Consumer ProtectionConsumer Protection

Source: Manual on Consumer ProtectionSource: Manual on Consumer ProtectionUnited Nations Conference on Trade and United Nations Conference on Trade and

Development (UNCTAD)Development (UNCTAD)20042004

Overview: Three broad Overview: Three broad categoriescategories

• 1. Consumer Protection System1. Consumer Protection System– Policies, laws, institutions and Policies, laws, institutions and

structures that form the framework for structures that form the framework for a consumer protection systema consumer protection system• UN GuidelinesUN Guidelines

• Consumer Protection Consumer Protection Agencies/OrganizationsAgencies/Organizations

• Consumer Protection LawConsumer Protection Law

• Consumer RedressConsumer Redress

• 2. Consumer Protection in the 2. Consumer Protection in the MarketplaceMarketplace– Various transactions that consumers Various transactions that consumers

enter in a market economyenter in a market economy•Consumer informationConsumer information

•Product safety and liabilityProduct safety and liability

•Consumer creditConsumer credit

• InsuranceInsurance

•Electronic commerceElectronic commerce

• 3. Consumer Protection and Basic 3. Consumer Protection and Basic NeedsNeeds– Consumer educationConsumer education– The provision of utilitiesThe provision of utilities– FoodFood– Health care deliveryHealth care delivery– Sustainable consumptionSustainable consumption

Part I. Consumer Protection Part I. Consumer Protection SystemSystemRationale for consumer protectionRationale for consumer protection

• Addresses disparities in consumer-Addresses disparities in consumer-supplier relationshipsupplier relationship– Bargaining powerBargaining power– KnowledgeKnowledge– ResourcesResources

• State intervention premised on grounds ofState intervention premised on grounds of– Economic efficiencyEconomic efficiency– Individual rightsIndividual rights– Distributive justiceDistributive justice

• Achieving bargaining equality between consumer and Achieving bargaining equality between consumer and producer interestsproducer interests

• Alleviating the problems of the particularly Alleviating the problems of the particularly disadvantageddisadvantaged

– Poor, elderly, childrenPoor, elderly, children

• ““Consumerism, especially in the developing world, is Consumerism, especially in the developing world, is now seen as a fundamental part of the strategy to now seen as a fundamental part of the strategy to eradicate poverty and to bring socio-economic justice eradicate poverty and to bring socio-economic justice to the underprivileged.”to the underprivileged.”

– Positive communal valuesPositive communal values– Right to developmentRight to development

Consumer RightsConsumer Rights

• John F. Kennedy’s Message to John F. Kennedy’s Message to Congress on March 15, 1962Congress on March 15, 1962

• Four basic rightsFour basic rights– Right to safetyRight to safety– Right to be informedRight to be informed– Right to chooseRight to choose– Right to be heardRight to be heard

• 1982 Consumer International’s 1982 Consumer International’s Charter of Consumer RightsCharter of Consumer Rights

• Eight rightsEight rights– Right to basic needsRight to basic needs

•Food, clothing, shelter, health care, Food, clothing, shelter, health care, education, water and sanitationeducation, water and sanitation

– Right to safetyRight to safety– Right to informationRight to information– Right to choiceRight to choice

– Right to be heardRight to be heard– Right to redressRight to redress– Right to educationRight to education– Right to healthy environmentRight to healthy environment

• Rights further re-enforced by Rights further re-enforced by adoption of UN Guidelines on adoption of UN Guidelines on Consumer Protection in 1985 and Consumer Protection in 1985 and 19991999

Who is the “consumer”?Who is the “consumer”?

• Original definition limited to Original definition limited to purchases for “personal purchases for “personal consumption”consumption”

• More recently includes small More recently includes small operatorsoperators– Applies to farmersApplies to farmers– Assures reasonable prices and quality of Assures reasonable prices and quality of

farm inputsfarm inputs

Who is responsible for Who is responsible for consumer protection?consumer protection?

• Government agenciesGovernment agencies– Ministry of Commerce, Investment and Ministry of Commerce, Investment and

Consumer AffairsConsumer Affairs

• Professional/Industry associationsProfessional/Industry associations

• Consumer organizationsConsumer organizations– St. Lucia Consumer AssociationSt. Lucia Consumer Association

U.N. Guidelines on Consumer U.N. Guidelines on Consumer Protection (UNGCP)Protection (UNGCP)

• Provide a framework for Provide a framework for governments to develop and governments to develop and strengthen consumer protection strengthen consumer protection policies and legislationpolicies and legislation

• Minimum guarantee by governments Minimum guarantee by governments that the measures will be undertakenthat the measures will be undertaken

Obligations imposed on Obligations imposed on governments by the UNGCPgovernments by the UNGCP

