consumer protection 3

8/2/2019 Consumer Protection 3

1/94

Consumer ProtectionConsumer ProtectionSource: Manual on Consumer ProtectionSource: Manual on Consumer Protection

United Nations Conference on Trade andUnited Nations Conference on Trade and

Development (UNCTAD)Development (UNCTAD)20042004


2/94

Overview: Three broad categoriesOverview: Three broad categories

1. Consumer Protection System1. Consumer Protection System Policies, laws, institutions and structures thatPolicies, laws, institutions and structures that

form the framework for a consumerform the framework for a consumerprotection systemprotection system

UN GuidelinesUN Guidelines

Consumer Protection Agencies/OrganizationsConsumer Protection Agencies/Organizations

Consumer Protection LawConsumer Protection Law

Consumer RedressConsumer Redress


3/94

2. Consumer Protection in the Marketplace2. Consumer Protection in the MarketplaceVarious transactions that consumers enter in aVarious transactions that consumers enter in a

market economymarket economy Consumer informationConsumer information

Product safety and liabilityProduct safety and liability

Consumer creditConsumer credit

InsuranceInsurance

Electronic commerceElectronic commerce


4/94

3. Consumer Protection and Basic Needs3. Consumer Protection and Basic Needs Consumer educationConsumer education

The provision of utilitiesThe provision of utilities FoodFood

Health care deliveryHealth care delivery

Sustainable consumptionSustainable consumption


5/94

Part I. Consumer Protection SystemPart I. Consumer Protection SystemRationale for consumer protectionRationale for consumer protection

Addresses disparities in consumer-supplierAddresses disparities in consumer-supplierrelationshiprelationship

Bargaining powerBargaining power KnowledgeKnowledge

ResourcesResources


6/94

State intervention premised on grounds ofState intervention premised on grounds of Economic efficiencyEconomic efficiency

Individual rightsIndividual rights

Distributive justiceDistributive justiceAchieving bargaining equality between consumer andAchieving bargaining equality between consumer and

producer interestsproducer interests

Alleviating the problems of the particularly disadvantagedAlleviating the problems of the particularly disadvantaged Poor, elderly, childrenPoor, elderly, children

Consumerism, especially in the developing world, is nowConsumerism, especially in the developing world, is nowseen as a fundamental part of the strategy to eradicateseen as a fundamental part of the strategy to eradicatepoverty and to bring socio-economic justice to thepoverty and to bring socio-economic justice to theunderprivileged.underprivileged.


7/94

Positive communal valuesPositive communal values

Right to developmentRight to development


8/94

Consumer RightsConsumer Rights

John F. Kennedys Message to CongressJohn F. Kennedys Message to Congresson March 15, 1962on 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


9/94

1982 Consumer Internationals Charter of1982 Consumer Internationals Charter ofConsumer RightsConsumer Rights

Eight rightsEight rights Right to basic needsRight to basic needs Food, clothing, shelter, health care, education,Food, clothing, shelter, health care, education,

water and sanitationwater and sanitation

Right to safetyRight to safety Right to informationRight to information

Right to choiceRight to choice


10/94

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 adoption ofRights further re-enforced by adoption ofUN Guidelines on Consumer Protection inUN Guidelines on Consumer Protection in1985 and 19991985 and 1999


11/94

Who is the consumer?Who is the consumer?

Original definition limited to purchases forOriginal definition limited to purchases forpersonal consumptionpersonal consumption

More recently includes small operatorsMore recently includes small operatorsApplies to farmersApplies to farmers

Assures reasonable prices and quality of farmAssures reasonable prices and quality of farm

inputsinputs


12/94

Who is responsible for consumerWho is responsible for consumer

protection?protection?

