WTO Public Symposium 2003: Session IV - "Cancun: Next Stop on the
Road to the 2015 Millennium Development Goals "
Organized by the Young Evian Group
The Young Evian Group is a network of young professionals from academia, government, business, NGOs, the media and politics, committed to the success of sustainable free trade as the best means of ensuring prosperity, and an open world society in the 21st century. Its parent organization, the
Evian Group, was founded in 1995 upon the precept that business must take a more prominent role in articulating the advantages of a more liberal trading order and that multinational corporations must exercise global responsibility commensurate with their knowledge and influence.
Based at the International Institute for Management Development (IMD) in Lausanne, Switzerland, the Evian Group's
purpose is to provide a forum for dialogue between the public and private sectors in developing and industrialized countries, to act as a think tank promoting enhanced governance and an open global economic society, and to generate advocacy for an open world economy. Founded in September 2002, “Young Evian” seeks to preserve and develop these ideals by gleaning experience and expertise from established Evian Group members, while infusing the Group with ideas and ensuring its “connectivity” to the next generation.
Panelists and Viewpoints
Panel Moderator: Jean-Pierre Lehmann (France), Founding Director of the
Evian Group, and Professor of International Political Economy,
IMD, Lausanne, Switzerland
Professor Jean-Pierre Lehmann called this session of the WTO Public Symposium to order with the assertion that
“good governance fosters good business, and good business fosters good governance. Reform is not effective in one without reform in the other.” At the dawn of the 21st century, the world is experiencing synchronous recessions amid synchronous governance crises. Recessions have occurred simultaneously in Japan, Russia and “submerging” markets; as well as in the United States, Germany and Switzerland. Meanwhile, the specter of deflation is appearing more frequently in countries worldwide. Crises in governance have accompanied the recessions – The Seattle syndrome of 1999, for example, resulted in fragmentation internationally, and the global governance policy process has since remained paralyzed. Lack of cohesion is now manifest in the Trans-Atlantic rift between the US and Europe, the North-South schism, the South-South drift and the street violence of nihilism. In 2003, the stalemate of Doha has furthered this “indecision” process.
Professor Lehmann anticipates a huge population increase and demographic shift over the next decade to decade-and-a-half, as birth rates continue to rise in the developing world and fall in economically advanced countries. After the 1997 East Asian crisis, some countries have been able to bounce back by pursuing reforms; while others have failed to reform and recover, only to experience brain drain in the aftermath. Some well-intentioned NGOs focus too much on global issues and not enough on national concerns such as corruption. The latter will become increasingly important as the expected population growth brings about changes in labor markets, and political barriers to the movement of people remain high. We must stop thinking of people as problems, but rather as individuals with aspirations to be empowered.
Kamal Quadir, (Bangladesh), Founder and Creative Director, GlobeKids Inc, Dhaka, Bangladesh
It is important to create good governance at both the local and global levels, especially in developing countries. While building
Grameen Phone, the large telecoms approached as potential investors tended to react as if to say “We’re not the Red Cross.” The understanding held by companies of doing business in the developing world is typically not one associated with profit making, but rather a misunderstanding of solely humanitarian interests. Seeking to discern countries’ comparative advantages requires creativity. Bangladesh does not have a highly skilled population, but we were able to bring high tech business there through the animation industry, which involves half digital and half human labor input. This is an example of the benefits of creativity when generalizing stereotypes are avoided.
Mills Soko (South Africa), Doctoral Candidate, International Politics,
University of Warwick, UK
Developing countries are overwhelmingly dependent upon agricultural exports, but they are thwarted by developed countries’ subsidies. The problem is not a technical one, but rather a lack of political courage in developed countries. In the developed world, leaders don’t want to face up to difficult questions if the challenge might jeopardize their power. The existing schism between the US and EU is a threat to multilateralism in the world, and such politics could have negative repercussions on African nations if they impede the benefits of the Doha Development Agenda. Foreign direct investment (FDI) can be a major engine of growth, and brain drain stands even to help this cause if communities living abroad repatriate and reinvest their earnings at home.
Koray Gul (Turkey), Project Director, Turkmen Holdings, Istanbul
An entrepreneur in the textile industry, Mr. Gul spoke highly of foreign direct investment (FDI) as one of the best locomotives for improving governance, wagering that even poor experiences with FDI can yield valuable dividends in terms of lessons learnt through failure. FDI was the major reason why Korea was able to recover so quickly after the East Asian economic crisis, and it was also the lure for which the Turkish textile industry lobbied its government heavily to join the European Currency Union. Though the domestic automobile and television producers in Turkey initially objected to liberalization, these industries ultimately benefited as capital became available. The prospects of attracting FDI can help to motivate and bring about reforms in national governance, which in turn contribute to the goal of improved global governance.
