Some proposals for sustainable development

by Martin Khor

There is a need for fundamental reforms of policy and practice at both the international and national levels to achieve sustainable development. This article sets out some proposals for change.

1.      Need for appropriate and democratic global governance

A prerequisite for reform is the democratisation of international relations and institutions, so that the South can have an active role in decision-making whilst civil society can also have its concerns taken into account.

The major global economic actors are the transnational corporations, the international banks, the World Bank, IMF and the WTO.  Their operations should be made much more accountable to the public, and indeed to the governments.

2.      Rebuilding the role of the UN

As the most universal and democratic international forum, the UN and its agencies should be given the opportunity and resources to maintain their identity, reaffirm their development focus and strengthen their programmes and activities.  The recent trend of weakening the UN in global economic and social issues, in favour of the Bretton Woods institutions and the WTO, should be reversed.

In particular, those Northern countries that have downgraded their commitment to the UN should turn around and instead affirm its indispensable and valuable role in advocating the social, equity, developmental and environmental dimensions in the process of rapid global change. The UN could at least be a counterweight to the laissez-faire approach of the IMF, World Bank and WTO.

While it can provide an enhanced complementary ‘safety net’, the UN must be able to make the leap to fighting against the basic causes of poverty, inequities, social tensions and unsustainable development. The more this is done, the more ‘space’ there will be for developing countries and for sustainable development.

The UN agencies (and the Secretariat itself) should guard against being influenced by conservative political forces to join in the laissez-faire approach or merely be content to play a second-fiddle role of taking care of the adverse social effects of laissez-faire policies promoted by other agencies. The UN should keep true to its mission of promoting sustainable development and justice for the world’s peoples, or risk losing its credibility and reason for existence. That is why the current emphasis on ‘partnerships with business’ is very worrying.

3.      Reforming the global economic system to benefit the South

Reforming the inequitable global economic system is needed as part of the battle for sustainable development. Of major importance is the reversal of the ongoing net South-North real and financial flows. Otherwise, it will be extremely difficult, if not impossible, for Southern countries to adequately implement sustainable development policies, even if they wanted to.

A major area of reform is poor and deteriorating terms of trade for the South’s commodity exports vis-a-vis Northern manufactured exports, which is a major source of the lack of foreign exchange and income in the South. 

To rectify the unfair economic trade terms as well as reduce resource depletion, the prices of raw materials could be significantly raised to reflect their real and ecological costs. This may require a new round of commodity agreements or other mechanisms, with an enlarged role given to a revitalised UNCTAD and other UN agencies to assist developing countries. Another area for reform is the resolution of the external debt burden of poor and middle-income developing countries. Debts of least developed countries (LDCs) and other poor countries should be written off so that they can make a fresh start. The recent financial crisis involving high external debts in East Asian countries again highlights the need for countries of the South to guard against falling into a debt trap. A fair resolution to the existing debt problem, that would not continue to squeeze Third World economies, is important to widening the options of developing countries for the future.

In the area of investment and technology, decades of efforts of  the South and the UN to establish codes of conduct for TNCs and for the transfer of technology were abandoned in the early 1990s. Instead the Northern countries are attempting to establish a multilateral agreement on investment rules, under the WTO (since their attempt to create one under the OECD failed).

The investment policy rules sought by the North would largely prevent the developing countries from having meaningful options for policy-making over strategic investment and development issues. Developing countries should therefore exercise their membership rights and not allow the WTO to negotiate investment rules.  Instead, the right of the South to determine their own economic policies, and to have control over their natural resources, should be recognised. This would include the right to determine the terms under which foreign companies can invest in a country.

New efforts should be made for codes or arrangements to regulate TNCs, to regulate restrictive business practices and to foster technology transfer to developing countries.

4.      Reviewing the Bretton Woods institutions and their policies

The ‘globalisation’ of a particular set of macroeconomic policies was achieved through the structural adjustment programmes (SAPs) which the World Bank and IMF designed and exported to more than 80 developing countries. The negative economic and social effects of structural adjustment policies, the non-accountability of the Bretton Woods institutions and the need to resolve the South’s debt crisis are increasingly acknowledged. Many Southern governments and NGOs from North and South have argued that debt and structural adjustment are the most important impediments to social and sustainable development in developing countries.

These are indeed the key issues in the required reform of the Bretton Woods institutions and their policies. The external debt overhang of highly indebted developing countries should be resolved as soon as possible. And in light of the new round of debt and structural adjustment problems arising from the Asian crisis, it is urgent that a process of reform be initiated on the IMF and World Bank, including on their processes of decision-making and on their inappropriate economic policies. Unless this is done, many developing countries that are still under structural adjustment programmes would find it very difficult (and increasingly so) to maintain the right to make policy choices.

A serious search for the elements of an appropriate approach to macroeconomic policies and development strategies, including the proper balance of roles between the state, the public sector and the private sector, is essential.