Government agenciesGovernment agencies Ministry of Commerce, Investment andMinistry of Commerce, Investment and

Consumer AffairsConsumer Affairs Professional/Industry associationsProfessional/Industry associations

Consumer organizationsConsumer organizations

St. Lucia Consumer AssociationSt. Lucia Consumer Association


13/94

U.N. Guidelines on ConsumerU.N. Guidelines on Consumer

Protection (UNGCP)Protection (UNGCP)

Provide a framework for governments toProvide a framework for governments todevelop and strengthen consumerdevelop and strengthen consumer

protection policies and legislationprotection policies and legislation Minimum guarantee by governments thatMinimum guarantee by governments that

the measures will be undertakenthe measures will be undertaken


14/94

Obligations imposed onObligations imposed on

governments by the UNGCPgovernments by the UNGCP

1. Physical Safety1. Physical SafetyAssure that products are safe and conform toAssure that products are safe and conform to

safety standardssafety standards Consumers receive information on proper useConsumers receive information on proper use

of goods and risks involvedof goods and risks involved

Measures are in place for notification andMeasures are in place for notification and

recall of unsafe goodsrecall of unsafe goods


15/94

2. Consumers economic interests2. Consumers economic interests Consumers obtain optimum benefit from theirConsumers obtain optimum benefit from their

economic resourceseconomic resources

Ensuring that goods meet production and performanceEnsuring that goods meet production and performancestandardsstandards

Adequate distribution channels and after sales servicesAdequate distribution channels and after sales services

Fair business practices are employedFair business practices are employed

Protection against contractual abusesProtection against contractual abuses Information is adequate for consumers to make informedInformation is adequate for consumers to make informed

decisions and exercise choicedecisions and exercise choice


16/94

3. Standards for safety and quality of3. Standards for safety and quality ofgoods and servicesgoods and services

Ensure there are national standards for safetyEnsure there are national standards for safetyand quality of goods and servicesand quality of goods and services

Such standards conform to internationalSuch standards conform to international

standardsstandards

Facilities to test and certify goods and servicesFacilities to test and certify goods and services

are encouragedare encouraged


17/94

4. Distribution facilities for essential goods4. Distribution facilities for essential goodsand servicesand services

Especially to consumers who areEspecially to consumers who aredisadvantaged, e.g., in rural areasdisadvantaged, e.g., in rural areas


18/94

5. Redress5. Redress Establish and publicize mechanisms that areEstablish and publicize mechanisms that are

fair, affordable and accessiblefair, affordable and accessible Especially taking into consideration the needs ofEspecially taking into consideration the needs of

low-income consumerslow-income consumers


19/94


20/94

7. Promotion of sustainable consumption7. Promotion of sustainable consumption Should be done in conjunction with civilShould be done in conjunction with civil

society organizations and business groupssociety organizations and business groups Sustainable consumption practices withinSustainable consumption practices within

government, by business enterprises and bygovernment, by business enterprises and by

consumersconsumers


21/94

8. Measures relating to food, water and8. Measures relating to food, water andpharmaceuticalspharmaceuticals

Prioritizes these areasPrioritizes these areas Should ensure quality control, adequateShould ensure quality control, adequate

distribution and standardized informationdistribution and standardized information


22/94

Food productionFood production Sustainable agricultural polices and practicesSustainable agricultural polices and practices

Conservation of biodiversityConservation of biodiversity Traditional knowledgeTraditional knowledge


23/94

Drinking waterDrinking water National policies should be developed toNational policies should be developed to

improve supply, distribution and quality ofimprove supply, distribution and quality ofwater for drinking and other purposeswater for drinking and other purposes


24/94

PharmaceuticalsPharmaceuticals Develop national policies to ensureDevelop national policies to ensure

appropriate use, procurement, distribution,appropriate use, procurement, distribution,production, licensing arrangements,production, licensing arrangements,

registration systems and information toregistration systems and information to

consumersconsumers


25/94

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

Doesnt fully account for globalization andDoesnt fully account for globalization andother changes in marketplaceother changes in marketplace


26/94

Functions of a consumer protectionFunctions of a consumer protection

agencyagency

Advise the government on consumer issuesAdvise the government on consumer issues

Represent the consumer interest in otherRepresent the consumer interest in other

governmental committeesgovernmental committees Enforce consumer protection and competitionEnforce consumer protection and competition

lawlaw

Conduct market surveys and research intoConduct market surveys and research intoconsumer protection problemsconsumer protection problems

