TWN Info Service on UN Sustainable Development (Jun14/03)
26 June 2014
Third World Network  

Experts debate globalisation and inequality
Published in SUNS #7831 dated 26 June 2014

Geneva, 25 Jun (Kanaga Raja) -- Political will and political power and sustainable policies at national level as well as national policy space and fair international trade, money and finance systems are essential to tackle poverty and inequality, according to experts at an eminent panel discussion at the UN Conference on Trade and Development (UNCTAD) last week.
 
The experts on the panel were discussing best policy practices for tackling poverty and inequality on the road to achieving sustainable development.
 
The discussion took place in a round-table session on 19 June, during UNCTAD's two-day Public Symposium (18-19 June), which this year coincided with UNCTAD's own fiftieth anniversary celebrations.
 
Among the discussants were Mr Rubens Ricupero, a former UNCTAD Secretary-General; Mr Martin Khor, the Executive Director of the South Centre; Ms Deborah James, Director of International Programmes at the Center for Economic and Policy Research (CEPR); Mr Roberto Bissio, Global Coordinator of the Social Watch Network; and Mr Zhongxiu Zhao, Vice-President of the University of International Business and Economics.
 
The session was moderated by Mr Shawn Donnan, World Trade Editor of the Financial Times, who began by saying that what is being dealt with is a really fundamental and huge subject, which is globalisation and inequality.
 
What is being talked about is a huge problem at an important moment, he reiterated, pointing for instance to what he called ‘the fragile middle' -- about 2.8 billion people in the world living on between $2 and $10 a day, who are technically above the poverty line but who are still struggling in the world today.
 
Referring to the issue of inequality and poverty reduction, Rubens Ricupero was of the view that everybody agrees that Latin America, in general, and Brazil in particular have been moving in the right direction, and in the opposite direction of many countries including developing countries that have seen inequality worsening and poverty coming back again, sometimes in force.
 
He underlined the fact that in order to fight poverty and reduce inequality, the first condition is political power and political will. Western societies only got rid of the most extreme forms of poverty when they decided that it was their utmost priority to do so, he said.
 
"And that is what we have been seeing in inequality in the current debate ... We all know that in the US, for instance, it is politics; it was the political choices made by the group that captured power" that explained this unfortunate evolution.
 
They decided to make the country safer for the very rich and tougher for the very poor, said Ricupero, noting that this is a political problem that has to be settled at the political level.
 
In Latin America, and particularly in Brazil, he said, "perhaps we have too much of political power, too much of political will. Is it possible to say that we could have too much of a good thing? Indeed it is. In our case (in Brazil), there was, after the military withdrew, a sort of new social compact to finally address a centuries-old history of slavery, of inequality, [and] of extreme poverty."
 
And Brazil did it in a very short time, he said, and in about 20 years, more than 50 million people were lifted up from the most abject forms of poverty.
 
While inequality is still a problem, Brazil is moving in a determined way to reduce it, Ricupero underlined, noting that Brazil is one of the few countries in the world where inequality is actually falling.
 
But as always, the problem now is "to ask ourselves whether it will be sustainable in the middle and long term", he remarked, stressing that his main message is that in order to make the fight against poverty and inequality sustainable, "we have to balance political will with a good mix of sound policies."
 
In Brazil's case, for instance, he said there was ‘some exaggeration' in terms of cash transfers, in terms of direct cash payments to families. In the last twelve years, it is estimated that a staggering 84% of the increase in public cost and expenditure went into cash transfers, he added.
 
The consequence of this is that "we have very little money left for infrastructure. There has been an enormous boom in consumption and credit - those are good things, but there has been a clear sacrifice in savings and investment, with the economy coming to a halt," he said, adding that this means that in the long-term it will no longer be sustainable in terms of the progress that has been achieved so far.
 
According to Ricupero, in the very long-term, what (Nobel laureate) Paul Krugman has said and is often quoted, is true -- ‘productivity may not be the only thing, but it's almost the only thing' and that at some point ‘we have to invest in human capital, on education and on the capacity to make people more productive with less cash transfers by governments.'
 
Ricupero emphasised that one of the useful points of this discussion would be to try to come up with ideas that would make the fight against poverty and inequality a long-term sustainable goal.
 
Martin Khor, the Executive Director of the South Centre, pointed out that there is acute poverty due to natural disasters, civil wars and so on, and that these kinds of causes require humanitarian assistance, but there isn't enough of that.
 
"Secondly, we have in many countries poverty which in the past was due to low commodity prices. This led some countries into external debt crises," he said.
 
