Globalisation and sustainable development: Challenges for Johannesburg

by Martin Khor

In 1992 when the UN Conference on Environment and Development (UNCED) held in Rio advanced the concept of sustainable development as the answer to both the environment and development crises facing the planet, it generated hope and optimism around the world. A decade on, as governments prepare for the World Summit on Sustainable Development (Rio Plus Ten) in Johannesburg to review the progress made in implementing Agenda 21 – UNCED’s Plan of Action - it is clear that this hope was misplaced. The process of globalisation, driven by the industrialised North and its corporations, has all but undermined the concept of sustainable development. The Johannesburg Summit in August should provide a good opportunity to refocus attention on the need to take effective action to check this dangerous trend.

THE 1992 United Nations Conference on Environment and Development (UNCED) was a historic watershed. It placed the environment crisis at the top of the international agenda, and linked environment with development in a new paradigm of sustainable development. 

Worldwide, hopes were high that a new global partnership had emerged from the ‘Spirit of Rio’ which would lead to practical programmes and policies that would deal with both the environment and development crises. North-South relations would tackle the growing global environment crisis and simultaneously strive for more equitable international economic relations that would be the basis for promoting sustainable development.

Broken promises

At the heart of the Rio ‘compact’ or core political agreement was the principle of ‘Common but Differentiated Responsibilities’. This recognised that the global ecological crisis had to be solved in an equitable way, through partnership. It acknowledged that the North has historically and at present been more responsible for the despoliation of the global environment, has more resources due to the uneven nature of the world economy, and thus has a proportionately greater responsibility in resolving environmental problems.

Unfortunately, almost a decade later the process after Rio has largely failed. The Rio Spirit seems to have faltered and been whittled down, if not away. The Rio Plus Five Summit (UN General Assembly Special Session to review the implementation of the Rio agreements) concluded in June 1997 without a political statement because the divide between North and South countries was too wide to bridge. The ongoing negotiations for the Johannesburg World  Summit on Sustainable Development (WSSD) - Rio Plus Ten - appear to be as divided. A ‘crisis of implementation’ of Agenda 21, the plan of action adopted at Rio, is the diagnosis, among governments, UN officials and civil society organisations alike following the process.

The world’s environment has continued to deteriorate. For example, forests continue to disappear or be degraded at a rate of 14 million hectares a year; greenhouse gases are still increasingly pumped into the atmosphere, but the US has rejected the Kyoto Protocol and the present targets for emission reductions are clearly inadequate; there is a looming crisis of water shortages around the world; and new technologies such as genetic engineering pose new environmental and health threats.

Aid has fallen drastically even though UNCED promised new and additional financial resources from the North. The OECD countries’ aid fell from US$61 billion in 1992 to $56 billion in 1993, and 14 of 21 donors decreased the share of aid as a ratio of their Gross National Product (GNP).  Since then, the situation has further worsened.  The aid decline is inevitably seen as reflecting a lack of commitment and sincerity on the part of Northern governments to implement the Rio agreements, and has robbed the UNCED follow-up processes and institutions of their status and legitimacy.

There has been no tangible progress in the transfer of technology, either in general or in environmentally sound technology.  Instead, since Rio, there has been much greater emphasis on increasing the rights of holders of intellectual property (mainly corporations of the North) and a corresponding downgrading of the rights of the public (and developing countries) in technology transfer and diffusion. This is mainly the result of the Uruguay Round’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires World Trade Organisation member states to tighten their national intellectual property right (IPR) regimes in favour of IPR holders, with detrimental effects on technology transfer or local development of technology. There is already evidence of how such patent regimes hinder transfer of environmental technology to the South. 

There is also a danger that the emerging IPR regime dictated by the WTO will marginalise the interests and rights of communities that developed biodiversity-based knowledge (in farming, medicinal plants, etc) whilst enabling the patenting of this knowledge by commercial companies. A good example of the adverse effects of strict IPRs protection is the exorbitant prices of medicines, especially for treatment of HIV/AIDS, as a result of the monopoly conferred through patents granted to drug companies.  The stress on IPRs protection at the expense of technology transfer has also robbed the post-UNCED process of its legitimacy, since technology transfer was the second plank, after aid, of what was seen as the North’s commitment to sustainable development.

Clash of paradigms

The reason for failure is not to be found in the sustainable development paradigm. Rather, the paradigm was not given the chance to be implemented. Instead, intense competition came from a rival: the countervailing paradigm of globalisation, driven by the industrialised North and its corporations, that has swept the world in recent years.  This is perhaps the most basic factor behind the failure to realise the UNCED objectives.

The globalisation paradigm received a great boost from the 1994 Marakkesh Agreement that established the WTO. Globalisation found a new institutional home, with its many rooms in the WTO’s numerous agreements. Moreover the WTO’s dispute settlement system based on trade retaliation and sanctions gave it a strong enforcement capability. The WTO agreements rivalled Agenda 21 and the Rio Declaration, which did not have a compliance system or a strong agency for their implementation.