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


27/94

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 andNeed for views of the under-represented andvulnerable groupsvulnerable groups

Some have wide membership and broadSome have wide membership and broadspectrum of concernsspectrum of concerns

Democracy involves participatory decision-Democracy involves participatory decision-making ; consultation with these groups is partmaking ; consultation with these groups is partof the nation-building processof the nation-building process


28/94

Role of consumer organizationsRole of consumer organizations

Provide independent information onProvide independent information onproducts 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 complaintsAdvise and act on consumer complaints

and obtain redress for consumersand obtain redress for consumers

Organize workshops and seminars onOrganize workshops and seminars onparticular issuesparticular issues


29/94

Engage in public interest litigation on behalf ofEngage in public interest litigation on behalf ofconsumersconsumers

Conduct surveys and research to study problemsConduct surveys and research to study problemsfaced by consumers or the impact offaced by consumers or the impact ofgovernment policies on consumersgovernment policies on consumers

Engage in dialogue with government andEngage in dialogue with government and

business to inform, persuade or negotiate onbusiness to inform, persuade or negotiate onbehalf of consumersbehalf of consumers


30/94

Consult with stakeholders to understandConsult with stakeholders to understandconsumer issues and develop policy toconsumer issues and develop policy to

address problem areasaddress problem areas Organize public education programsOrganize public education programs Register and issue licenses for certainRegister and issue licenses for certain

business activitiesbusiness activities

Issue administrative rules to regulateIssue administrative rules to regulatebusiness entitiesbusiness entities


31/94

Consumer Law: ConstitutionsConsumer Law: Constitutions

Early constitutions focused on civil andEarly constitutions focused on civil andpolitical rights (first generation rights)political rights (first generation 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 widerMore recent constitutions confer widerrange of human rightsrange of human rights Economic, social and cultural rightsEconomic, social and cultural rights

second generation rightssecond generation rights


32/94

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 1980s, consumerIn constitutions adopted since 1980s, consumerrights recognized as human rightsrights recognized as human rights

Thus included in the constitutions of manyThus included in the constitutions of manycountriescountries

Recognize disparity of knowledge, resources andRecognize disparity of knowledge, resources andbargaining power and provide for consumerbargaining power and provide for consumerrightsrights


33/94

Consumer Law: FrameworkConsumer Law: Framework

Cover a broad range of practices, goods andCover a broad range of practices, goods andservicesservices

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

procedures and rules of evidenceprocedures and rules of evidence

Confer on consumer groups the right toConfer on consumer groups the right torepresent individualsrepresent individuals Provide for a range of remediesProvide for a range of remedies


34/94

Consumer RedressConsumer Redress

Problems include:Problems include: ExpenseExpense

Length of timeLength of timeAlienationAlienation

AdversarialAdversarial


35/94

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 functionsPermit paralegals to perform attorney functions

Court substitutes (ADR)Court substitutes (ADR)

Statute-based tribunalsStatute-based tribunalsArbitrationArbitration OmbudsmanOmbudsman


36/94

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

P t II C P t ti i thPa t II Cons me P otection in the


37/94

Part II: Consumer Protection in thePart II: Consumer Protection in the

MarketplaceMarketplace

CConsumer Information and Choiceonsumer Information and Choice

Consumer information ideally is meant toConsumer information ideally is meant toprovide standardized, objective andprovide standardized, objective andimpartial information direct to consumersimpartial information direct to consumers

at the point of sale, in order for them toat the point of sale, in order for them to

decide which of the many brandeddecide which of the many brandedproducts and services available will bestproducts and services available will best

suit their own needs.suit their own needs.