According to Khor, the solutions offered by the international financial institutions were often the wrong ones, with the wrong conditionalities. And this led these countries into two or three lost decades because they continued to be in poverty, especially if one compares them to developing countries that did not suffer a debt crisis and did not go through structural adjustment policies.
 
When he is often asked why East Asia did better than Africa, Khor said, "I tell my African friends (that) it's not due to more corruption in Africa or more tyranny in Africa - we have this all over the world - it's due to the fact that we (East Asia) didn't fall into the wrong policies of the IMF and World Bank and we were able to institute a lot of policies which they (Africa) were not allowed to do."
 
So, on the global transformation side, if countries fall into debt, they need to have debt relief upfront or an international debt resolution mechanism. There is also need for reforms of the international debt system as well as reforms in the conditionalities of loans.
 
Today, said Khor, the big debate is also on the conditionality of loans to the European countries who have gone to the IMF or the European Central Bank.
 
But on the larger issue of (moving) from poverty to sustained development, Khor said that at the national level one could have short-term and quite successful policy of cash injection to the poor. And this is now being carried out by an increasing number of countries led by Brazil with its Zero Hunger programme and so on.
 
Citing what Ricupero had said earlier about cash transfers, Khor asserted that this may not be financially sustainable unless one has sustained economic growth, especially (contributing) to government revenues that can then sustain a social programme.
 
Referring to sustainable development strategies and policies, he asked firstly, how to obtain more revenues from existing commodities, including minerals. "I think this is a very important area."
 
Khor posed several other questions: How to have better benefit-sharing with the TNCs that extract the natural resources? How to keep the commodity prices up rather than down, because it is the low commodity prices that have led many developing countries into poverty and which also led to the formation of UNCTAD itself? How to diversify away from commodities or among commodities and add value to the commodities through processing and manufacturing?
 
He recalled one incident, whereby, "I remember the Minister of Commodities in Malaysia telling me that if we (Malaysia) exported one cubic metre of raw wood versus the same cubic metre converted into furniture, we would get seven times more revenue (from furniture) - more value-added - and that is why we went into furniture export."
 
The role of the State is very important in the provision of loans and subsidies, and in infrastructure, as well as active promotion of commodity-diversification and upgrading into manufactures, said Khor.
 
He also pointed to the need for a stable currency, saying that unstable currencies led to crisis in many developing countries, and this requires a reform in the international monetary and financial system, which has not come about yet.
 
This is the global transformation that is needed, stressed Khor, adding that capital flows will also need to be stable. There can't be huge inflows and outflows of capital which makes it very difficult for a country to remain stable in terms of its real economy.
 
There is need for policy space to be able to carry out all these strategies, he said, further underlining the need to have the correct trade rules.
 
"We have rules in the WTO in relation to subsidies, TRIMs [trade-related investment measures] and so on that make it difficult, or even impossible, for many developing countries to institute the kind of policies that successful developed countries, or successful developing countries, were able to have in the pre-subsidy agreement and the pre-TRIMs agreement period."
 
Khor said: "We need developed countries to cooperate by not instituting policies that are detrimental to developing countries, for example, high agricultural subsidies which enable them to export food at very cheap prices to developing countries, which because of lowered tariffs due to structural adjustment, force these poor developing countries to import food, which is less efficient (and) therefore displacing their more efficient farmers."
 
There is also need to re-examine the free trade agreements that ask developing countries to lower their tariffs to zero for almost all products even as agricultural subsidies remain in the developed countries, and this will make it very difficult for them to escape from poverty and into sustained development.
 
There is need to look at investment rules that many countries are now finding to be a real burden because it constrains their ability to have regulations, and the fact that they could be brought to court in a very unfair arbitration system.
 
"We need to have environmental policies that are sound or rather development policies that are environmentally sound, otherwise the base for future development is gone. And we need to have a development agenda post-2015 that has the right Sustainable Development Goals but also go beyond the goals and targets framework," Khor concluded.
 
Zhao, the Vice-President of the University of International Business and Economics, highlighted China's past experiences in using trade to promote development and to reduce poverty in the country. He pointed out that trade absorbed over 100 million people from the rural areas and that this process is still continuing.
 
Roberto Bissio, the Global Coordinator of Social Watch, talked about best practices relating to poverty and inequality in his country Uruguay.
 
He said that after the financial crisis of 2002 with the terrible impact that it had, Uruguay was in a situation not very different from that of Greece or Spain today. But from 2005 onwards, cash transfer programmes were immediately started by the government to address the issue of poverty.
 