As the 1990s drew on, and the WTO agreements went into operation, the globalisation paradigm far outstripped the sustainable development paradigm. At the last WTO Ministerial Conference in Doha, despite strong resistance from many developing countries, a much-expanded work programme was pushed through by the major developed countries.

Financial liberalisation also fostered globalisation by contributing to the series of new financial crises that began with Mexico, going on to East Asia, Russia and Brazil and now enveloping Turkey and Argentina. This was in addition to the old financial crisis of debt in Africa and other regions that has prevailed.

Globalisation also took the form of the spread of new technologies, including genetic engineering that has the potential of impacting significantly on the environment and human health.

The competition between the two paradigms, with globalisation running away as the winner, and moreover a winner whose speed, direction and effects seem to be uncontrollable, has resulted in more unsustainable development.

The UNCED approach represents one paradigm for international relations: that of consensus-seeking, incorporating the needs of all countries (big or small), partnership in which the strong would help the weak, integration of environment and development concerns, the intervention of the state and the international community on behalf of public interest to control market forces so as to attain greater social equity and bring about more sustainable patterns of production and consumption.

The liberalisation, ‘free market’ approach represents a very different paradigm.  It advocates the reduction or removal of state regulations on the market, letting ‘free market forces’ reign, and a high degree of rights and ‘freedoms’ to the large corporations that dominate the market. The state should intervene only minimally, even in social services. On the environment, instead of public intervention or environmental controls, the market should be left free on the assumption that this would foster growth and the increased resources can be used for environmental protection. This approach also sidelines concerns of equity, or the negative results of market forces, such as poverty and non-fulfilment of basic needs.  It assumes the market will solve all problems.

Extended to the international level, the paradigm advocates liberalisation of international markets, breaking down national economic barriers, and rights to corporations to sell and invest in any country of their choice without restraints or conditions. Governments should not interfere with the free play of the market, and social or development concerns (for instance, obtaining grants from developed countries to aid developing countries)  should  be  downgraded.

The approach advocates a Social Darwinian philosophy of ‘each man for himself, each firm for itself, each country for itself.’ In this law of the social jungle, it is the right of individuals and companies to demand freedom to seek advantage and profit and to have access to the markets and resources of other countries anywhere in the globe, to pursue their right to profit. The advocates of this approach want a free-market system where the strong and ‘efficient’ are rewarded; the weak or inefficient may suffer losses but in any case should fend for themselves.

The free-market paradigm represented by the Bretton Woods institutions has persisted in promoting structural adjustment programmes based on market liberalisation. The same paradigm ruled the GATT/WTO which was dominated by the Northern governments advocating the opening up of markets (especially of developing countries) to the exports and investments of corporations and financial institutions. The Uruguay Round of trade talks that ended in December 1993 heralded a new era where multilateral trade agreements and negotiations would subject countries to a great extent to the objectives of Northern governments advocating greater and wider ‘market access’ for their corporations. These were more powerful than the UNCED agreements and products of 1992 and the partnership approach that the latter promised. 

The main factor behind the triumph of the market paradigm is the strong support and aggressive advocacy of the powerful countries, and their deliberate marginalisation of the partnership paradigm. Within these countries, the commerce and finance departments of government enjoy far greater influence than the environment or overseas aid departments. This has contributed to the far higher priority given in these countries to national and private commercial interests vis-a-vis environment and development concerns. 

In recent years, the Northern countries have also succeeded in downgrading the UN in social and economic affairs and policies, while enormously increasing the powers and influence of the Bretton Woods institutions and especially the WTO in determining international economic and social policies. This shift in institutional location of authority has come about because the Bretton Woods/WTO  institutions represent the paradigm advocated by the North who control these  institutions, in contrast to the UN system where the South is better  represented and where decision-making processes are different.

With the higher status of the market paradigm, sustainable development concerns have been given lower priority. Governments of strong countries have become obsessed with competitiveness of their firms and countries; this has reduced the commitment to improve the environment and change production and consumption patterns. Deregulation has included the weakening of environmental policies(or their enforcement) in many countries. Interest in implementing the development components of UNCED (and of other conferences such as the Social Summit) has diminished.

Regulating corporations

Another major reason for the failure to implement the UNCED objectives is the absence of any kind of effective framework of accountability and disciplines for  the behaviour and practices of big corporations. UNCED 1992 was itself partly responsible for this, as it did not propose any measures for regulating big corporations. These institutions are the main players responsible for generating much of the pollution and resource extraction in the world, as well as greatly contributing to the generation of unsustainable consumption patterns and a consumer culture. Instead of being regulated, their power and outreach have spread, facilitated by the implementation of the WTO’s rules.

Not surprisingly, therefore, in the past few years, the power of big corporations has increased: they control even more of the world’s resources and account for a greater share of production activities, distribution, finance and marketing.  There has been no noticeable change in their production patterns. The ‘business as usual’ practice has resulted in the continuation or even intensification of environmental pollution and resource depletion. Through globalisation of media, their advertising and sales promotions of consumer products and tastes have had an even much greater impact in spreading the kinds of lifestyles and consumption patterns that are environmentally unsustainable.

