Trade, development and democracy: the need for reform of the WTO
European Parliament seminar
It is a great pleasure to be here. A big debate is raging about how to promote, some say preserve, democracy in a globalizing world. Whereas democracy remains rooted in local communities and nation states, a growing number of issues require global attention and action. Governments know they cannot effectively serve their people and their peoples' interests without the cooperation of others. They cannot ensure clean air and a clean environment, run an airline, organize a tax system, attack organized crime, solve the plagues of our age; aids, cancer, poverty, without the cooperation of other governments and international institutions.
Too much of the last century and the century before was ruled by coercion. But I believe we are now in a better world of persuasion. To be sure, it remains an imperfect world. But it is a vast improvement on earlier times. And it is due to wise men and women of vision who established international institutions and negotiated important treaties like the UN Charter, Law of the Sea, the Antarctic Agreement; all the better to advance civilised behaviour. Let me add that far from diminishing the authority of the nation state, these institutions and mechanisms advance and guarantee the sovereignty of nations — by stopping the unilateral aggressive behaviour of states, especially the more powerful ones. Perhaps I see things a little differently — as a non-European and a citizen of a small nation, New Zealand. But for me, international institutions do not threaten the authority of the state. They guarantee that authority. Let me add also that small players need the law and systems of rules the most.
The current WTO drive to better relate to Parliamentarians reflects my personal experience and beliefs. Elected public servants are the measurable, accountable, dismissable representatives of civil society. There are a few, mostly NGOs from wealthy societies, academics and some international bureaucrats who challenge this proposition. They claim their lobby-group, their pressure group, has more members than the ruling party. Sometimes this is true. (But that tells us something else). Some have claimed as well that we live in a post-industrial, post-representative age. One international bureaucrat, at a meeting I attended recently, said they are now the true representatives of the people, through their contacts with civil society (he cited low voter turn-out and the low opinion so many people have of politicians). I said that is very unhealthy and dangerous. But this is a profound debate that must be had. The UN Charter says “We the peoples” not “We the Governments”. In some countries, which lack the democratic impulse and democratic institutions, it is true that some Governments have been repressive and a few, fewer and fewer over the past 20 years, have been the enemies of their true owners, the people. And it is also true that heroic individuals and their supporters, NGOs, have been punished for their belief in freedom and choice. But when people are free, they choose to set up political parties and seek power through elections. This is the true essence of civil society.
Political systems and political parties function best when they are open and transparent and when they encourage the widest participation in policy creation, whether it be on WTO or domestic priorities. Most mature democracies and successful Governments and political parties operate in this manner.
As Governments have gradually contracted out certain limited functions to international institutions, treaties and agreements, there has not been a corresponding evolution and focus of political oversight. We need a comprehensive and cohesive response to international governance because many people feel alienated from power and ownership. Their feelings of anxiety have been made more stark by the process of globalization. Globalization is not new. It is not a policy. It is a process that has been going on since the beginning of time. Some historians claim trade is now at about the same level as it was at the turn of the last century. Certainly there was a greater movement of people across borders 100 years ago than today.
What is different? Overall, globalization has accelerated. And the information and technological explosion has ensured people are aware of the increased pace of globalization and are aware as well of its implications. That is a good thing. We live in an age where democracy has flourished, where voters and consumers want more information and control, greater accountability and greater ownership.
The challenge is how to work together internationally for the benefit of ordinary people everywhere. The WTO is at the very heart of this debate.
That is not surprising. International trade is an important cross-border issue. Even more so nowadays, since trade policy touches on sensitive issues like the environment and food safety, which are becoming the very stuff of politics in the post-Cold War era. And the WTO, with its many ambitious and wide-ranging agreements and its uniquely binding dispute-settlement mechanism, is a particularly advanced instrument of international co-operation.
I have no doubt that the WTO is a force for good in the world. A glance at history tells us that the past 50 years of trade liberalisation are incomparably better than the protectionist nightmare of the 1930s. Indeed, the last 50 years has seen unparalleled prosperity and growth and more has been done to address poverty in these last 50 years than the previous 500.
Let me give some important examples. Since 1960, child death rates have halved in developing countries; malnutrition rates have declined by 33 percent; and the proportion of school children who do not go to school has dropped from around half to a quarter. Further, the number of rural families without access to safe water has fallen from nine tenths to one quarter. Over 150 million people have been taken out of extreme poverty in China alone in the past 10 years.
Let me add; experience shows, and studies confirm, that countries that are more open to trade grow faster than those that aren't, and so have less poverty, better jobs, better hospitals, and better schools. Thirty years ago, Ghana had the same living standards as South Korea. Now South Korea is in the OECD. Thirty years ago, Japan had developing country status. What a tribute to openness, democracy and free trade. That is why over the past 15 years, developing country after developing country has unilaterally made liberalisation the keystone of their economic policies.
The multilateral trading system proved its worth again only a few years ago when it helped keep markets open in the wake of the financial crisis that started in Asia and then swept the world, thus helping to prevent a global recession.
The question is: are we paying for the undoubted benefits of the WTO with an unacceptable loss of democracy? Honestly, I don't think so.
For one thing, all WTO agreements are reached by a consensus of our 140 member governments. We have no security council. Every country has a veto, and they are not afraid to use it. In most countries, WTO agreements are then ratified by elected national parliaments.