• 1. Physical Safety1. Physical Safety– Assure that products are safe and Assure that products are safe and

conform to safety standardsconform to safety standards– Consumers receive information on Consumers receive information on

proper use of goods and risks involvedproper use of goods and risks involved– Measures are in place for notification Measures are in place for notification

and recall of unsafe goodsand recall of unsafe goods

• 2. Consumers’ economic interests2. Consumers’ economic interests– Consumers obtain optimum benefit from their Consumers obtain optimum benefit from their

economic resourceseconomic resources• Ensuring that goods meet production and Ensuring that goods meet production and

performance standardsperformance standards

• Adequate distribution channels and after sales Adequate distribution channels and after sales servicesservices

• Fair business practices are employedFair business practices are employed

• Protection against contractual abusesProtection against contractual abuses

• Information is adequate for consumers to make Information is adequate for consumers to make informed decisions and exercise choiceinformed decisions and exercise choice

• 3. Standards for safety and quality of 3. Standards for safety and quality of goods and servicesgoods and services– Ensure there are national standards for Ensure there are national standards for

safety and quality of goods and servicessafety and quality of goods and services– Such standards conform to international Such standards conform to international

standardsstandards– Facilities to test and certify goods and Facilities to test and certify goods and

services are encouragedservices are encouraged

• 4. Distribution facilities for essential 4. Distribution facilities for essential goods and servicesgoods and services– Especially to consumers who are Especially to consumers who are

disadvantaged, e.g., in rural areasdisadvantaged, e.g., in rural areas

• 5. Redress5. Redress– Establish and publicize mechanisms that Establish and publicize mechanisms that

are fair, affordable and accessibleare fair, affordable and accessible•Especially taking into consideration the Especially taking into consideration the

needs of low-income consumersneeds of low-income consumers

• 6. Education and information programs6. Education and information programs– Should involve consumer and business Should involve consumer and business

groupsgroups– Particular attention to disadvantaged Particular attention to disadvantaged

consumers in urban and rural areasconsumers in urban and rural areas– Should be included in school curriculumShould be included in school curriculum– Training programs for educators, mass Training programs for educators, mass

media professionals and consumer media professionals and consumer advocatesadvocates

• 7. Promotion of sustainable 7. Promotion of sustainable consumptionconsumption– Should be done in conjunction with civil Should be done in conjunction with civil

society organizations and business society organizations and business groupsgroups

– Sustainable consumption practices Sustainable consumption practices within government, by business within government, by business enterprises and by consumersenterprises and by consumers

• 8. Measures relating to food, water 8. Measures relating to food, water and pharmaceuticalsand pharmaceuticals– Prioritizes these areasPrioritizes these areas– Should ensure quality control, adequate Should ensure quality control, adequate

distribution and standardized distribution and standardized informationinformation

• Food productionFood production– Sustainable agricultural polices and Sustainable agricultural polices and

practicespractices– Conservation of biodiversityConservation of biodiversity– Traditional knowledgeTraditional knowledge

• Drinking waterDrinking water– National policies should be developed to National policies should be developed to

improve supply, distribution and quality improve supply, distribution and quality of water for drinking and other purposesof water for drinking and other purposes

• PharmaceuticalsPharmaceuticals– Develop national policies to ensure Develop national policies to ensure

appropriate use, procurement, appropriate use, procurement, distribution, production, licensing distribution, production, licensing arrangements, registration systems and arrangements, registration systems and information to consumersinformation to consumers

Current status of UNGCPCurrent status of UNGCP

• UN is surveying countries’ adoptionUN is surveying countries’ adoption

• Many LDCs have nothing in placeMany LDCs have nothing in place– No laws or consumer organizationsNo laws or consumer organizations

• Doesn’t fully account for Doesn’t fully account for globalization and other changes in globalization and other changes in marketplacemarketplace

Functions of a consumer Functions of a consumer protection agencyprotection agency

• Advise the government on consumer issuesAdvise the government on consumer issues

• Represent the consumer interest in other Represent the consumer interest in other governmental committeesgovernmental committees

• Enforce consumer protection and competition Enforce consumer protection and competition lawlaw

• Conduct market surveys and research into Conduct market surveys and research into consumer protection problemsconsumer protection problems

• Conduct product testing for safety and qualityConduct product testing for safety and quality

Consumer organizationsConsumer organizations

• Need for an independent party that is non-Need for an independent party that is non-political and non-commercialpolitical and non-commercial

• Need for views of the under-represented Need for views of the under-represented and vulnerable groupsand vulnerable groups

• Some have wide membership and broad Some have wide membership and broad spectrum of concernsspectrum of concerns

• Democracy involves participatory decision-Democracy involves participatory decision-making ; consultation with these groups is making ; consultation with these groups is part of the nation-building processpart of the nation-building process

Role of consumer Role of consumer organizationsorganizations• Provide independent information on Provide independent information on

products and servicesproducts and services• Organize mass action, such as letter-Organize mass action, such as letter-

writing campaigns, boycotts, rallies, etc.writing campaigns, boycotts, rallies, etc.• Advise and act on consumer complaints Advise and act on consumer complaints

and obtain redress for consumersand obtain redress for consumers• Organize workshops and seminars on Organize workshops and seminars on

particular issuesparticular issues

• Engage in public interest litigation on Engage in public interest litigation on behalf of consumersbehalf of consumers