However, they were conceived as an emergency measure much like humanitarian assistance, and what was done was to institute mandatory collective bargaining, which resulted in the doubling of unions, which in turn resulted in the salaries of workers growing in real terms, thus recovering buying power.
 
In addition, he said, the minimum wage was doubled and all workers, including domestic and rural workers, were formalised. Maternity and paternity leave, universal health insurance and income tax were also introduced.
 
On top of that, a non-economic agenda of more rights was undertaken, said Bissio, such as women having the right to decide on the number of children they want to have, people having the right to marry whomever they wish to marry, the right to chose one's gender, etc.
 
All these policies led to poverty reduction and less inequality, and investments grew in enormous proportions, contrary to theories on the need to constrain workers' rights and so on in order to attract investment. In fact, there was growth in both national and foreign investment.
 
However, said Bissio, inequality between countries is a more complicated issue, because it does not depend on a country's internal policies.
 
In an apparent reference to a recent decision by the US Supreme Court to reject an appeal by Argentina and thus allowing to stand a lower-court decision concerning its foreign debt, Bissio said: "We are facing a situation in the world today where sovereign country decisions about, for example, your own debt are taken by the Supreme Court of the US."
 
"And we would like to avoid the Supreme Court of the US judging over Argentina's foreign debt in a way that will lead the country to default, most likely, although they are desperately trying not to," he said, cautioning that this will also pull Uruguay ‘down the drain'.
 
Pointing out that many other Latin American economies will also suffer as a result of this decision, he noted that even the IMF is now saying that debt restructuring cannot be done anymore if such a stand is taken.
 
He recalled that at the UNCTAD-XI Conference in Sao Paulo in 2004, Ricupero had warned developing countries against joining the path of financial liberalisation.
 
According to Bissio, Ricupero had said at that time that ‘this is like joining the Mafia - you are attracted by a lot of promises and all the benefits that you are going to get in terms of money, power, women, whatever but after a while you realise that maybe it was not a good decision, (and) you cannot send a resignation letter.'
 
And that is what is happening to many countries now which are bound by Bilateral Investment Treaties (BITs) etc, said Bissio, adding that UNCTAD and the international system need to start thinking of an international witness protection programme for countries that want to get out of this system, as well as for countries that now want to revise their BITs.
 
Deborah James of CEPR said that a lot of the strategies that the US actually employed in its development when it was looking at a per capita income of $5,000, has been made unavailable now for developing countries, and "we feel that this is one of the roots of the current inequality between countries."
 
Referring to the issue of services, she was of the view that everyone would agree that for poverty reduction, there is a pretty well-established global consensus about achieving universal access to essential public services such as healthcare, education, and access to water and sustainable energy.
 
Unfortunately, she said, both in the GATS and the proposed TISA (Trade in Services Agreement), this would really restrict a lot of the policy space, particularly around regulation of public services guarantees as well as access to foreign companies coming in to provide those services.
 
According to James, some of the best practices that were used by the current industrialised countries such as the strategic deployment of tariffs on certain industries to promote their development are restricted by the current global trade rules.
 
This obviously needs to be changed if countries are going to have the policy space to act on industrial policy and create jobs, she further said, adding that in terms of IP (intellectual property) rules, there is an actual overvaluing of certain types of labour such as intellectual labour and an undervaluing of other types of labour, such as people working in manufacturing plants.
 
She also referred to central bank policy, which she said has been most destructive in the last five years.
 
She said: "We have seen a situation where in the global economic crisis, the mandate of the European Central Bank has been exclusively focused on inflation and prices and has not taken its mandate on jobs and growth seriously. And because of that, we have tens of millions of people in Europe who are out of work and we have the depression of global aggregate demand as a result, that affects everybody around the world." +
 
United Nations: EU aims to scuttle treaty on human rights abuses
 
New York, 24 Jun (IPS/Thalif Deen) -- When the United Nations began negotiating a Code of Conduct for Transnational Corporations (TNCs) back in the 1970s, the proposal never got off the ground because of vigorous opposition both from the powerful business community and its Western allies.
 
But a move to resurrect this proposal - through the creation of a new international legally-binding treaty to hold TNCs accountable for human rights abuses - has been gathering momentum at the current session of the UN Human Rights Council (UNHRC) in Geneva, which concludes Friday.
 
Still, it has triggered the same political replay of the 1970s: strong opposition from business interests and Western nations, this time specifically the 28-member European Union (EU).
 
