‘Cost of defaults’ on WTO agenda
At its recent global review of ‘aid for trade’ in Geneva, the World Trade Organisation invited the ICA to participate in a session focussing on reducing costs in the cotton supply chain. Kai Hughes, ICA Managing Director, addressed the conference confirming that the cost of defaults in recent years is close to $500m.
Sharing the platform with three ministers from African nations and ICAC’s Jose Sette, Kai talked about the unquantifiable cost of defaults to governments, such as loss of foreign investment and reputation. He encouraged governments to ensure that their legal systems were fair and effective, with judges trained in dealing with foreign arbitration awards under the New York Convention.
Kai also highlighted the negative reputational costs to states who ignore multiple defaults in countries reliant on the textile trade for a large percentage of its GDP. He urged governments not to be tempted to adopt protectionist policies in response, but be prepared to intervene in private commercial disputes by working with key organisations to seek a solution on behalf of both buyers and sellers.