Lydia Rupprecht (Canada), Gender Programme Specialist, UNESCO, Paris, France
Consider the case of Burkina Faso, where the country’s Poverty Reduction Strategy Paper called for the privatization of water treatment and refuse collection services. Formerly performed by small firms and micro-enterprises employing local women, these services were quickly taken over by large enterprises once the markets were opened. No longer able to compete, the micro-enterprises that had once been a vector for local development not only had to fire workers, but also ceased to yield the needed positive externalities of sanitation plus the empowerment and education of women. Trade in general has different impacts across a
population: for some there is great risk, while for others there are great benefits.
Further Comments by Panelists and Delegates
One delegate from a developing country commented that direct investment may be profitable for a country only if certain prerequisites exist. Good governance must be established to provide a climate of confidence attractive to business and investors. The mining sectors of several African countries receive FDI, but this does not benefit local populations because of poor governance and corruption. We must talk about ethical investment. Panelist Valérie Engammare concurred that the quality, and not the quantity, of FDI matters most.
Coordination of African Countries
Following a comment by Panelist Kamal Quadir that the South African government has aggressively sought FDI for the country since 1994, one delegate criticized the region of southern Africa for its noticeable lack of effort toward coordination with other African countries. This, he said, was recently exemplified by Swaziland’s move to support the EU rather than most of the rest of Africa in a sugar dispute initiated by Brazil and New Zealand. The delegate also suggested that the trans-Atlantic rift between the US and EU could be seen positively as healthy competition, instead of negatively as international fragmentation.
Agricultural Subsidies and Protection
Discussion in favor of the elimination of agricultural subsidies led to questions of whether it might be time for Africa to shift its comparative advantage away from agriculture. One delegate pushed this proposal further by suggesting that there may be other sectors the continent might fight in to win, or at least to survive. Considering the opposite idea, that the world should acknowledge and concede to Africa’s competitive advantage in agriculture, another delegate asked the panel if it would advocate the dissolution of subsidy-dependent farm economies in Europe.
Panelist Mills Soko responded that his arguments against domestic support and protection in developed countries do not imply the decimation of farmers there. Rather, his arguments are intended to draw attention to the failure by developed countries to fulfill their Uruguay Round commitments to increase market access, as this is one of the main obstacles to the Doha Round. Furthermore, conceding agriculture to Africa would leave other related problems unsolved. Many African countries (with the exception of Mauritius, Morocco and South Africa) have not diversified economically, and the practice of monoculture leaves them vulnerably exposed to shocks and currency fluctuations.
Asserting that subsidies exist because of powerful political forces in rich countries, delegate Sunil Chako raised the question of what incentives, if any, would politicians in these countries have for lowering subsidies. Returning to the principles of the Evian Group, Professor Lehmann reasoned that, if politically organized, the enlightened self-interest of businesses could provide a counterforce against subsidies. Companies like Unilevel, for example, foresee developing countries as potential future markets. An outlook of this sort favors lower subsidies in rich countries that would contribute to additional disposable income for consumers in developing countries, where less saturated markets provide opportunities for sales and growth.
The strength of intellectual property rights in developing countries as a key element of governance was addressed by another delegate who emphasized that developing nations depend not only on agriculture, but also upon services and knowledge-based industries for growth. More investment and trade in services, therefore, is in their interest; but protectionism by developed countries tends to come back when groups of developing countries gain strength in a sector. The increased popularity among American companies of locating call centers in Asia rather than domestically, for example, has led to political pressure for the protection of jobs from labor interests in the US. On the other hand, developing countries must also avoid policies that ruin incentives for patriots to return home after having gained skills abroad. High taxes and difficult or corrupt cross-border movement of people can exacerbate brain drain.
A delegate from Kenya affirmed that, unless brain drain is addressed, it will be of the same magnitude as the labor drain of the 18th century. Since multilateral negotiations
such as the Uruguay Round have in the past destroyed the preferential access many African countries once enjoyed with select trading partners, bilateral agreements such as
the African Growth and
Opportunity Act would now be preferred to WTO negotiations in order to restore former benefits.
Further comments by symposium delegate Sunil Chacko