• Conduct surveys and research to study Conduct surveys and research to study problems faced by consumers or the problems faced by consumers or the impact of government policies on impact of government policies on consumersconsumers

• Engage in dialogue with government and Engage in dialogue with government and business to inform, persuade or negotiate business to inform, persuade or negotiate on behalf of consumerson behalf of consumers

• Consult with stakeholders to Consult with stakeholders to understand consumer issues and understand consumer issues and develop policy to address problem develop policy to address problem areasareas

• Organize public education programsOrganize public education programs• Register and issue licenses for certain Register and issue licenses for certain

business activitiesbusiness activities• Issue administrative rules to regulate Issue administrative rules to regulate

business entitiesbusiness entities

Consumer Law: Consumer Law: ConstitutionsConstitutions• Early constitutions focused on civil Early constitutions focused on civil

and political rights (“first generation and political rights (“first generation rights”)rights”)– Freedom and security of an individualFreedom and security of an individual– Protection from state and public powerProtection from state and public power

• More recent constitutions confer More recent constitutions confer wider range of human rightswider range of human rights– Economic, social and cultural rightsEconomic, social and cultural rights– ““second generation rights”second generation rights”

• Trend is to include the right to developmentTrend is to include the right to development– ““third generation” or “solidarity” rightsthird generation” or “solidarity” rights

• In constitutions adopted since 1980’s, In constitutions adopted since 1980’s, consumer rights recognized as human rightsconsumer rights recognized as human rights

• Thus included in the constitutions of many Thus included in the constitutions of many countriescountries

• Recognize disparity of knowledge, resources Recognize disparity of knowledge, resources and bargaining power and provide for and bargaining power and provide for consumer rightsconsumer rights

Consumer Law: FrameworkConsumer Law: Framework

• Cover a broad range of practices, goods Cover a broad range of practices, goods and servicesand services

• Create consultative bodiesCreate consultative bodies• Vest agencies with rule-making powersVest agencies with rule-making powers• Create special tribunals with simplified Create special tribunals with simplified

procedures and rules of evidenceprocedures and rules of evidence• Confer on consumer groups the right to Confer on consumer groups the right to

represent individualsrepresent individuals• Provide for a range of remediesProvide for a range of remedies

Consumer RedressConsumer Redress

• Problems include:Problems include:– ExpenseExpense– Length of timeLength of time– AlienationAlienation– Adversarial Adversarial

• AlternativesAlternatives– Facilitating access to courtsFacilitating access to courts

•Legal aid for the needyLegal aid for the needy•Contingent fee systemContingent fee system•Permit paralegals to perform attorney Permit paralegals to perform attorney

functionsfunctions

– Court substitutes (ADR)Court substitutes (ADR)•Statute-based tribunalsStatute-based tribunals•ArbitrationArbitration•OmbudsmanOmbudsman

• Assessing efficacy of ADRsAssessing efficacy of ADRs– AccessAccess

• Widespread publicityWidespread publicity• CostCost• AccessibilityAccessibility

– FairnessFairness• IndependentIndependent

– TransparencyTransparency– EffectivenessEffectiveness

• Scope comprehensiveScope comprehensive• Procedures simpleProcedures simple• Rules of evidence relaxedRules of evidence relaxed• SpeedySpeedy• Decisions binding on industryDecisions binding on industry

Part II: Consumer Protection in Part II: Consumer Protection in the Marketplacethe MarketplaceCConsumer Information and Choiceonsumer Information and Choice

• ““Consumer information ideally is meant Consumer information ideally is meant to provide standardized, objective and to provide standardized, objective and impartial information direct to impartial information direct to consumers at the point of sale, in order consumers at the point of sale, in order for them to decide which of the many for them to decide which of the many branded products and services branded products and services available will best suit their own needs.”available will best suit their own needs.”

• Consumer information is especially Consumer information is especially needed whereneeded where– Products and services are high pricedProducts and services are high priced– Products and services are technically Products and services are technically

complexcomplex– No basis of assessment at point of saleNo basis of assessment at point of sale– Little consumer knowledge of required Little consumer knowledge of required

performance before purchaseperformance before purchase

• Where information is regulated (e.g., Where information is regulated (e.g., labels subject to mandatory labeling labels subject to mandatory labeling laws, such as pharmaceuticals) laws, such as pharmaceuticals) consumers have relatively few problemsconsumers have relatively few problems

• Where information is unregulated (e.g., Where information is unregulated (e.g., advertising or unregulated labels) advertising or unregulated labels) consumers have more problemsconsumers have more problems– Sometimes offset by information from Sometimes offset by information from

independent consumer groupsindependent consumer groups

• Additional problems arising from Additional problems arising from expansion of international tradeexpansion of international trade– Information on imported productsInformation on imported products

•Many don’t comply with voluntary labeling Many don’t comply with voluntary labeling standardsstandards

