From the TUC

Bonn Diary: UN, union voice and, now, industrial policy

05 Jun 2013, by in Environment

Here in Bonn for the UN climate convention, the UN is redeeming the very notion of industrial policy as it works on strategies to diversify the economies of developing countries. The ITUC’s job is to argue for national consultations, for a ‘just transition‘ and for an equal place at the table for trade unions and communities along with national governments and employers to develop broad-based and sustainable economic growth.

Aaron Cosbey from the IISD remarked that the so-called “Washington consensus” that governments can’t develop industry policy” is, effectively, done for. The challenge, he argues, is how to move from here to an agenda for action. We argue that union voice is an essential part of that new process.

The UN’s Kyoto Protocol, renewed last December to 2020, commits governments to strive to minimise the adverse economic, social and environmental side effects of climate change policies on other countries. So, in devising response measures, developing countries need the kind of “big push” that Paul Krugman argued for in the US: coordinated government action and instruments to help strategic industries get off the ground.  Such an approach brings strong co-benefits in helping to eradicate poverty – exactly the point made last year in Rio+20 where the green economy was seen as providing ways out of mass deprivation in the least developed nations.

Today, a Venezuelan delegate remarked that all at the same time, developing nations are looking for economic growth, to build educational capacity, to be more equal and inclusive and grow in an environmentally sustainable way. All of which requires the UN to develop policies on technology transfer, capacity building a new sources of climate finance for the South.

If it seems too often that oil rich nations are in climate change denial, then some of that was reflected in an OPEC contribution today. Their delegate, Mohammed Hamel, highlighted the economic conundrum of the 12 oil producing nations, where on average, 37% of OPEC GDP and 74% of exports by value are fossil fuels. It was difficult in the forum today to accept the sense of the economic model he then presented, purporting to show that limiting carbon emissions to 550 parts per million – a third above today’s concentrations – would halve OPEC GDP.

At such levels of CO2 emissions we are all, effectively, toast (a scientific term). Yet a Saudi Arabia delegate, Sarah Baasham, brought some new thinking to the debate, referring to Saudi initiatives on renewable energy: $100bn investment programme in renewables, solar and carbon capture, opening up massive new manufacturing opportunities. This surely is the way to diversify and deploy fossil fuel revenues now.

Aaron Cosby outlined a three-tier framework for industrial policy:

  • Developing macro-economic strategies that support investment, secure low inflation, provide a measure of fiscal stability and phase out fossil fuel subsidies.
  • Address market failures, so invest in transport infrastructure, education and skills development and environmental protection measures.
  • Provide targeted support, such as green subsidies, low interest rates for sustainable investments and demonstration projects.

Of course, at different times and places, governments have deployed industrial policy at some or all of these levels. But his case is that we have to move to concerted action. The UN is due to produce a report from this four-day session in time for the UN’s next convention in Warsaw in December, just 18 months from the final deadline to agree a global deal. Technically, this week’s forum is an offshoot of the UN’s Subsidiary Body for implementation (SBI). 

Industrial policy plays out at national level. Hopefully, the UN can more than just report on differences, the conflicting and unresolved positions that bedevil this process. We do know how to do industrial policy; we are even re-learning it in the UK.  

Tomorrow, the ITUC is presenting its arguments on just transition, a policy framework combining social partners in investments in green, low carbon technologies, skills and training, and social protection  for communities hardest hit by economic and social change. It’s up to us as trade unions to demand a say in industrial investment and trade policy – over what goes on in boardrooms and in the workplace. Hopefully, the UN will provide the lead in integrating just transition into an ambitious industrial policy framework.