TRADE MUST BE BOTH FREE AND FAIR

By Erkki Tuomioja and - - Reprint | | Print |

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HELSINKI, Jan 1 2004 (IPS) - The current process of globalisation is incomplete, unequal, and characterised by a deficit in democratic governance, writes Erkki Tuomioja, foreign minister of Finland. Tuomioja writes in this analysis that as with elections, it is not enough that trade is free: it has be fair as well. In many developing countries the formal economic sector constitutes a tiny part of the society, the majority of which is either left out of the globalisation process or experiences only its negative effects. Most of the world\’s population lacks protection of the law or social security. It is necessary to expand the space for local initiatives and solutions as a way of limiting the negative effects of globalisation. But this can be done effectively only through multilateral support and rules. We need global social and environmental policies. We have to ask how to democratise the global governance and how to redistribute global assets.

At the same time that democracy has spread further in the world than ever before, discontent with democracy is growing. Millions of people are feeling left out of political decision-making, and there is a growing sense that the forces and events shaping our lives are beyond democratic control.

The current process of globalisation is incomplete, unequal, and characterised by a deficit in democratic governance. As with elections, it is not enough that trade is free: it has be fair as well.

Some developing countries have opted for integration into the world economy through manufacturing strategies inspired by the success stories from East Asia. Replication of these is impossible or at least very difficult. Strategies based on cheap labour and free-trade zones offer some jobs, but not much more. Tax revenues are nil, and links to the local economy are rare. Recipes for success stories are not found in text books or dogmatic theories; they are often mixtures of policy measures composed of both orthodoxy and heresy. We should allow space for local tailor-made pragmatic solutions. However, total isolation from the world economy is a sure recipe for poverty.

It is not possible to turn back the clock and return to the local economies of the past, but it is possible to direct market forces in such a way that they produce more desirable outcomes. Only the most ideological fundamentalists do not admit that markets left alone produce harmful social effects.

When we talk about globalisation of the economy, we mean primarily the interaction between formal economic agents: firms, governments, multilateral financial institutions, and so on. Yet the vast majority of people live outside or on the margins of this formal economy. In many developing countries the formal economic sector constitutes a tiny part of the society, the majority of which is either left out of the globalisation process or experiences only its negative effects. Most of the world’s population lacks protection of the law or social security, which are essentially limited to the industrialised countries. According to the International Labour Organisation, (ILO), informal work accounts for more than half of urban employment in most developing countries. If we also consider subsistence agriculture as informal work, the figure becomes even higher. According to the ILO, well over 90% of the agricultural workforce of Mexico and India is informal.

The best way to combat informality, poverty, or child labour is to create decent work, to design pro-growth strategies. But there must be some re-engineering of the global economic system so that less developed countries also have a realistic chance to succeed in the ever intensifying global economic competition.

One aspect of globalisation is the increasing ability of civil society actors around the world to interact with each other. Some civil society organisations (CSOs) are trying to emphasise the right of different communities to preserve their identity and ways of life. The extension of the market economy inevitably threatens the preservation of social, cultural, and economic values of many societies, especially those of indigenous people. Shouldn’t true democracy mean that we have also space in our world for those who wish to live in traditional societies?

We should not romanticise the issue. Many people want to move to the cities and leave their traditional societies and be part of a globalised society. Others wish not to. Democracy should mean that people can influence the changes that are taking place in their immediate sphere of life. It cannot work efficiently if decision-making moves further and further away, denying people the opportunity to influence their own lives.

When we talk about democracy, we should talk not only about civil rights but also of democratic access to resources: education, technology, natural resources, land, and water. If market forces are left uncontrolled, the livelihoods of many will be endangered.

It is necessary to expand the space for local initiatives and solutions as a way of limiting the negative effects of globalisation. But this can be done effectively only through multilateral support and rules. We need global social and environmental policies. We have to ask how to democratise the global governance and how to redistribute global assets. International financial institutions need to be made more transparent and democratic and to recognise the drawbacks and limitations of neoliberalism. Global solutions must be complemented with national efforts towards democracy and more equal distribution of income.

The Helsinki Process on Globalisation and Democracy, initiated by the Tanzanian and Finnish governments, intends to develop a transparent, inclusive, and participatory dialogue of all relevant stakeholders to go deeper into the challenges I have referred to above.

We will try to set old prejudices aside and move ahead. One of our objectives is to get the forces behind the World Social Forum and the World Economic Forum to talk to each other in order to explore any commonality of views on the burning issues before us. At the heart of this dialogue is the question of how to restore and reform democratic governance of the process of globalisation. (END/COPYRIGHT IPS)