– Information provided electronically over Information provided electronically over the internet (later)the internet (later)

Critical issues related to Critical issues related to advertisingadvertising

• ““Commercial advertising, when it is Commercial advertising, when it is practiced fairly and responsibly, serves a practiced fairly and responsibly, serves a useful function, informing the public about useful function, informing the public about the existence of a product and the the existence of a product and the characteristics of the product. In order to be characteristics of the product. In order to be a positive influence, advertisements must a positive influence, advertisements must be truthful and informative, must not be truthful and informative, must not exaggerate the usefulness or qualities of exaggerate the usefulness or qualities of the product and should not play on the the product and should not play on the emotional needs of the consumer so as to emotional needs of the consumer so as to create artificial needs.”create artificial needs.”

• Consumer concerns with advertisingConsumer concerns with advertising– Ads for products proven to be unsafe and/or Ads for products proven to be unsafe and/or

addictive (e.g., alcohol and tobacco)addictive (e.g., alcohol and tobacco)– Ads that target and mislead vulnerable Ads that target and mislead vulnerable

communities about the productcommunities about the product– Ads that aggressively target children to consumer Ads that aggressively target children to consumer

foods high in fat, sugar and saltfoods high in fat, sugar and salt– Ads for products that contain toxic or cancer-Ads for products that contain toxic or cancer-

causing chemicals for which there is no scientific causing chemicals for which there is no scientific proof of safety levels (e.g., pesticides, aspartame, proof of safety levels (e.g., pesticides, aspartame, etc.)etc.)

• International codes on advertisingInternational codes on advertising– WHO/UNICEF Code of Marketing of WHO/UNICEF Code of Marketing of

Breastmilk Substitutes 1981Breastmilk Substitutes 1981– FAO International Code of Conduct on FAO International Code of Conduct on

the Distribution and Use of Pesticides the Distribution and Use of Pesticides 19851985

– Framework Convention on Tobacco Framework Convention on Tobacco Control 2003Control 2003

Product Safety LawsProduct Safety Laws

• Rationale for product safety lawsRationale for product safety laws– Products are increasing in complexity and Products are increasing in complexity and

sophistication; reasonable inspection will not sophistication; reasonable inspection will not reveal latent defects or hazardsreveal latent defects or hazards

– Minimum and uniform standards ensure Minimum and uniform standards ensure developing countries do not become dumping developing countries do not become dumping grounds for sub-standard products rejected in grounds for sub-standard products rejected in the country of originthe country of origin

– International standards will provide for International standards will provide for unimpeded access to overseas marketsunimpeded access to overseas markets

• Components (5) of a comprehensive Components (5) of a comprehensive product safety policy:product safety policy:

• 1. Preparatory action1. Preparatory action– Surveillance of products in the marketSurveillance of products in the market– Data collection (local and foreign sources)Data collection (local and foreign sources)

• ““Consolidated List of Products Whose Consumption Consolidated List of Products Whose Consumption and/or Sale Have Been Banned, Withdrawn, Severely and/or Sale Have Been Banned, Withdrawn, Severely Restricted, or Not Approved by Governments”Restricted, or Not Approved by Governments”

• 2. Regulatory action2. Regulatory action– Development of product safety Development of product safety

standardsstandards

• 3. Monitoring action3. Monitoring action– Testing by government or reliable Testing by government or reliable

independent consumer organizationsindependent consumer organizations

• 4. Corrective action4. Corrective action– Impose product bansImpose product bans– Warning noticesWarning notices– Product recallsProduct recalls– Seize stocksSeize stocks– Destroy stocksDestroy stocks– Require modifications of the productRequire modifications of the product

• 5. Compensatory actions5. Compensatory actions– Compensate consumers for lossCompensate consumers for loss– Deter future wrongdoingDeter future wrongdoing

Consumer CreditConsumer Credit

• Credit increases demand for and Credit increases demand for and consumption of goods and servicesconsumption of goods and services

• Critical to economic growthCritical to economic growth• Unfettered growth of credit has Unfettered growth of credit has

negative consequencesnegative consequences– Impulse buyingImpulse buying– Extra costs associated with creditExtra costs associated with credit– Excessive debtExcessive debt

• The poor pay moreThe poor pay more– Ineligible for credit in many stores; thus buy Ineligible for credit in many stores; thus buy

shoddy goods at higher pricesshoddy goods at higher prices– If credit advanced, higher rates chargedIf credit advanced, higher rates charged

• Credit often advanced to individuals with a Credit often advanced to individuals with a history of defaulthistory of default

• Increased complexity of transactions (e.g. Increased complexity of transactions (e.g. home equity loans/lines of credit) require home equity loans/lines of credit) require more complex documentsmore complex documents– More difficult to understand and compare More difficult to understand and compare

terms, including cost of creditterms, including cost of credit

• Consumer credit laws shouldConsumer credit laws should– Require lenders to provide consumers with Require lenders to provide consumers with

copies of all documentscopies of all documents– Establish a single method of calculating Establish a single method of calculating

interest ratesinterest rates– Conspicuously disclose the rateConspicuously disclose the rate– Control the price of creditControl the price of credit– Regulate credit-related insuranceRegulate credit-related insurance– Provide right to cancel (“cooling off” period)Provide right to cancel (“cooling off” period)