5.      Reforming the WTO

The WTO should be made more transparent and accountable to the larger international framework of cooperation and sustainable development. This is critical because the rapid developments in the WTO have major ramifications for sustainable development and yet there is a lack of information and participation from the public, from many sections of national governments and parliaments, and from other international institutions. There should also be greater internal transparency within the WTO and developing-country members must have full participation rights in discussions and decision-making.

There is a need to assess the implications of existing WTO agreements and to address the imbalances and deficiencies that lead to unequal outcomes at the expense of developing countries.  The WTO agreements have on the whole benefited the stronger trading countries much more, and many weaker countries are likely to suffer net losses in many areas. The inequities should be redressed during the review of the agreements that is mandated to take place in the WTO in the next few years.

In particular, the WTO Agriculture Agreement has not taken into account the needs and interests of small farmers, especially the non-commercialised farmers in developing countries that form a large section of the population. The Agriculture Agreement should thus be reviewed and reformed to take into account its impact on small farmers and in the context of food security and sustainable agriculture.

A review and reform of TRIPS is also urgently needed (see sub-section 7 below).

The problems of implementation facing developing countries should be dealt with as a matter of top priority, and a strengthened special mechanism should urgently be set up to satisfactorily resolve the problems (including through amendments of agreements). The special and differential rights of developing countries should be strengthened and operationalised. In this context, the main operational principle of the WTO, which is liberalisation and ‘national treatment’ for foreign products, should be reviewed in the light of the experiences of many developing countries, which have suffered adverse effects from liberalising their imports too rapidly whilst not being able to increase their export capability, access and earnings.

Developing countries that encounter problems arising from liberalisation should be able, in practice, to make use of their right to special and differential treatment, so that they can strike a balance between opening up to the world market and promoting the interests of local firms and farms. The main goal of the WTO is sustainable development, whilst liberalisation is only a means (and should be done appropriately); this central theme should be operationalised in the workings of the WTO.

Finally, the WTO should not take up issues that are not trade-related.  The attempts by some countries to introduce such new issues as investment rules, competition policy, government procurement and labour standards should not be accepted, as developing countries will be disadvantaged by the way the WTO is likely to treat such issues. Moreover the WTO would be seriously overloaded with such an expanded portfolio when most developing countries are already unable to cope with the current set of agreements and with the present volume of negotiations.

6.      Trade and environment

Discussions within the WTO on the environmental effects of WTO rules can be beneficial, provided the environment is viewed within the context of sustainable development and the critical component of development is given adequate weightage.  The principle of ‘common but differentiated responsibilities’ should guide discussions on trade and environment in the WTO and elsewhere. The WTO’s Committee on Trade and Environment should orientate its work to the more complex but appropriate concept and principles of sustainable development. But there should not be any move to initiate an ‘environment agreement’ in the WTO that involves concepts such as production and process methods (PPMs) and eco-dumping. Thus, there should not be the linking of environmental standards (and the related issues of PPMs and eco-dumping) to trade measures. However, it is equally important that trade and environment discussions take place in the UN system. The integrity of multilateral environmental agreements (MEAs) also needs to be strongly upheld.

7.      Reviewing  IPR regimes 

There should be an urgent review of the current international IPR regimes, particularly the TRIPS Agreement, to assess the impact on sustainable development. The mandated reviews of Article 27.3b and of the overall TRIPS Agreement are occasions to undertake such an assessment, and based on the assessment appropriate changes should be made.

In the review of TRIPS, serious consideration should be given to the following:

·        In Article 27.3b, changes should be made to enable member countries  to exclude all living organisms and biological materials as well as living processes from patentability; and it should be clarified that members can have the option of a sui generis system for plant varieties that protects traditional knowledge, farmers’ rights and local community rights.

·        It should be clarified that nothing in TRIPS prevents members from taking measures needed to protect and promote public health; moreover, members should be enabled to exclude from patentability medicines needed to treat life-threatening diseases and diseases related to poverty. The Doha Ministerial Declaration on TRIPS and Public Health is a positive first move whereby the right of members to undertake compulsory licensing and parallel imports of pharmaceutical drugs has been reaffirmed.

·        Measures should be allowed for the effective transfer of environmentally sound technology, including exclusion from patentability.

·        Measures for technology transfer to developing countries should be made operational and binding.

8.      Reforming the global finance system

There should be regulation of capital flows to prevent disruptive effects and avoid financial crises. Countries that face debt default should be able to have access to debt standstill and debt workout under an international debt arbitration institution. A more democratic system of governance and decision-making on international financial matters is also needed. The Monterrey Consensus on Financing for Development was disappointing in that it failed to commit to a much needed programme of systemic reform, thus the WSSD must carry the agenda forward.

