UK holding back negotiations on food speculation in Europe
Meanwhile the Swiss vote to ban speculation
Over the last few years, the World Development Movement (WDM) has been tirelessly campaigning on food speculation and the effects it has on world food prices.
Their efforts may soon reap rewards. Key decisions around the future rules of food speculation are currently at the hands of the three European institutions.
After years of intense lobbying by WDM local group members, staff and its allies across Europe, the Europe Commission published a proposed compromise text in September 2013. While the compromise text wasn't perfect it did address some of the biggest concerns WDM had about the way speculators might be able to evade new rules.
Last week the negotiators met to discuss this proposed compromise. But no agreement could be reached because of differences between the different EU member state governments.
Specifically, the UK, in contrast to most of the other big countries such as France, Germany and Italy, disagreed with proposals to remove major loopholes.
The UK claimed that since many commodities were traded in London, it wanted its own rules rather than agreeing common EU limits which would ensure traders could not play different countries off against each other in a race to have the weakest controls on food speculation.
In addition the UK also failed to support efforts to make sure all types contracts were covered by the new rules, preferring to exempt its favourite toys – shady, bilaterally traded contracts of the type that helped contribute to the financial crisis – from limits on speculation.
WDM will be sending a letter to the financial secretary to the treasury, Sajid Javid, this week highlighting the problems with food speculation.
Switzerland votes to ban food speculation
Reuters reported on 1st October 2013 that Switzerland will be forced to take a vote on banning speculation in agricultural commodities after the Young Socialist party gained more than 100,000 signatures required for a vote to change the constitution.
The timing of the national vote was not clear and was pending official guidance from the government. But the proposal, entitled "No Speculation on Food Commodities" would affect companies with a subsidiary in Switzerland, even if their headquarters were elsewhere. It would also apply to firms investing in agricultural commodities for themselves or on behalf of clients.
The Young Socialist Party said it was concerned that "prices were moving based on factors that have nothing to do with the real market".
The Swiss direct democratic system has several referendums a year, meaning that public ire can be translated into strong action. Swiss government records showed that politicians had submitted more than twenty parliamentary requests on the commodities sector since the start of last year on topics ranging from oil-related corruption scandals in Nigeria to tax planning for commodity traders.
Stephane Graber, secretary general of industry body the Geneva Trading and Shipping Association said that he did not expect the latest proposal on food speculation to have much impact on Swiss companies.
Switzerland's Cabinet was also considering a motion for a law on transparency rules that would go beyond those in the US and EU by explicitly targeting unlisted trading houses for the first time.