38/94

Consumer information is especially neededConsumer information is especially neededwherewhere

Products and services are high pricedProducts and services are high priced Products and services are technically complexProducts and services are technically complex

No basis of assessment at point of saleNo basis of assessment at point of sale

Little consumer knowledge of requiredLittle consumer knowledge of requiredperformance before purchaseperformance before purchase


39/94

Where information is regulated (e.g.,Where information is regulated (e.g.,labels subject to mandatory labeling laws,labels subject to mandatory labeling laws,

such as pharmaceuticals) consumers havesuch as pharmaceuticals) consumers haverelatively few problemsrelatively 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 fromSometimes offset by information from

independent consumer groupsindependent consumer groups


40/94

Additional problems arising fromAdditional problems arising fromexpansion of international tradeexpansion of international trade

Information on imported productsInformation on imported products Many dont comply with voluntary labelingMany dont comply with voluntary labeling

standardsstandards

Information provided electronically over theInformation provided electronically over the

internet (later)internet (later)


41/94

Critical issues related to advertisingCritical issues related to advertising

Commercial advertising, when it is practicedCommercial advertising, when it is practicedfairly and responsibly, serves a useful function,fairly and responsibly, serves a useful function,informing the public about the existence of ainforming the public about the existence of a

product and the characteristics of the product.product and the characteristics of the product.In order to be a positive influence,In order to be a positive influence,advertisements must be truthful and informative,advertisements must be truthful and informative,must not exaggerate the usefulness or qualitiesmust not exaggerate the usefulness or qualities

of the product and should not play on theof the product and should not play on theemotional needs of the consumer so as to createemotional needs of the consumer so as to createartificial needs.artificial needs.


42/94

Consumer concerns with advertisingConsumer concerns with advertising Ads for products proven to be unsafe and/or addictiveAds for products proven to be unsafe and/or addictive

(e.g., alcohol and tobacco)(e.g., alcohol and tobacco)

Ads that target and mislead vulnerable communitiesAds that target and mislead vulnerable communities

about the productabout the product

Ads that aggressively target children to consumerAds 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-causingAds for products that contain toxic or cancer-causing

chemicals for which there is no scientific proof ofchemicals for which there is no scientific proof of

safety levels (e.g., pesticides, aspartame, etc.)safety levels (e.g., pesticides, aspartame, etc.)


43/94

International codes on advertisingInternational codes on advertising WHO/UNICEF Code of Marketing of BreastmilkWHO/UNICEF Code of Marketing of Breastmilk

Substitutes 1981Substitutes 1981 FAO International Code of Conduct on theFAO International Code of Conduct on the

Distribution and Use of Pesticides 1985Distribution and Use of Pesticides 1985

Framework Convention on Tobacco ControlFramework Convention on Tobacco Control

20032003


44/94

Product Safety LawsProduct Safety Laws

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

sophistication; reasonable inspection will not revealsophistication; reasonable inspection will not reveal

latent defects or hazardslatent defects or hazards

Minimum and uniform standards ensure developingMinimum and uniform standards ensure developing

countries do not become dumping grounds for sub-countries do not become dumping grounds for sub-

standard products rejected in the country of originstandard products rejected in the country of origin

International standards will provide for unimpededInternational standards will provide for unimpededaccess to overseas marketsaccess to overseas markets


45/94

Components (5) of a comprehensive productComponents (5) of a comprehensive productsafety policy: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 and/orConsolidated List of Products Whose Consumption and/orSale Have Been Banned, Withdrawn, Severely Restricted, orSale Have Been Banned, Withdrawn, Severely Restricted, or

Not Approved by GovernmentsNot Approved by Governments


46/94

2. Regulatory action2. Regulatory action Development of product safety standardsDevelopment of product safety standards

3. Monitoring action3. Monitoring action Testing by government or reliableTesting by government or reliable

independent consumer organizationsindependent consumer organizations


47/94

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


48/94

5. Compensatory actions5. Compensatory actions Compensate consumers for lossCompensate consumers for loss

Deter future wrongdoingDeter future wrongdoing


49/94

Consumer CreditConsumer Credit

Credit increases demand for andCredit increases demand for andconsumption of goods and servicesconsumption of goods and services

Critical to economic growthCritical to economic growth Unfettered growth of credit has negativeUnfettered growth of credit has negativeconsequencesconsequences Impulse buyingImpulse buying