9.      Technology assessment and precautionary principle

UNCED did not deal with the theme of assessment and regulation of environmentally unsound technology in a systemic manner. Although the UN Commission on Sustainable Development (CSD) agreed on a work programme in its first session in 1993, there was no implementation. What is required is a competent international centre or agency, under the UN, that carries out sustainable development assessments of technologies, especially new and emerging technologies. The centre should establish systems for governing and regulating technologies. The precautionary principle should be applied in technology policy.

10.    International environmental governance

There are many gaps in the current system of international environmental governance (IEG). The WSSD should reach some conclusions about the future evolution of IEG. There should be better coordination and rationalisation among the various MEAs, and between these and the UN Environment Programme (UNEP) as well as the CSD. Future initiatives on environment regulation, and on IEG, must place the environmental issues within the context of sustainable development, so that the development dimension is integrated into environmental policy.

A strengthened CSD with sufficient resources backed by political commitment of governments is crucial so that policy guidance and coordination can be realised.

11.    Seeking alternative development strategies

UNCED recognised that a re-conceptualisation of development strategies is required. The 1997-8 Asian financial crisis was a wake-up call and makes it crucial to reflect on the dangers to a country of excessive openness to foreign funds and investors. The latest crisis in Argentina reinforces the need for alternatives.

An important issue is whether developing countries will be allowed to learn lessons from and adopt key aspects of these alternative approaches. For this to happen, the policy conditions imposed through structural adjustment have to be loosened, and some of the multilateral disciplines on developing countries imposed through the WTO agreements have to be re-examined.

In the search for alternative options for developing countries, approaches based on the principles of sustainable development should be given high priority. The integration of environment with economics, and in a socially equitable manner, is perhaps the most important challenge for developing countries and for the world as a whole in the next few decades. So far there has been a recognition that something should be done but the real work has yet to begin.

Increased research is crucial in this area. It would be very useful if economic arguments could be put forward to show policy-makers that it makes better economic and financial sense to take care of the environment now, even as the country progresses, rather than later. More work needs to be done, including at regional and national levels in developing countries, to produce evidence and to make both the public and policy-makers aware that environmental damage is economically harmful, and that environmental protection and eco-friendly technology and practices are themselves economically efficient ways of conducting development.

It would also be very useful to highlight examples of, and draw lessons from, components of successful implementation of sustainable and human development policies and approaches. The emerging ‘sustainable and human development’ paradigm could then contribute to the debate on appropriate macroeconomic policies; the appropriate relations between state, markets and people; and appropriate development styles and models.

In the ecological sphere, the series of negotiations initiated by UNCED is an opportunity for all countries to cooperate by creating a global framework conducive to the reduction of environment problems and the promotion of sustainable economic models. However, international discussions on the environment can only reach a satisfactory conclusion if they are conducted within an agreed equitable framework. The North, with its indisputable power, should not make the environmental issue a new instrument of domination over the South. The principle of ‘common but differentiated responsibilities’ should continue to be the guiding principle.

There should be much more focus on changing economic policies and behaviour in order that the patterns of consumption and production can be changed to become environmentally sound. What needs to be discussed is not only the development model of the South but even much more the economic model of the North, and of course the international economic order. 

Whilst the international elements of a fair and sustainable global order are obviously crucial, there must also be substantial changes to the national order as a complement. In both North and South, the wide disparities in wealth and income within countries have to be narrowed. In a situation of improved equity, it would be more possible to plan and implement strategies of economic adjustment to ecological and social goals.

In the South, the policy option can be taken to adopt more equitable and ecological models of development. With more equitable distribution of resources such as land, and greater access to utilities and housing, the highest priorities of the economy should be shifted to the production of basic goods and services to meet the needs of the people. Investments (including government projects) should be channelled towards basic infrastructure and production, in contrast to the current bias for luxury projects and status symbols of progress.

Social investment in primary health care, education, housing for people, public transport and popular cultural activities should also be emphasised, rather than the high-level luxury services that now absorb a large portion of national expenditure. In this social context, changes also have to be made to make the economy follow the principles of ecology. There should generally be a reduction in the extraction and production of primary commodities: this would reduce the problem of depletion of natural resources such as forests, energy and minerals.

The decline in output and export volume could be offset if commodity prices were to rise, thereby providing a fair value of export earnings. In agriculture, the ecological methods of soil conservation, seed and crop diversity, water harnessing and pest control, should replace the modern unecological methods. With a reduction in production of agricultural raw materials, more land can also be allocated for food crops. There should be as much conservation of primary forests as possible; and the destructive methods of trawler fishing should be rapidly phased out whilst fishery resources are rehabilitated and the environmentally-sound fishing methods of small fisherfolk are promoted. In industry and construction, ecologically-appropriate forms of production should be given priority. There should be strict limits on the use of toxic substances or hazardous technologies, a ban on toxic products and the minimisation of the volume of toxic waste and of pollution.

Of course, to make this move towards a better global order possible, there must be effective people’s participation, because the radical changes being called for can be realised only when there is popular will.