Electronic commerceElectronic commerce

• 1996 fewer than 40 million connected to 1996 fewer than 40 million connected to internetinternet

• 1997 number increased to 96 million1997 number increased to 96 million

• 2005 predicted to be nearly 1 billion2005 predicted to be nearly 1 billion

• 1998 27.6 million buying goods and services 1998 27.6 million buying goods and services online worth $32 milliononline worth $32 million

• 2002 more than 128 million spending over 2002 more than 128 million spending over $425 million$425 million

• Issues:Issues:– Consumer redress in cyberspace Consumer redress in cyberspace

disputesdisputes– PrivacyPrivacy– Identification of providerIdentification of provider– Security of paymentsSecurity of payments– FraudFraud

• Organization for Economic Cooperation Organization for Economic Cooperation and Development (OECD)and Development (OECD)

• United Nations Commission on United Nations Commission on International Trade Law (UNCITRAL)International Trade Law (UNCITRAL)

• Alliance for Global Business (AGB)Alliance for Global Business (AGB)– International trade associationsInternational trade associations

• Global Business Dialog on Electronic Global Business Dialog on Electronic Commerce (GBDe)Commerce (GBDe)– CEO-led business initiativeCEO-led business initiative

• International Chamber of Commerce (ICC)International Chamber of Commerce (ICC)

Part III: Consumer Protection Part III: Consumer Protection and Basic Needsand Basic NeedsConsumer EducationConsumer Education

• Objectives of consumer education are:Objectives of consumer education are:

• Develop skills to make informed decisions in Develop skills to make informed decisions in the purchase of goods and services in light ofthe purchase of goods and services in light of– Personal valuesPersonal values– Maximum utilization of resourcesMaximum utilization of resources– Available alternativesAvailable alternatives– Ecological considerationsEcological considerations– Changing economic conditionsChanging economic conditions

• Become knowledgeable about the law and Become knowledgeable about the law and consumer rights, in order to participate consumer rights, in order to participate effectively and confidently in the effectively and confidently in the marketplace and take appropriate action to marketplace and take appropriate action to seek redressseek redress

• Develop an understanding of the citizen’s Develop an understanding of the citizen’s role in the economic, social and government role in the economic, social and government systems and to influence those systems to systems and to influence those systems to make them responsive to consumer needsmake them responsive to consumer needs

• Consumer education is not the same Consumer education is not the same thing as consumer informationthing as consumer information– Consumer education improves Consumer education improves

consumer’s ability to use informationconsumer’s ability to use information

• ““By exercising free choice, based on By exercising free choice, based on knowledge of the facts, the consumer will knowledge of the facts, the consumer will be able to make the best use of his be able to make the best use of his resources, money, time, knowledge and resources, money, time, knowledge and ability. He will thereby contribute to the ability. He will thereby contribute to the proper functioning of the economy and proper functioning of the economy and stimulating effective and fair competition stimulating effective and fair competition and he will thereby contribute to social and and he will thereby contribute to social and economic development.”economic development.”– Council of Europe (1981)Council of Europe (1981)

• Modern conception of consumer education Modern conception of consumer education reflects the inter-relationship between the reflects the inter-relationship between the private household and societal responsibilitiesprivate household and societal responsibilities

• Concepts such as sustainable consumption are Concepts such as sustainable consumption are woven into education about the impact of woven into education about the impact of modern consumer lifestyles on the environmentmodern consumer lifestyles on the environment

• In developing countries, consumer education is In developing countries, consumer education is a tool to ensure that scarce resources of poorer a tool to ensure that scarce resources of poorer consumers are not fritted away by unethical consumers are not fritted away by unethical business practicesbusiness practices

• Strategies for implementing Strategies for implementing consumer educationconsumer education

• A comprehensive program is directed A comprehensive program is directed to all consumersto all consumers– SchoolsSchools

•Skills to make informed decisionsSkills to make informed decisions•Skills to understand the impact of decisions Skills to understand the impact of decisions

of individuals, businesses and governments of individuals, businesses and governments on the lives of otherson the lives of others

– Those outside formal educationThose outside formal education•Mass mediaMass media

•Trade associationsTrade associations

•Trade unionsTrade unions

•Resident associationsResident associations

– Special focus onSpecial focus on•Rural areasRural areas

•Low incomeLow income

•Vulnerable groups (seniors; disabled)Vulnerable groups (seniors; disabled)

• Six fields of content suggested by the Six fields of content suggested by the Nordic Council of Ministers (1999)Nordic Council of Ministers (1999)– Personal financesPersonal finances– Rights and obligationsRights and obligations– Commercial persuasionCommercial persuasion– Consumption, environment and ethicsConsumption, environment and ethics– FoodFood– SafetySafety

