilitator:  Seamus Finn, Oblates of Mary Immaculate, Office of Justice, Peace/Integrity of Creation 

Presentor:  Sony Kapoor, Consultant, Christian Aid

     

3:30 – 5:00

 

4) Finally, how to best tread this path together? The lessons leant from working closely together throughout the year and opportunities and pitfalls. How do we go forward from here?

 

Facilitator:  Emira Woods, Institute for Policy Studies

Presentors:  Raymond Baker, Senior Fellow, Brookings Institution and Center for International Policy

 


 

Report from November 8, 2005: Review and Strategy Meeting.

 

The purpose of this strategy meeting was to reflect on what on what happened at the G-8 Summit at Gleneagles, the Annual Meetings of the World Bank and the IMF, the UN World Summit of September, and the status of preparations for the Hong Kong WTO Ministerial slated for December.  The next step was to consider what opportunities had opened up because of these events.  Then looking more broadly, we wanted to know how these opportunities compare with where we would like to go—whether we phrase it as the eradication of poverty, making poverty history, or meeting the Millennium Development Goals. Are we tackling the right issues?  Allocating our resources most effectively?  How can we collaborate going forward?  

 

Part one:  A brief analysis of the outcomes and expected outcome of various meetings in 2005 and the implications for various development issues

 

Facilitated by: Debyani Kar, Jubilee USA Network

 

Report on G-8 Meeting (Sameer Dossani, Fifty Years is Enough)

 

At the G-8 Meeting in Gleneagles the principle of debt cancellation was agreed on, but the details were not.  At the Gleneagles meeting a commitment was made for full debt cancellation of IMF, World Bank, and African Development Bank debt for 14 countries.  Another 4 countries will receive IMF and World Bank debt cancellation, but they were unable to get an agreement on the cancellation of Inter-American Development Bank debt. Unfortunately this debt cancellation remains tied the HIPC initiative which the World Bank has acknowledged as a failure.

 

History: Groups such as Fifty Years is Enough has been working on 100% debt cancellation since 1994. These groups were told that this was unrealistic and in 2002 Camdessus reaffirmed that this would not happen. What happened recently? What made it possible?

 

Report on World Bank Meetings by Lenny Sapozhnikov, InterAction

 

Between the G-8 meeting in July and the September Annual Meetings, non-G-8 countries were asked to fork over money for a deal that they did not commit to. Many countries felt that they were not part of the decision. At the end of the day the US Treasury and the UK Treasury worked on getting a communiqué from both the IMF and the World Bank that basically said the boards of those institutions agreed to the G-8 deal, and the G-8 would put in the extra money. The communiqués promised to come up with a timetable and benchmarks.  A vote has yet to take place and is not expected for a few more months, but we are convinced it will go through.

 

There remain fears about new conditions.  There are also fears that they will back down on some of the countries. For example, Mauritania may not receive debt cancellation because of a coup that occurred in the last couple of months.

 

The conditionality review was not promising. They agreed to look into an annual review of conditionalities but have made no commitment to revise them.

 

Report on IMF Meetings by Jo Marie Griesgraber, New Rules and Debyani Kar, Jubilee USA Network

 

The IMF Board was also irritated that the G-8 was making the decision for them.  The IMF is looking into grandfathering in additional countries and adding new conditionalities for debtors. 

 

The IMF now has a Policy Support Instrument (PSI) which is all policy, but no money. Nigeria used this instrument because they wanted the IMF stamp of approval for Paris Club debt reduction, without adding more debt.  This instrument is voluntary. In addition, the IMFC approved, in principle, on an exogenous shocks facility, and a proposal for additional money for ‘aid for trade.’

 

No actions were taken on Governance. The IMFC report in September was identical to the April report. There was talk by US Under-Secretary of the Treasury Tim Adams on the reallocation of votes, but no need to increase quotas.  His point is that the Europeans should work it out between themselves about who loses votes, and proceed to consolidate to one or two chairs. The Rato paper also talks about the need to reallocate votes, but anticipates quota increase in the next round.

 

One common theme is that the IFIs have not signaled any willingness to change course from the current macroeconomic framework

 

Report on UN World Summit by Juergen Stetten, Friedrich Ebert Foundation

 

Kofi Annan kicked off the UN World Summit with a program “A Larger Freedom” to reform the UN.  Annan’s program laid out four themes: 1) development, 2) security, 3) human rights, and 4) strengthening of the UN.

 

Three issues stand out:

1)      The agreement to setup a Peace Keeping Commission.

