Beyond Barriers

The UNDP Human Development report for 2005195 reported the continual marginalisation of low-income countries in the international trading system. Of the $9 trillion that is generated from world exports, the amount that goes to sub-Saharan Africa, with a population of 689 million, is less that half of that which goes to Belgium, which has a population of 10 million. This skewed trading system supports sizeable profits for corporations at the top of the value chain, who control access to high-value markets. Such corporations have an interest the rules guiding the international trade, as do anti-poverty campaigners who see current rules as barriers to systemic change. After failing to achieve a significant commitment on the issue of trade from the G8 in July, the attention of campaigners and lower-income countries turned to the sixth World Trade Organisation (WTO) ministerial in Hong Kong, in December.

2005 marked the 10^th anniversary of the WTO. Its creation was originally promoted at a meeting of the World Economic Forum (WEF) and the agreements on services and intellectual property were drafted at the behest of international telecommunications and pharmaceutical industries.196 This history, ongoing corporate lobbying, and the questionable impacts of trade liberalisation on sustainable development over the past decade, lead many to question the WTO’s role. One argument made in favour of the WTO is that it allows multilateral negotiation of trade rules, which gives low-income countries more power than in bilateral or plurilateral negotations with rich countries. Another is that those negotiations should take into consideration the specific needs of low income countries so that trade agreements give them “more time to adjust, greater flexibility, and special privileges.”197 However, the disparity in both participation in negotiations and ability to use permitted economic sanctions upon dispute resolution,  means that the WTO can reinforce existing power differentials. A lack of progress in delivering significant changes to richer country subsidies and barriers that are called for by many lower-income countries undermines the claim for the WTO to have a ‘development’ agenda. Although the deadline for negotiations of this Doha ‘development’ round was the end of 2005, a conclusive decision — which requires the unanimity of all 149 member states — was not arrived at, ensuring that the round continues during 2006.

During the WTO meeting, Hong Kong witnessed scenes typical of recent international trade summits, such as the previous month’s FTAA, with street battles between protestors and police, as barriers protected the conference goers. This Ministerial was considered by those within the barriers to be a greater success than the Cancun meeting 2 years previously, which had ended without agreement. Pascal Lamy, the director-general of the WTO, said that an agreement to end rich countries’ subsidizing of agricultural exports by 2013 would help with concluding the round and moving negotiations forward.198 However, some activists called the agreement a failure for the poor. Steve Tibbett from Action Aid, said: "the WTO has served up a diet of peanuts, waffle and fudge”199 as richer countries continued to push for access to low-income country markets and stronger rights for their companies whilst refusing to rapidly reduce their subsidizing of agricultural exports. Some commentators argued that the new economic heavyweights India and Brazil helped ensure a resolution to the talks by putting pressure on low-income countries. In addition, a new procedure of plurilateral negotiations was agreed, whereby groups of countries would enter into future negotiations. This is an attempt to speed along future negotiations, in a way that may further undermine the multilateral character of the process.

The agreement reached in Hong Kong was perhaps most important for the staff of the WTO themselves. Due to greater scrutiny from global civil society and better bargaining power from low income countries their organisation was in gridlock, and faced with becoming the slow-lane of liberalisation, as bilateral and regional trade agreements proceeded at pace. With new allies emerging in the big economies of Brazil, Russia, India and China, the agricultural subsidies issue set aside, for now,  and the difficulties of multilateral negotiating reduced through the adoption of new procedures, the WTO is now back in business, to coordinate new agreements on areas like the liberalising of financial services.

To begin new rounds of liberalisation when existing experience of liberalisation has been so mixed is not a sensible form of international cooperation. A paper by the Trade Union Advisory Committee to the Organisation for Economic Co-operation and Development (OECD)200 published in the build up to the Hong Kong ministerial argued that the agreements under discussion would add to greater income insecurity and lower opportunities for decent work in low-income countries. Some barriers, it appears, are useful. As discussed in the previous annual reviews, the development effects of liberalising financial services is questionable, and so it is not responsible for private financial institutions to lobby for it. If agreements are reached in finance, tourism and other sectors, it will further the imbalance between internationally agreed and protected rights and freedoms of large corporations and their obligations to the people they affect through their operations. Voluntary initiatives such as the UN Global Compact and the OECD Guidelines for Multinational Enterprises are pointed to by some as an effective response to this imbalance. However, the absence of independent monitoring of corporate activity and the ineffective means for those affected by poor conduct to raise their concerns and secure change have rendered these initiatives insufficient in the eyes of some civil society groups. A 2005 report by an international coalition of NGOs monitoring the effectiveness of the OECD guidelines201 found that ‘there is no conclusive evidence that the Guidelines have had a positive, conclusive impact’ on large corporations’ operations.

Meanwhile the WEF’s latest report on global governance reported that although some progress was being made on poverty alleviation, the environmental situation is bad and getting worse, noting that “no serious frameworks are in place to ensure the integrity of ecosystems”, while there has been a “retreat on human rights” during the year, with growing “restrictions on freedom from torture and freedom of expression.”202 Taken together these findings remind us how the world urgently needs more effective mechanisms to protect people and their environments. This must involve intergovernmental organisations that can enforce both corporate and governmental compliance with existing human rights, labour rights and environmental standards, and ensure these are not overridden by trade rules agreed by government delegations that respond mostly to the interests of their export lobbies. Just as corporations once called for the creation of an organisation like the WTO, so responsible corporations could today join a call for intergovernmental organisations with the necessary bite to protect the social and environmental sub-structure of functioning markets - people’s rights and resources. To support this vision of a new phase of intergovernmental cooperation will require a new leadership consciousness in business executives. This involves seeing across the barriers of one’s company, sector, country and culture, and seeing the system within which one exists, how one contributes to systemic flaws, and how to begin helping change those flaws. Enacting this ‘transcending leadership’, described above in ‘Nike says its time to team up’, in the area of trade rules, poses a challenge for corporate responsibility executives, as it requires engaging with public affairs and government relations departments, to promote more intelligent and responsible lobbying, as described in the section ‘The political bottom line’. Breaking down the internal barriers within large companies is a key skill for this form of leadership.

contents © Greenleaf Publishing, apart from the Introduction © jem bendell, 2006. site by waywardmedia.com