UtilitiesUtilities

• Utilities are considered basic needsUtilities are considered basic needs

• Universal Declaration of Human Universal Declaration of Human Rights states that everyone has the Rights states that everyone has the right of equal access to public right of equal access to public services in his/her countryservices in his/her country

• 1.6 billion do not have access to 1.6 billion do not have access to energy supplyenergy supply

• Over 1 billion lack access to clean Over 1 billion lack access to clean waterwater

• One half of the world’s population has One half of the world’s population has made a phone callmade a phone call

• 5% of the world uses the internet5% of the world uses the internet– 88% of those are in developed world 88% of those are in developed world

(15% of world’s population)(15% of world’s population)

• Utilities present unique problems for Utilities present unique problems for consumersconsumers– Generally involve basic and essential servicesGenerally involve basic and essential services– Peculiar economic characteristics that make Peculiar economic characteristics that make

competition difficultcompetition difficult

• Public policy has focused on regulating Public policy has focused on regulating monopolies for public protectionmonopolies for public protection– Price and other controlsPrice and other controls– Public ownershipPublic ownership

• Support for privatization based onSupport for privatization based on– Inefficiency of government ownershipInefficiency of government ownership– CorruptionCorruption– Failures in developing countries to Failures in developing countries to

provide adequate levels of serviceprovide adequate levels of service

The special case of waterThe special case of water

• One reason for problems stemming from One reason for problems stemming from state ownership of water is that it’s too cheapstate ownership of water is that it’s too cheap

• Prices are kept artificially lowPrices are kept artificially low– On average, price covers 1/3 of costOn average, price covers 1/3 of cost– Shortfall made up by government subsidiesShortfall made up by government subsidies

• ConsequencesConsequences– Consumption is encouragedConsumption is encouraged– No incentive to conserveNo incentive to conserve– shortagesshortages– Governments don’t have the money to invest in Governments don’t have the money to invest in

infrastructure improvements or pay off debtsinfrastructure improvements or pay off debts

• Response of IMF and World Bank is Response of IMF and World Bank is privatizationprivatization– Introduce market disciplineIntroduce market discipline– Give access to financial capital Give access to financial capital

necessary for infrastructure expansionnecessary for infrastructure expansion

• Built into loan conditionality Built into loan conditionality agreements or structural adjustment agreements or structural adjustment programsprograms

• Privatization is controversialPrivatization is controversial– Results in increased cost to consumersResults in increased cost to consumers– Some consumers may not be able to afford itSome consumers may not be able to afford it

• Governments must raise prices to make sale Governments must raise prices to make sale possible; profit of buyers factored inpossible; profit of buyers factored in

– Potential abuses of monopoly powerPotential abuses of monopoly power– Improvements to infrastructure and potential Improvements to infrastructure and potential

extension of service to additional consumers extension of service to additional consumers may be offset by refusal to extend to non-may be offset by refusal to extend to non-profitable areasprofitable areas

– Buyers tend to be western multi-Buyers tend to be western multi-nationalsnationals•Loss of economic independenceLoss of economic independence

•Foreign owners dictating termsForeign owners dictating terms

•Concentration of developing world resources Concentration of developing world resources in western ownershipin western ownership

• Privatized systems must include:Privatized systems must include:– Guaranteed universal accessGuaranteed universal access– Fair pricing structureFair pricing structure– Uniform quality standardsUniform quality standards– Protection from termination of serviceProtection from termination of service

Food: Security and SafetyFood: Security and Safety

• International law recognizes the right to foodInternational law recognizes the right to food– Physical and economic access to foodPhysical and economic access to food– Access to food of adequate quality and quantityAccess to food of adequate quality and quantity– Having the means to obtain itHaving the means to obtain it

• By way of production or procurementBy way of production or procurement

• Food security defined by FAO as food that is Food security defined by FAO as food that is “safe, nutritious and culturally acceptable “safe, nutritious and culturally acceptable and is available, accessible and affordable to and is available, accessible and affordable to all people”all people”

• Over 800 million people suffer from Over 800 million people suffer from hunger and food insecurityhunger and food insecurity– 99% are in the developing world99% are in the developing world

•21% of population of India21% of population of India

•11% of population of China11% of population of China

•58% of population of Central Africa58% of population of Central Africa

• 1996 World Food Summit, 185 countries 1996 World Food Summit, 185 countries and the EC made a commitment to achieve and the EC made a commitment to achieve universal food security.universal food security.