2)      Accepting the concept of “responsibility to protect” their citizens against gross violations of human rights (e.g. Rwanda and Kosovo)

3)      Do away with the Human Rights Commission and replace it with a Human Rights Council

 

At the summit there was a half-day component on the FFD Consultations to address the individual initiatives. During this component many countries presented initiatives such as the Lula Initiative, and the Chile air ticket levy. There was an agreement in the General Assembly to a 2007 FFD +5 meeting.

 

Kofi Annan’s term as Secretary General ends in late 2006. What will the new Secretary General bring to the table? This is a wait and see year.  No decisions will be made until the new Secretary General starts.

 

Report on WTO Hong Kong Ministerial:  Pamela Sparr, InterAction

 

  1. Agriculture – Issues include market access, special and differential treatment. NGOs are mostly focused on the Agriculture negotiations.  The Southern governments no longer seem so united here.

  2. Non-Agriculture Manufacturing Agreement. (NAMA) The EU wants action here, not just on Agriculture

  3. Trade Related Intellectual Property (TRIPS) - Amending Article 31 with respect to drugs under compulsory licensing. 

  4. General Agreement on Trade in Services (GATS) - The EU and others are trying to force benchmarks for the global South to designate when certain sectors will open to liberalization. 

  5. Aid for Trade – Trade facilitation, quantity and nature of trade, integrated framework.

 

What will happen when there is a new Head of the WTO?

 

ONE Campaign Position on Trade. They are focusing on the poor areas in terms of evaluation and monitoring the WTO.

 

1)      Agriculture position – work to get developing countries greater opportunities to sell their goods, domestically, regionally, internationally. Timetable to eliminate agriculture supports in the West.

2)      Power to decide. Flexibility to determine their own trade policy. Safeguards. Benchmarks. Fully exempt from tariffs?

3)      Open and transparent processes.  Ability for civil society to provide meaningful input and to monitor at national and international level. Meaningful opportunities for civil society to participate.

4)      Trade capacity building – A call to increase money for ‘aid for trade’ as long as trade facilitation is transformed in the following ways:  1) country driven; 2) involve local civil society; 3) used for development of local and regional markets, not just open international markets; 4) without conditions for reciprocal economic policy changes; 5) not tied to the purchase of US products or the use of US contractors; and 6) prevent and mitigate negative consequences of changes in trade policy.

 

Part two:  A discussion of what, if any, progress is expected in the short to medium term and whether this would be enough to achieve various goals such as the MDGs, etc

 

Facilitator:      Jo Marie Griesgraber, New Rules Coalition

 

What progress would you expect if your lobbying dreams come true?  What do we expect or hope that might happen? Please cast this in a positive light as we want to develop strategies and priorities.

 

Discussion

 

  • A pressure point on debt came about because of a number of factors.  This gave us a case for using multilateral donor resources to pay down their own debt.  If bilateral donors were able to afford to cancel debt then so could multilateral donors. Two major things made this possible: 1) Argentina’s default changed the course of the IMF power structures and  2) the threat of Nigeria defaulting on Paris Club debt led to the Paris Club offering Nigeria a deal.

  • The IFIs are on the defensive, with their backs against wall. They are fighting back with a renewed focus on infrastructure and conditionalities.

  • WTO negotiations are very intense and highly political.  There is a draft of GATs where the section on benchmarking is written in. There is a huge uproar over this because it was not agreed to include that benchmarking.  Now, the author of the text says he can’t remove it without majority consensus even though there was no majority consensus to include it in the first place. 

  • WTO Lobbying focus should be on stalling negotiations until people begin talking a different kind of trade policy.

  • There is currently about $1.5 trillion of developing country debt. How much of this debt would be reduced by the Gleneagles commitment? The best estimate of this debt is $40 billion over 40 years, which is barely a drop in the bucket. The targeted countries are only a fraction of the trillion.

  • In the agriculture negotiations the Administration is focusing on US development NGOs for their help on getting subsidies reduced. Commodity groups are pressuring Congress to continue with subsidies. How do we advance positively on this?

  • If the WTO negotiations are stalled again this will lead to difficult alternatives. What will happen if the developing countries push too hard and succeed in making Hong Kong another Cancun?  It might be a Pyrrhic victory.  We have seen a rise of bilateralism; the US is involved in all sorts of deals.  Developing countries are agreeing to deals with the US that they would not concede to in the WTO.

  • Gleneagles also made a promise of new money.  How much is going to be new money? Debt cancellation will help the creditors to sort out their books and regularize their accounts. A larger issue is how much new money will be given?

  • We need to expand the debt cancellation deal and decouple it from HIPC.  Right now the details are miserable. We need attainable goals and instruments to help attain those goals.