Extra costs associated with creditExtra costs associated with credit

Excessive debtExcessive debt


50/94

The poor pay moreThe poor pay more Ineligible for credit in many stores; thus buy shoddyIneligible for credit in many stores; thus buy shoddy

goods at higher pricesgoods at higher prices

If credit advanced, higher rates chargedIf credit advanced, higher rates charged Credit often advanced to individuals with aCredit often advanced to individuals with ahistory of defaulthistory of default

Increased complexity of transactions (e.g. homeIncreased complexity of transactions (e.g. homeequity loans/lines of credit) require moreequity loans/lines of credit) require morecomplex documentscomplex documents More difficult to understand and compare terms,More difficult to understand and compare terms,

including cost of creditincluding cost of credit


51/94

Consumer credit laws shouldConsumer credit laws should Require lenders to provide consumers with copies of allRequire lenders to provide consumers with copies of all

documentsdocuments

Establish a single method of calculating interest ratesEstablish a single method of calculating interest 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)


52/94

Electronic commerceElectronic commerce

1996 fewer than 40 million connected to internet1996 fewer than 40 million connected to internet

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 services1998 27.6 million buying goods and services

online worth $32 milliononline worth $32 million 2002 more than 128 million spending over $4252002 more than 128 million spending over $425

millionmillion


53/94

Issues:Issues: Consumer redress in cyberspace disputesConsumer redress in cyberspace disputes

PrivacyPrivacy Identification of providerIdentification of provider

Security of paymentsSecurity of payments

FraudFraud


54/94

Organization for Economic Cooperation andOrganization for Economic Cooperation andDevelopment (OECD)Development (OECD)

United Nations Commission on InternationalUnited Nations Commission on International

Trade Law (UNCITRAL)Trade Law (UNCITRAL) Alliance for Global Business (AGB)Alliance for Global Business (AGB) International trade associationsInternational trade associations

Global Business Dialog on Electronic CommerceGlobal Business Dialog on Electronic Commerce

(GBDe)(GBDe) CEO-led business initiativeCEO-led business initiative

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

Part III: Consumer Protection andPart III: Consumer Protection and


55/94

Part III: Consumer Protection andPart III: Consumer Protection and

Basic NeedsBasic Needs

Consumer EducationConsumer Education

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

Develop skills to make informed decisions in theDevelop skills to make informed decisions in thepurchase of goods and services in light ofpurchase 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


56/94

Become knowledgeable about the law andBecome knowledgeable about the law andconsumer rights, in order to participateconsumer rights, in order to participate

effectively and confidently in the marketplaceeffectively and confidently in the marketplace

and take appropriate action to seek redressand take appropriate action to seek redress

Develop an understanding of the citizens role inDevelop an understanding of the citizens role inthe economic, social and government systemsthe economic, social and government systems

and to influence those systems to make themand to influence those systems to make themresponsive to consumer needsresponsive to consumer needs


57/94

Consumer education is not the same thingConsumer education is not the same thingas consumer informationas consumer information

Consumer education improves consumersConsumer education improves consumersability to use informationability to use information


58/94

By exercising free choice, based on knowledgeBy exercising free choice, based on knowledgeof the facts, the consumer will be able to makeof the facts, the consumer will be able to make

the best use of his resources, money, time,the best use of his resources, money, time,

knowledge and ability. He will thereby contributeknowledge and ability. He will thereby contributeto the proper functioning of the economy andto the proper functioning of the economy and

stimulating effective and fair competition and hestimulating effective and fair competition and he

will thereby contribute to social and economicwill thereby contribute to social and economicdevelopment.development.

Council of Europe (1981)Council of Europe (1981)


59/94

Modern conception of consumer educationModern conception of consumer educationreflects the inter-relationship between thereflects the inter-relationship between theprivate household and societal responsibilitiesprivate household and societal responsibilities

Concepts such as sustainable consumption areConcepts such as sustainable consumption arewoven into education about the impact ofwoven into education about the impact ofmodern consumer lifestyles on the environmentmodern consumer lifestyles on the environment

In developing countries, consumer education is aIn developing countries, consumer education is atool to ensure that scarce resources of poorertool to ensure that scarce resources of poorerconsumers are not fritted away by unethicalconsumers are not fritted away by unethicalbusiness practicesbusiness practices