Regulation of transnational corporations (TNCs) and business in general has worsened greatly since the Rio Summit. Efforts to finalise a Code of Conduct on TNCs were formally killed off in 1993, and the responsible agency, the UN Centre on Transnational Corporations, was closed down. Many years of work and negotiations came to naught. Initiatives in the UN Conference on Trade and Development (UNCTAD), such as the Code of Conduct on Technology Transfer and the Set of Principles and Rules on Restrictive Business Practices, were also marginalised due to the reluctance of the developed countries to see their coming into effect.

Instead, there has been a strong opposite trend, which is now dominant, to continuously reduce and remove regulations that governments have over corporations, and to grant corporations increased rights and powers whilst removing the authority of states to impose controls over their behaviour and operations.

The Uruguay Round has already granted far higher standards of intellectual property rights protection to the TNCs, thus facilitating further their monopolisation of technology and ability to earn huge rents through higher prices.  There are now strong pressures from Northern governments at the WTO to grant foreign companies the right of entry, establishment and national treatment  (treatment no less favourable than that accorded to their domestic counterparts) in all WTO member states. Other proposals on competition policy and government procurement would give them further rights of access to business in developing countries. The ability of governments to regulate the operations and effects of TNCs and companies in general is being severely curtailed.

It is most unlikely that businesses will voluntarily curb their own practices to be in line with sustainable development, especially with the current intensification of competition. Thus the removal of the rights of states to regulate business, especially TNCs, is a major and perhaps fatal flaw in the international community’s attempt to arrest environmental deterioration and promote sustainable development.

The failure of political leadership

There has also been a weakening of political leadership to address environmental, social or development issues.  Northern political leadership has followed the imperative of maintaining competitiveness in a globalising world, thereby placing environmental and social concerns much lower on the list of priorities. Instead, these governments are meeting the demands of their corporations to promote liberalisation and to champion their interests domestically and internationally.

Thus, at international negotiations, whether at the WTO or at the UN, Northern governments promote proposals that widen the rights of TNCs, whilst blocking or diluting principles and points that are made on behalf of sustainable development.

In the international arena, Southern governments, individually and as a group, are generally inadequately prepared for negotiations, compared to the Northern governments. Despite the dramatic expansion of the importance of international organisations and processes in determining national policies, the political leadership and bureaucracy in most developing countries have not devoted adequate human and financial resources to preparations for international negotiations.  Their resulting weak negotiating capacity sometimes makes them unable to effectively promote their points, and they have to agree to other points that are detrimental to their interests. Such a situation is particularly dangerous when the negotiations involve legally-binding agreements, as in the WTO.

Many political leaders and bureaucrats may privately agree that the present state of affairs on environment and development is negative and requires drastic reforms. However, they go along with the big tide of liberalisation and cater to the demands and interests of the business elite.  Many have declared that they are unable to change the situation, and that the forces of liberalisation and globalisation are too strong to counter. 

This of course leads to the question  of  who,  if  not  the  political leaders, are going to take effective action to promote sustainable development.

However, whilst sustainable development is at a low ebb, there are also signs of its revival as a paradigm. The limitations and failures of globalisation have caused a major public backlash that may eventually result in some policy changes. Pro-sustainability forces within governments in developing countries are becoming more aware of their right or responsibility to try to rectify the present problems, including changing some of the rules in the WTO.

The WSSD provides a good opportunity to refocus attention of the establishment and the public not only on the problems but also on the need to shift paradigms.

Reaffirming the Rio spirit and commitments

The basis for the Rio compact was clear, and remains so today. The South is hampered from meeting the basic needs of its people by its unfavourable position in the world economy, and its national resources are being drained through falling commodity prices, heavy debt burdens and other outflows. Development goals, poverty eradication and provision for basic needs are (or should be) their top priorities. Environmental concerns should be integrated with (and not detracted from) these development objectives. 

In concrete terms, North-South agreement and implementation of the principle of ‘common but differentiated responsibilities’ would require that the concept of sustainable development have at least two major components, each balancing the other: environmental protection, and meeting the basic and human needs of present and future generations. 

Thus, sustainable development would involve not only ecological practices that can meet the needs of future generations, but also a change in production and consumption patterns in an equitable manner whereby resources which are currently being wasted are conserved and re-channelled to meet the needs of everyone today as well as those of future generations. In this concept, equity among and within countries in the control and use of resources in ecologically prudent ways is a critical (or even the most critical) factor.

It should be stressed that the elements proposed here for a fair and sustainable global order have to be taken together, as a package. Social justice, equity, ecological sustainability and people’s participation are all necessary conditions for this order, and the change must apply at both national and international level. Policies that promote equity alone would not necessarily result in a more environmentally-sound world. On the other hand, measures to solve the ecological crisis without being accompanied by a more equitable distribution of resources could lead to even greater inequity and injustice.                  

Martin Khor is the Director of Third World Network.