  • At the Havana meeting the idea of debt audits came out. What if we did a debt audit of the United States? How much of the debt would be odious and illegitimate.

  • Short term goals on debt:  1) keep chipping away at the current economic model’s failure to reduce poverty and increase per capita growth; 2) make sure the 10 countries at decision point get debt cancellation without going through more conditionalities; and  3) get the Inter-American Development Bank debt included in the G-8 deal.

  • Look at alternative economic polices such as ALBA in Venezuela.  Action Aid will be working with heterodox economists who will visit countries at the same time as the IMF teams do their Article IV visits, to demonstrate that the countries have alternatives, which deepening economic literacy.  NGOs do a lot of good work on budget tracking. We need to focus on economic literacy and learn alternative policies

  • Engage with the US Treasury via citizens groups. The NGO advocacy community has been trying to directly lobby Treasury but there are no channels to do this. The proper channel to the US Treasury is through Congress. Work with different constituencies such as HIV/AIDS activists.

  • Action Aid will work with parliamentarians in 5-6 developing countries.  They are organizing a series of trainings and workshops to learn what is wrong with the current framework. With this tactic they will work with parliamentarians and engage directly with central banks and finance ministries. One strategy is to dialogue with Central Bank and Finance Ministers during the lead up to Article IV consultations.   

  • Start to work on odious debt.  Iraq has set a precedent.  Many developing countries are better positioned to go-it-alone, instead of using IMF resources, because of high reserves and high commodity prices. 

  • There are now positive examples of the “coalitions of the willing”, such as countries prepared to move ahead with the airline ticket tax.

  • Look at the hot topics and opportunities that are moving now: 1) the exogenous shock facility; 2) the FFD +5 process; 3) a timeline on debt which may be linked with conditionality; 4) new macro-economic frameworks; 5) “aid for trade” to reduce negative consequences of trade.  What about a “poison pill”, a negative strategy for Hong Kong? Where other trade concessions would be linked with ending bank secrecy, or with required bank information sharing?

 

Part three:  A brainstorm about what lessons have been learned, how these influence the strategy going forward. Have we been going down the right path at all? Which doors have been closed shut and which new ones have opened?

 

Facilitator:        Seamus Finn, Oblates of Mary Immaculate

     

Presentation by Sony Kapoor, Consultant, Christian Aid

 

We will be doing similar meetings like today’s strategy meeting in the UK, Germany, Sweden Norway, and beyond.

 

This year’s G-8 summit focused on development and security.  The focus at the meeting was primarily on security.  

 

The MDGs are only meant to cut poverty in half; this is not an end goal.

 

What have we been doing wrong?  What should we do going forward? Should we give up?

 

Over the last 4-5 years the focus of the development community has been around giving money and maximizing inflows into developing countries.  This has been accompanied by restrictions.  (e.g. if half of your budget comes from aid then you would do your best not to offend those who give you the money.)  Conditionalities have only been modestly decreased from 200 to 190. This is a massive restriction of policy space.  Recall that during his presidential campaign, as Lula’s ratings went up, interest rates on bonds went up at a parallel rate.  Lula was, in effect, compelled to promise not to default on debt. The only other option was for Brazil to default and Lula begin his term with a major financial crisis.  Brazil is a wealthy country, rich in natural resources.  It should have the latitude to design its own development path.  Greater policy space is a key goal, and we need to focus on resource outflows, not just on resource inflows.

 

Discussion
 

  • Brazil, Nigeria, India, and Argentina all show signs of progress, but are not acting in cooperation with the poorer countries. The interests of these countries are not consistent with Malawi and Sri Lanka.

  • What are the best ways to stop capital flight? I would like to hear the best ways to do that. What about weak banking systems or progressive income taxes?

  • Capital flight is important, but the issue of net resource transfer to developing countries is also important. If taken as a whole capital moves for all sorts of reasons. We need to narrow the focus.  Our agenda needs to be in sync with developing country agendas.

  • We need to map out the reasons for net resource flow and analyze the map.

  • It would be interesting to do the audit with a broader perspective.  This audit would include the money that is not seen as it leaves the country (e.g. transfer pricings, illegal money, tax havens)  Official audits miss this type of activity. This would be an audit of selected countries on books and off books flows.

  • Educate people on odious debt to prevent the Suharto’s and Marcus’ of the world from doing it again. Accurate accounting and reporting of odious debt.

  • The term “capital flight” means different things including tax evasion and money laundering. It is an ambiguous term that means moving money. We need to be clearer on what we mean by capital flight. The term ‘dirty money’ is a better term to describe the illegal transfers.

  • Since the 1960s a structure has come about to facilitate the movement of resources out of developing countries. Multinational corporations have been planting companies everywhere and moving off-shore.