60/94

Strategies for implementing consumerStrategies for implementing consumereducationeducation

A comprehensive program is directed toA comprehensive program is directed toall consumersall consumers

SchoolsSchools Skills to make informed decisionsSkills to make informed decisions Skills to understand the impact of decisions ofSkills to understand the impact of decisions of

individuals, businesses and governments on theindividuals, businesses and governments on thelives of otherslives of others


61/94

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)


62/94

Six fields of content suggested by theSix fields of content suggested by theNordic 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


63/94

UtilitiesUtilities

UtilUtiliities are considered basic needsties are considered basic needs

Universal Declaration of Human RightsUniversal Declaration of Human Rights

states that everyone has the right of equalstates that everyone has the right of equalaccess to public services in his/her countryaccess to public services in his/her country


64/94

1.6 billion do not have access to energy1.6 billion do not have access to energysupplysupply

Over 1 billion lack access to clean waterOver 1 billion lack access to clean water One half of the worlds population hasOne half of the worlds population hasmade 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 (15% of88% of those are in developed world (15% of

worlds population)worlds population)


65/94

Utilities present unique problems for consumersUtilities present unique problems for consumers Generally involve basic and essential servicesGenerally involve basic and essential services

Peculiar economic characteristics that makePeculiar economic characteristics that make

competition difficultcompetition difficult

Public policy has focused on regulatingPublic policy has focused on regulatingmonopolies for public protectionmonopolies for public protection

Price and other controlsPrice and other controls Public ownershipPublic ownership


66/94

Support for privatization based onSupport for privatization based on Inefficiency of government ownershipInefficiency of government ownership

CorruptionCorruption Failures in developing countries to provideFailures in developing countries to provide

adequate levels of serviceadequate levels of service


67/94

The special case of waterThe special case of water

One reason for problems stemming from stateOne reason for problems stemming from stateownership of water is that its too cheapownership of water is that its 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 dont have the money to invest inGovernments dont have the money to invest in

infrastructure improvements or pay off debtsinfrastructure improvements or pay off debts


68/94

Response of IMF and World Bank isResponse of IMF and World Bank isprivatizationprivatization

Introduce market disciplineIntroduce market discipline Give access to financial capital necessary forGive access to financial capital necessary for

infrastructure expansioninfrastructure expansion

Built into loan conditionality agreementsBuilt into loan conditionality agreementsor structural adjustment programsor structural adjustment programs


69/94

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 possible; profitGovernments must raise prices to make sale possible; profitof buyers factored inof buyers factored in

Potential abuses of monopoly powerPotential abuses of monopoly power

Improvements to infrastructure and potentialImprovements to infrastructure and potential

extension of service to additional consumers may beextension of service to additional consumers may beoffset by refusal to extend to non-profitable areasoffset by refusal to extend to non-profitable areas


70/94

Buyers tend to be western multi-nationalsBuyers tend to be western multi-nationals

Loss of economic independenceLoss of economic independence

Foreign owners dictating termsForeign owners dictating terms

Concentration of developing world resources inConcentration of developing world resources inwestern ownershipwestern ownership


71/94

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


72/94

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 isFood security defined by FAO as food that is

safe, nutritious and culturally acceptable and issafe, nutritious and culturally acceptable and isavailable, accessible and affordable to allavailable, accessible and affordable to all

peoplepeople


73/94

Over 800 million people suffer fromOver 800 million people suffer fromhunger 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


74/94

1996 World Food Summit, 185 countries and the1996 World Food Summit, 185 countries and theEC made a commitment to achieve universalEC made a commitment to achieve universal

food security.food security.

Pledged to reduce number of hungry people inPledged to reduce number of hungry people inworld to half (to 400 million) by 2015world to half (to 400 million) by 2015

According to FAO, number of undernourishedAccording to FAO, number of undernourished

falling at rate of 8 million per year (target of 20)falling at rate of 8 million per year (target of 20) Thus goal wont be reached until 2030Thus goal wont be reached until 2030


75/94

Hunger FactsHunger Facts

There is enough food to feed all theThere is enough food to feed all thepeople 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


76/94

Rapid increase in food production doesntRapid increase in food production doesntnecessarily result in food securitynecessarily result in food security

78% of countries reporting child78% of countries reporting childmalnourishment export food!malnourishment export food!