Of course, this means deals sometimes take a long time to broker. With so many stakeholders (140 members), the processes are difficult and laborious. It is like trying to run a Parliament without a speaker, without whips, without parties and without speaking limits. But it is democratic and it does ensure all our members participate fully.
When a member government feels that another is not playing by the rules to which it has previously signed up, it can ask an impartial WTO panel to arbitrate. It is quite similar to asking a commercial court to rule on whether or not parties are sticking to a contract they have agreed. Again, nothing undemocratic there. I am sure Kofi Annan would like a binding disputes mechanism he could use in world trouble spots.
The WTO is above all an intergovernmental organization. So it is mainly accountable to the people through their governments. But we are accountable in other ways as well. Through the media, for instance. Through our contacts with civil society, trade unions, business, lobbies, churches and NGOs. And through parliamentarians like yourselves.
Let me say a little more about our current efforts concerning parliaments and parliamentarians. The WTO's External Relations Division deals with enquiries from Members of Parliament most days. I hold regular meetings with parliamentarians. I make a point of testifying before parliamentary committees as often as possible. I have made contact with global parliamentary associations like the International Parliamentary Union and regional assemblies in an attempt to inform and involve. Early in my term, I approached the IPU and suggested we should hold seminars to explain to legislators our role, to point out that we don't own governments, they own us. I have also made contact with the global international organizations such as Socialist International, Liberal International and the Democratic Union, addressing their conferences and offering our services.
Of course, we can do more. We always can. But consider the alternatives. One option is to do away with the WTO. Some extremists suggest that if there were no WTO there would be no globalization. If each country set its trade laws in isolation, we would not need to worry about the imperfections of international democracy. But we have been down that road before. Before too long, protectionist lobbies would get the upper hand. And as we learned from the 1930s, beggar-thy-neighbour policies soon end up making beggars of us all.
Another option is to treat the world as if it were a nation state writ-large. There could be world elections to a world parliament and even a world government. But that is not realistic, in fact it would be dangerous. It would achieve the opposite of what the proponents suggest. There is no such thing as a world electorate. Europe's 350 million people would not accept being continually outvoted by China's 1,300 million. Nor it is desirable: most decisions that affect New Zealanders are still best taken in New Zealand rather than at a global or regional level.
Our global institutions are 50 years old. We are middle-aged, and at 50 it is prudent to undergo regular check ups. We were established out of the horror and lessons of the First World War and Great Depression, made deeper and more lethal by protectionism policies and higher tariffs. The twin tyrannies of our age, Fascism and Marxism, were given momentum from this economic collapse. Then came the Second World War. From this came the noble Marshall Plan, where the victors funded former enemies into future competitors. The mirror opposite of the Versailles Treaty, they gave us the United Nations and its many agencies, the World Bank, the International Monetary Fund and the GATT.
It is time for a check-up, an audit of our global institutions. I believe in the post-war structure. With all its imperfections, the world would be less stable, less predictable and more dangerous without these institutions. We are fortunate that great public servants like Kofi Annan and Jim Wolfensohn are there to guide us with their wisdom and vision. Perhaps we can assist their efforts, and my own, by updating our various management structures.
The best option is to improve on what we have already. For, me, that means doing more to reconnect the WTO with ordinary people. Some of this is up to the WTO Secretariat (and we have important initiatives underway). But most of it is a job for governments. So, what can WTO Members do?
First, I believe the WTO could be more open, so people can judge whether their government is carrying out its mandate in Geneva. (I also believe that the debates on transparency currently underway in Geneva show this is also the view of most Members.) WTO rules are all publicly available, but perhaps the arguments and reasoning that shape their formation should be too. (But it is not for me or the WTO to make public the bottom line of a sovereign Government in sensitive negotiations.) Let me add that we give the enemies of 'open societies' an unnecessary hammer to beat us with because of aspects of our culture and procedures.
Second, I believe many governments could do more to inform their people about the WTO and its activities. They could develop better procedures for informing parliaments and voters about their work at the WTO, just as some European Union members have done about their work in Brussels.
Third, more might be done to involve Parliamentarians in the WTO's work. I believe Parliamentarians could, if given the opportunity, assist governments to bridge the gap between the WTO and voters by holding public hearings and better engaging the public at home in the creation and implementation of policy. I might add that parliamentarians already play a very important part in the WTO as they are charged with the responsibility of ratifying our agreements. In saying this, I cannot, of course, prejudge how far the links can or should go. That is for WTO Members to decide and our Members correctly and jealously guard their prerogatives.
Those are some ideas. I welcome this debate and the greater scrutiny it implies. We at the WTO have plenty to be proud of. And we will be even more effective if we are seen to be more open, more accountable. Then perhaps we can do better with our members who could give us the resources to assist our more marginalized members. I do not dream of having the budget of the World Wildlife Fund which is three times ours. But perhaps some governments might care to give the same amount as they give to some NGOS. I have just two staff members dedicated to dealing with all of civil society, parliaments, NGOs and universities.
Finally, can I commend again for your consideration the idea that political leaders ought to think through the problems and challenges of coherence and jurisdiction between their institutions — so that the United Nations and its agencies, World Bank, IMF, ILO and WTO better serve our masters — yourselves. And your masters — the people.