  • It is clear that Katrina has changed the landscape for us. We can not ignore what happened there or what is happening in the riots in France. This is an incredible opportunity to link up these issues in the US and internationally. How do we hit this opportunity head on?

  • Put trade back on the table.  Once debt is canceled the trend will reverse immediately by incurring new debt. The US model is a failed development model that cannot deliver, has not delivered and there is a growing deficit.

  • Maria, Pam and Jo Marie were part of a group that wrote a case study on Reaganomics. We should do a case study having Mississippi and Louisiana apply for a loan at the World Bank. This case could show why the current model isn’t working.

  • Another option is a Town Hall event that takes into account UN international issues paralleled with domestic poverty.  (E.g. look at how Wal-Mart devastates a small town when it moves in and relate it to what the big transnational companies are doing internationally.)

  • The US Social Forum has been postponed until 2007.

  • We have not capitalized on the repeated failures of the system. We need to highlight how much countries are losing by playing within the rules. If the system has been causing harm to a country for so long why haven’t the terms been changed and why should a country engage in a system that has only caused problems?

  • There is a growing power for developing countries when they come together.  Latin America has come together to challenge the IFIs and the trade agenda.

  • One problem is the deceitful way the Bush Administration has tried to win policy on the Hill by reciting out-dated World Bank data. We need to reclaim the policy debate and point out this deceit when it occurs.

  • What is a concrete ways to get out of debt?  There needs to be a proper way to deal with bankruptcy problems.

  • We need prudential regulations to dampen capital flows.  Right now commodity prices are at an all time high and it is a good time to hedge.

  • We need to look at the quality of delivery of Aid and not just the quantity.

  • Attention spans of people are limited. Look at the grassroots and connect the global to the local. Why is this a voting issue in the UK and not in the US? E.g. the Millennium Challenge Account was supposed to be $5 billion as in committed in Monterrey, yet US Congress only approved $1.5 billion.

  • Need to be strategic and visionary when discussing corruption and odious debt. The same channels that bleed developing countries are used for terrorist financing.

  • In regard to resource flows try a less paternalistic approach.  Teach a man to fish, and then let him fish, don’t cover him with restrictions. The problem with the fish metaphor is that some people might not like to fish, or maybe there is a problem of over fishing. 

  • We need to highlight that reducing poverty also builds peace. Serious poverty leads to violence as does inequality and exclusion.

  • The MDG's will not be met with business as usual.  Even if we could achieve the MDGs it would only partially reduces the death, suffering and environmental ruin resulting from endemic global poverty. Humanitarian motivation is simply insufficient to generate the resources need.  Especially in war time, nation rebuilding, extreme deficit, pandemic fear and a zero-sum budget.  Framing the MDGs within the context of achieving US national security interests will be vital. Without a source of "new" money to meet the MDGs (Tobin tax, carbon tax,...) any existing resources applied to the MDGs will need to be shifted from other programs (domestic health and education, agriculture, homeland security, DoD or Iraq...). 

 

Part four: Finally, how to best tread this path together? The lessons leant from working closely together throughout the year and opportunities and pitfalls. How do we go forward from here?

 

Facilitator:  Emira Woods, Institute for Policy Studies

 

Presentation by Raymond Baker, Brookings Institution and Center for International Policy

 

We need to come together with specific actions ranging widely across issues.

 

The outflow of resources drains more money out than foreign money coming in by a 10 to 1 ratio. There is no way to make this formula work. It is legal to bring into the US the proceeds of foreign crimes such as slave trading, kidnapping, alien smuggling, and racketeering (see table 4.5 Specified Unlawful Activities Under U.S. Anti-Laundering laws pages 187-188 of Capitalisms Achilles’ Heel).  99.9% of this money coming in gets deposited in US accounts on first presentation.  How do we address this issue?  The world’s largest economy needs to eliminate the difference between illegal crimes committed in the US and crimes committed abroad. The US is way behind in this endeavor.

 

Suggested Activities :

  1. How do we get the US Congress to consider legislation adopting the same lists of offenses barred under US anti-money legislation, whether committed inside or outside the Unites States?  A concrete activity would be to write a letter to Senators Grassley, Levin and Coleman calling for the US to eliminate the difference between illegal crimes committed in the US and crimes committed abroad. Jo Marie will work with Ray Baker to draft the letter and circulate it for signatures. What we hope to get out of the letter would be a congressional hearing on this topic and/or a GAO report. 

  2. How do we get Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown to consider baring disguised corporations from making transfers into UK bank accounts.  The Patriot Act took shell banks off the table, how do we get disguised corporations off the table? Sony will talk with the UK development NGOs and communicate with Ray Baker.