India had 42 million ton grain surplus in 2000India had 42 million ton grain surplus in 2000

5,000 Indian children die each day of malnutrition5,000 Indian children die each day of malnutrition


77/94

Prosperity of a country no guarantee thatProsperity of a country no guarantee thatcitizens wont go hungrycitizens wont go hungry

US has highest GDP in worldUS has highest GDP in world 4.2 million households (4.1%) experience4.2 million households (4.1%) experience

hunger at least part of the yearhunger at least part of the year


78/94

Role of food importsRole of food imports

Removal of import restrictions and lower foodRemoval of import restrictions and lower foodtariffs make importation of highly subsidizedtariffs make importation of highly subsidized

food an attractive alternativefood an attractive alternative

Potential problems:Potential problems: Vulnerability to price and supply fluctuations andVulnerability to price and supply fluctuations and

political upheavalpolitical upheaval

Subject to manipulation by transnational corporationsSubject to manipulation by transnational corporations Undermine livelihood of farmersUndermine livelihood of farmers


79/94

Consumer groups should focus government attention on:Consumer groups should focus government attention on: Promoting food security and improved access to foodPromoting food security and improved access to food Reconciling demand for cheap food with adequateReconciling 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 domesticGive priority to production of staple foods for domestic

consumptionconsumption

Address issues that contribute to food securityAddress issues that contribute to food security UrbanizationUrbanization Land degradationLand degradation Water scarcityWater scarcity


80/94

Food safetyFood safety

Food safety risks are increasingFood safety risks are increasing Movement of food and live animals across bordersMovement of food and live animals across borders 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 antibiotics inHormones, veterinary drugs and antibiotics inanimalsanimals


81/94

Building food safety capacity is essential,Building food safety capacity is essential,especially in developing countriesespecially in developing countries

Food borne disease has significant impact onFood borne disease has significant impact onboth health and developmentboth health and development

Many developing countries lack theMany developing countries lack theresources and expertise to implement foodresources and expertise to implement food

safety policiessafety policies


82/94

Codex Alimentarius CommissionCodex Alimentarius Commission

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

Harmonize food standards betweenHarmonize food standards between

countriescountries Protect health of consumers and ensureProtect health of consumers and ensure

fair practices in food tradefair practices in food trade

Membership of 165 countries representingMembership of 165 countries representing98% of world population98% of world population


83/94

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 BiotechnologyBiotechnology

Consumer concerns with geneticConsumer concerns with genetic


84/94

Consumer concerns with geneticConsumer concerns with genetic

engineeringengineering

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

EnvironmentEnvironment

Health problemsHealth problems

Groups have called for moratorium on plantingGroups have called for moratorium on plantingGE crops until safety concerns are addressedGE crops until safety concerns are addressedand appropriate controls put in placeand appropriate controls put in place


85/94

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 lawsSome countries already have labeling laws

in placein place

Sustainable ConsumptionSustainable Consumption


86/94

Sustainable ConsumptionSustainable ConsumptionThe concept of sustainable consumptionThe concept of sustainable consumption

Ever-increasing consumption is putting aEver-increasing consumption is putting astrain the environmentstrain the environment

Outcome of the development model theOutcome of the development model theNorth follows and the South emulatesNorth follows and the South emulates

Sustainable consumption is viewed as theSustainable consumption is viewed as the

only long-term strategy for survivalonly long-term strategy for survival


87/94

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 lifeSatisfaction of basic needs to improve quality of life

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

consideration the capacity of the earth to assimilateconsideration the capacity of the earth to assimilatethe wastesthe wastes

Adopting consumption patterns that will not jeopardizeAdopting consumption patterns that will not jeopardizethe needs of current and future generationsthe needs of current and future generations

Ensuring equity in consumption within countries andEnsuring equity in consumption within countries andbetween countriesbetween countries