• Pledged to reduce number of hungry people Pledged to reduce number of hungry people in world to half (to 400 million) by 2015in world to half (to 400 million) by 2015

• According to FAO, number of According to FAO, number of undernourished falling at rate of 8 million undernourished falling at rate of 8 million per year (target of 20)per year (target of 20)

• Thus goal won’t be reached until 2030Thus goal won’t be reached until 2030

Hunger FactsHunger Facts

• There is enough food to feed all the There is enough food to feed all the people in the worldpeople in the world– 4.5 pounds per person per day4.5 pounds per person per day

• Real causes of hunger are poverty, Real causes of hunger are poverty, inequality and lack of accessinequality and lack of access

• Rapid increase in food production Rapid increase in food production doesn’t necessarily result in food doesn’t necessarily result in food securitysecurity– 78% of countries reporting child 78% of countries reporting child

malnourishment export food!malnourishment export food!• India had 42 million ton grain surplus in India had 42 million ton grain surplus in

20002000

•5,000 Indian children die each day of 5,000 Indian children die each day of malnutritionmalnutrition

• Prosperity of a country no guarantee Prosperity of a country no guarantee that citizens won’t go hungrythat citizens won’t go hungry– US has highest GDP in worldUS has highest GDP in world– 4.2 million households (4.1%) 4.2 million households (4.1%)

experience hunger at least part of the experience hunger at least part of the yearyear

Role of food importsRole of food imports

• Removal of import restrictions and lower Removal of import restrictions and lower food tariffs make importation of highly food tariffs make importation of highly subsidized food an attractive alternativesubsidized food an attractive alternative

• Potential problems:Potential problems:– Vulnerability to price and supply fluctuations Vulnerability to price and supply fluctuations

and political upheavaland political upheaval– Subject to manipulation by transnational Subject to manipulation by transnational

corporationscorporations– Undermine livelihood of farmers Undermine livelihood of farmers

• Consumer groups should focus government attention Consumer groups should focus government attention on:on:

• Promoting food security and improved access to foodPromoting food security and improved access to food• Reconciling demand for cheap food with adequate Reconciling demand for cheap food with adequate

compensation to farmerscompensation to farmers– Often involves scrutiny of middlemenOften involves scrutiny of middlemen

• Address underlying causes of povertyAddress underlying causes of poverty• Give priority to production of staple foods for Give priority to production of staple foods for

domestic consumptiondomestic consumption• Address issues that contribute to food securityAddress issues that contribute to food security

– UrbanizationUrbanization– Land degradationLand degradation– Water scarcityWater scarcity

Food safetyFood safety

• Food safety risks are increasingFood safety risks are increasing– Movement of food and live animals across Movement of food and live animals across

bordersborders– Changes in food handlingChanges in food handling– Emergence of new pathogensEmergence of new pathogens

• Risks greater in developing countriesRisks greater in developing countries• Pesticide risksPesticide risks

– Direct risk through application processDirect risk through application process– Indirect risk through toxic residues in foodIndirect risk through toxic residues in food

• Hormones, veterinary drugs and Hormones, veterinary drugs and antibiotics in animalsantibiotics in animals

• Building food safety capacity is Building food safety capacity is essential, especially in developing essential, especially in developing countriescountries– Food borne disease has significant Food borne disease has significant

impact on both health and developmentimpact on both health and development

• Many developing countries lack the Many developing countries lack the resources and expertise to resources and expertise to implement food safety policiesimplement food safety policies

Codex Alimentarius Codex Alimentarius CommissionCommission

• Established by FAO and WHO in 1962Established by FAO and WHO in 1962

• Harmonize food standards between Harmonize food standards between countriescountries

• Protect health of consumers and Protect health of consumers and ensure fair practices in food tradeensure fair practices in food trade

• Membership of 165 countries Membership of 165 countries representing 98% of world populationrepresenting 98% of world population

• Codex committeesCodex committees– Meat and poultry hygieneMeat and poultry hygiene– Food additives and contaminantsFood additives and contaminants– Pesticide residuesPesticide residues– Residues of veterinary drugs in foodsResidues of veterinary drugs in foods– Food hygieneFood hygiene– Animal feedingAnimal feeding– Biotechnology Biotechnology

Consumer concerns with Consumer concerns with genetic engineeringgenetic engineering

• Concerns about GE relate toConcerns about GE relate to– Sustainability of biodiversitySustainability of biodiversity– Ecological balance of life support systemsEcological balance of life support systems– WildlifeWildlife– Environment Environment – Health problemsHealth problems

• Groups have called for moratorium on Groups have called for moratorium on planting GE crops until safety concerns are planting GE crops until safety concerns are addressed and appropriate controls put in addressed and appropriate controls put in placeplace

• Appropriate controls includeAppropriate controls include– Labeling of GE importsLabeling of GE imports– Banning of unlabeled GE foodsBanning of unlabeled GE foods

• Some countries already have labeling Some countries already have labeling laws in placelaws in place

Sustainable ConsumptionSustainable ConsumptionThe concept of sustainable The concept of sustainable consumptionconsumption

• Ever-increasing consumption is Ever-increasing consumption is putting a strain the environmentputting a strain the environment

• Outcome of the development model Outcome of the development model the North follows and the South the North follows and the South emulatesemulates

• Sustainable consumption is viewed Sustainable consumption is viewed as the only long-term strategy for as the only long-term strategy for survivalsurvival