  3. How do we get the World Bank to analyze the whole of illegal outflows from developing and transitional economies – all components, corrupt, criminal, and commercially tax evading?  (No designated follow up; however, Center for Global Development could possibly be interested in this.)

  4. How do we get Kofi Annan to appoint a high-level commission to examine the question of debt owed by developing countries from a social perspective.  This would shift the discussion from the financial institutions to a social context.

  5. How do we get the president of Nigeria, Olusegun Obasanjo, to advocate to the Africa Union that Paris Club negotiations will henceforth be undertaken in African capitals. Having these discussions in the different venue would change their dynamic. Ray Baker is prepared to draft a letter and then seek to dispatch it to President Obasanjo to urge his adoption of this position. He will work with Jo Marie.  She will distribute letter to those attending this meeting. (see below list) Also Jubilee may be interested in follow-up here.

 

Other proposals for Action

  • Michael Isimbabi will convene a New Rules working group on taxes to get the ball rolling.

  • Sony Kapoor will be participating in a UK parliament event on Thursday, Nov 9 on Capital Flight, Poverty and the Role of the UK. (Relates to point 2 above)

  • Get the UN to take up the issue of odious debt in an international legal manner.

  • Call for an inspection panel to look at the World Bank’s structural policies.

  • Put together a portfolio of successful economic policies.

  • Financial markets watch. Increasing amount of impact and yet there is not a systematic way to monitor the impacts.

  • When the World Bank team does an evaluation of a country, send an alternative set of economists  to come up with an alternate framework.  (Action Aid)

  • Map flows in and out of a country  (Sony Kapoor is doing this)

  • Look at lending guidelines to open up the odious debt debate. The US has never publicly acknowledge lending to dictators in past. (E.g. US lending to Uzbekistan.)

  • One problem is that we duplicate too much, there needs to be a higher degree of cooperation and a better way to divvy up tasks.

  • Reopen the debate on using IMF gold to pay for IMF debt.

  • Follow-up conference on FFD provides a framework for future collaboration. The FFD agenda is very broad.  Holding joint meetings with experts from the private sector, government, academia, civil society organizations, and international financial and standard-setting institutions is very energizing. (E.g. One proposal on national development banks that came out of the Multi-stakeholder dialogues held by the New Rules Coalition came from entrepreneurs from Africa.) Broader cross-sectoral meetings are useful; likewise collaboration between New York, NY and Washington, DC NGOs.

 

Follow up to this Meeting:

 

Three meetings that will provide forums for continuing this broad collaboration:

1.  Jubilee USA Network Annual  Meeting  (November 10-11, 2005)

2.  Post Hong Kong Ministerial Meeting debriefing sessions (December, 2005)

3.  Status report on negotiations leading up to FFD + 5  (January, 2006)

 

Notes and participant lists will be distributed from this meeting.

 

Minutes:  Jamie Baker, New Rules; with Jo Marie Griesgraber, New Rules.

 

Meeting Participants

 

NAME ORGANIZATION
Raymond W. Baker Brookings Institution / CIP
Jamie Baker New Rules for Global Finance Coalition
Dan Beeton Center for Economic Policy Research
Coralie Corky' Bryant Columbia University
Aldo Caliari Center of Concern
Hope Chu Fifty Years is Enough
Randall Dodd Financial Policy Forum
Sameer Dossani  Fifty Years is Enough
Séamus P. Finn Missionary Oblates of Mary Immaculate
Jo Marie Griesgraber New Rules for Global Finance Coalition
Sony Kapoor Christian Aid & Tax Justice Networl 
Debyani Kar  Jubilee USA Network
Jennifer Nordin Center for International Policy
Kate Phillips-Barrasso United Nations Foundation
Maria Riley Center of Concern
Rick Rowden Action Aid USA
Lenny Sapozhnikov InterAction
Frank Schroeder Friedrich Ebert Stiftung New York
Pamela Sparr InterAction
Juergen Stetten  Friedrich Ebert Stiftung New York
Irfan ul Haque Independent Consultant to G-24
Neil Watkins Jubilee USA Network
Emira Woods Institute for Policy Studies (IPS)
Chuck Woolery Formerly Chair, United Nations Association Council of Organizations, Washington DC
 
PARTICIPANTS BY PHONE
 
Kristin Dawkins Institute for Agriculture and Trade Policy
Michael Isimbabi African Leadership and Progress Network 
Patricia Jurewicz Institute for Agriculture and Trade Policy
Shiney Varghese Institute for Agriculture and Trade Policy

 

 

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