88/94

ObstaclesObstacles

IgnoranceIgnorance We dont know level of per capita consumption theWe dont know level of per capita consumption the

planet can sustainplanet can sustain

InequalityInequality Differences within and between nations makeDifferences within and between nations make

developing a common agenda difficultdeveloping a common agenda difficult

InstitutionsInstitutions

Existing political and economic mechanisms forExisting political and economic mechanisms foraddressing major international problems of theaddressing major international problems of theenvironment are inadequateenvironment are inadequate


89/94

SuccessesSuccesses

Growth in use of material resources hasGrowth in use of material resources hasslowed as a result of shifts in demandslowed as a result of shifts in demand

towards less material-intensive productstowards less material-intensive products Emissions have been reduced as a resultEmissions have been reduced as a result

of tighter regulations and incentivesof tighter regulations and incentives

Municipal waste growth has slowed orMunicipal waste growth has slowed ordeclineddeclined


90/94

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 leadershipAdopt and enforce regulationsAdopt and enforce regulations

Reinforce valuesReinforce values Consumer education programs for consumersConsumer education programs for consumers

on impacts of their choices and behavioron impacts of their choices and behavior


91/94

Obligations of the corporate sectorObligations of the corporate sector

World Business Council for SustainableWorld Business Council for SustainableDevelopment in 2001 proposed a seven-pointDevelopment in 2001 proposed a seven-pointblueprint for corporations; include:blueprint for corporations; include: Develop technological and social innovations toDevelop technological and social innovations to

improve quality of life and tackle depletion ofimprove quality of life and tackle depletion ofresourcesresources

Use media and advertising to promote sustainabilityUse media and advertising to promote sustainability Create markets that reflect real economic, social andCreate markets that reflect real economic, social and

environmental costsenvironmental costs Create opportunities for the poorest segments ofCreate opportunities for the poorest segments of

societysociety


92/94

Obligations of consumersObligations of consumers

CI urges consumer organizations to:CI urges consumer organizations to: Educate members on sustainable consumption in orderEducate members on sustainable consumption in order

to change attitudes and behaviorto change attitudes and behavior

Provide information to consumers on products andProvide information to consumers on products andservices and demand that same be provided byservices and demand that same be provided by

merchantsmerchants

Regularly assess environmental aspects of productsRegularly assess environmental aspects of products

Represent the environmental interests of consumers atRepresent the environmental interests of consumers atall relevant national and international forumsall relevant national and international forums


93/94

Consumers are encouraged to avoid productsConsumers are encouraged to avoid productsthatthat Cause environmental degradation during the extractionCause environmental degradation during the extraction

of natural resources or during their manufacture, useof natural resources or during their manufacture, use

and disposaland disposal Utilize large amounts of energy during theirUtilize large amounts of energy during their

manufacture, use or disposalmanufacture, use or disposal Cause unnecessary waste, due to over-packaging orCause unnecessary waste, due to over-packaging or

unduly short life spanunduly short life span

Utilize materials derived from threatened species orUtilize materials derived from threatened species orenvironmentsenvironments

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


94/94

Consumers may be willing to take easy stepsConsumers may be willing to take easy stepsthat benefit the environment; but may not makethat benefit the environment; but may not makesignificant changes in buying habits, paysignificant changes in buying habits, paymarkedly higher costs, or make changes in basicmarkedly higher costs, or make changes in basiclifestyles. Yet sustainable consumption calls forlifestyles. Yet sustainable consumption calls for

such effective approaches. Consumer consciencesuch effective approaches. Consumer consciencehas to be sufficiently modified such as to effecthas to be sufficiently modified such as to effectchanges in behavior. This is the ultimatechanges in behavior. This is the ultimatechallenge for the consumer movement.challenge for the consumer movement.Consumers have to be convinced that when theyConsumers have to be convinced that when they

vote with their pockets they are in factvote with their pockets they are in factexercising a social, moral and politicalexercising a social, moral and politicalresponsibility that goes beyond their ownresponsibility that goes beyond their ownparochial interests and their present generation.parochial interests and their present generation.

consumer protection 3

Documents