Jens Martens, director of the Global Policy Forum Europe, told IPS there is a heated debate in the UNHRC about establishing an intergovernmental working group to negotiate the proposed legally binding instrument on TNCs.
 
"So, the current discussion is not about the substance of a code of conduct or treaty but on the process," he added.
 
There are currently two draft resolutions tabled at the UNHRC session in Geneva: one sponsored by Ecuador and South Africa asking the UNHRC to establish an intergovernmental working group: a proposal supported by developing nations of the Group of 77 (G77) and a coalition of more than 500 non-governmental organisations (NGOs).
 
A second draft resolution, sponsored by Norway, Russia, Argentina and Ghana, supports the existing working group on business and human rights and asks for extending its mandate by another three years: a draft also supported, among others, by the United States and the EU.
 
Martens, who co-authored a recent study on "Corporate Influence on the Business and Human Rights Agenda of the United Nations," said "corporate actors have been extremely successful in implementing public relations strategies that have helped to present business enterprises as good corporate citizens."
 
He said they have also given the impression of "seeking dialogue with governments, the United Nations and decent concerned stakeholders, and able to implement environment, social and human rights standards through voluntary Corporate Social Responsibility (CSR) initiatives."
 
Martens said the UN's much-ballyhooed Global Compact and the UN's Guiding Principles on Business and Human Rights became prime examples of an allegedly pragmatic approach based on consensus, dialogue and partnership with the corporate sector in contrast to regulatory approaches to hold corporations accountable.
 
Alberto Villarreal, trade and investment campaigner at Friends of the Earth Uruguay, told IPS that by recognising environmental activism in all its expressions as a legitimate defence of human rights, "we can contribute to the struggle of environmental rights defenders and keep them safe."
 
The London-based Global Exchange, an international human rights organisation, has put out a list of the "top 10 corporate criminals", accusing them of being complicit in violations of human rights and the environment.
 
The companies identified include Shell/Royal Dutch Petroleum, Nike, Blackwater International, Syngenta, Barrick Gold and Nestle.
 
The charges include unlivable working conditions for factory workers, lack of worker's rights, pollution, child labour, toxic dumping, unfair labour practices, discrimination, and destruction of indigenous lands for mining and oil exploration.
 
Anne van Schaik, accountable finance campaigner at Friends of the Earth Europe, said many countries support tabling a resolution for a binding treaty, but the EU has warned that if it gets adopted it will refuse to discuss it.
 
"The EU is therefore effectively boycotting the UNHRC and standing up for corporate interests instead of human rights," she added.
 
Asked if there would be a decision at the current UNHRC session, Schaik told IPS, "We are unsure if this issue will be resolved on Friday."
 
She said the EU's "very obstructive approach" means it will not participate in the intergovernmental process of creating a treaty if the resolution is in fact adopted, "thereby effectively undermining the democratic decision- making process at the United Nations."
 
Schaik said the Norwegian resolution states that there should be a discussion on the issue of access to remedy, judicial and non-judicial, for victims of business-related human rights abuses on the agenda of the Forum of Businesses and Human Rights.
 
Effectively that means that at this week's session, there will be a discussion, but there are no consequences or follow-up plans for what happens after that, she added.
 
Schaik said Ecuador proposes to "establish an open-ended intergovernmental working group with the mandate to elaborate an international legally binding instrument on Transnational Corporations and Other Business Enterprises with respect to human rights."
 
This means there will be a new instrument which will state obligations for transnational companies, which is obviously much more far reaching than a discussion at a forum at the United Nations, she said.
 
The study on the human rights treaty, co-authored by Martens, focuses specifically on the responses by TNCs and their leading interest groups to the various UN initiatives, specifies the key actors and their objectives. It also highlights the interplay between business demands and the evolution of the regulatory debates at the United Nations.
 
The study provides an indication of the degree of influence that corporate actors exert and their ability, in cooperation with some powerful UN member states, to prevent international binding rules for TNCs at the United Nations.
 
Meanwhile, the Paris-based Reporters Without Borders has urged the UNHRC to promote the adoption of clear and binding rules on online surveillance and censorship. "Businesses sell technology to authoritarian regimes that allows them to carry out large-scale online surveillance of their population," the group said.
 
In a statement released this week, the Paris-based organisation said this technology has been, and still is, used in Libya, Egypt, Morocco and Ethiopia to arrest, imprison and torture. The companies that provide this technology cannot claim to be unaware of this, it added.