• Many definitions of sustainable consumptionMany definitions of sustainable consumption• All share these basic principles:All share these basic principles:

– Satisfaction of basic needs to improve quality of Satisfaction of basic needs to improve quality of lifelife

– Improving efficiency in resource useImproving efficiency in resource use– Minimizing emissions of wastes taking into Minimizing emissions of wastes taking into

consideration the capacity of the earth to consideration the capacity of the earth to assimilate the wastesassimilate the wastes

– Adopting consumption patterns that will not Adopting consumption patterns that will not jeopardize the needs of current and future jeopardize the needs of current and future generationsgenerations

– Ensuring equity in consumption within countries Ensuring equity in consumption within countries and between countriesand between countries

ObstaclesObstacles

• IgnoranceIgnorance– We don’t know level of per capita consumption We don’t know level of per capita consumption

the planet can sustainthe planet can sustain

• InequalityInequality– Differences within and between nations make Differences within and between nations make

developing a common agenda difficultdeveloping a common agenda difficult

• InstitutionsInstitutions– Existing political and economic mechanisms for Existing political and economic mechanisms for

addressing major international problems of the addressing major international problems of the environment are inadequateenvironment are inadequate

SuccessesSuccesses

• Growth in use of material resources has Growth in use of material resources has slowed as a result of shifts in demand slowed as a result of shifts in demand towards less material-intensive productstowards less material-intensive products

• Emissions have been reduced as a result Emissions have been reduced as a result of tighter regulations and incentivesof tighter regulations and incentives

• Municipal waste growth has slowed or Municipal waste growth has slowed or declineddeclined

Obligations of governmentObligations of government

• UN Guidelines on Consumer Protection:UN Guidelines on Consumer Protection:• Minimize resource utilizationMinimize resource utilization

– E.g., greater efficiency in use of energyE.g., greater efficiency in use of energy

• Exercise leadershipExercise leadership– Adopt and enforce regulationsAdopt and enforce regulations

• Reinforce valuesReinforce values– Consumer education programs for Consumer education programs for

consumers on impacts of their choices and consumers on impacts of their choices and behaviorbehavior

Obligations of the corporate Obligations of the corporate sectorsector• World Business Council for Sustainable World Business Council for Sustainable

Development in 2001 proposed a seven-Development in 2001 proposed a seven-point blueprint for corporations; include:point blueprint for corporations; include:– Develop technological and social innovations to Develop technological and social innovations to

improve quality of life and tackle depletion of improve quality of life and tackle depletion of resourcesresources

– Use media and advertising to promote Use media and advertising to promote sustainabilitysustainability

– Create markets that reflect real economic, Create markets that reflect real economic, social and environmental costssocial and environmental costs

– Create opportunities for the poorest segments Create opportunities for the poorest segments of societyof society

Obligations of consumersObligations of consumers

• CI urges consumer organizations to:CI urges consumer organizations to:– Educate members on sustainable consumption in Educate members on sustainable consumption in

order to change attitudes and behaviororder to change attitudes and behavior– Provide information to consumers on products and Provide information to consumers on products and

services and demand that same be provided by services and demand that same be provided by merchantsmerchants

– Regularly assess environmental aspects of Regularly assess environmental aspects of productsproducts

– Represent the environmental interests of Represent the environmental interests of consumers at all relevant national and consumers at all relevant national and international forumsinternational forums

• Consumers are encouraged to avoid Consumers are encouraged to avoid products thatproducts that– Cause environmental degradation during the Cause environmental degradation during the

extraction of natural resources or during their extraction of natural resources or during their manufacture, use and disposalmanufacture, use and disposal

– Utilize large amounts of energy during their Utilize large amounts of energy during their manufacture, use or disposalmanufacture, use or disposal

– Cause unnecessary waste, due to over-Cause unnecessary waste, due to over-packaging or unduly short life spanpackaging or unduly short life span

– Utilize materials derived from threatened Utilize materials derived from threatened species or environmentsspecies or environments

– Adversely affect other countries and Adversely affect other countries and communities, especially those in the Southcommunities, especially those in the South

• ““Consumers may be willing to take easy Consumers may be willing to take easy steps that benefit the environment; but steps that benefit the environment; but may not make significant changes in may not make significant changes in buying habits, pay markedly higher costs, buying habits, pay markedly higher costs, or make changes in basic lifestyles. Yet or make changes in basic lifestyles. Yet sustainable consumption calls for such sustainable consumption calls for such effective approaches. Consumer effective approaches. Consumer conscience has to be sufficiently modified conscience has to be sufficiently modified such as to effect changes in behavior. This such as to effect changes in behavior. This is the ultimate challenge for the consumer is the ultimate challenge for the consumer movement. Consumers have to be movement. Consumers have to be convinced that when they vote with their convinced that when they vote with their pockets they are in fact exercising a pockets they are in fact exercising a social, moral and political responsibility social, moral and political responsibility that goes beyond their own parochial that goes beyond their own parochial interests and their present generation.”interests and their present generation.”