Global Policy Forum

By Anne Swardson

Davos, Switzerland, Jan. 31 -- U.N. Secretary General Kofi Annan today called on the world's largest and most powerful companies to enact and uphold standards on human rights, labor and the environment in their operations in developing countries.

The idea of a code of conduct that corporations would impose on themselves and their subcontractors for investments and operations in poor countries has been proposed before, but not by anyone as highly placed as Annan.

"The spread of markets far outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take," Annan told several hundred business leaders here for the annual meeting of the World Economic Forum. "History teaches us that such an imbalance between the economic, social and political realms can never be sustained for very long."

"Without your active commitment and support, there is a danger that universal values will remain little more than fine words," he said, "and unless those values are really seen to be taking hold, I fear we may find it increasingly difficult to make a persuasive case for the open global market."

Even before Annan's speech, there had been a sense here, reinforced by the last 1 1/2 years of global financial turmoil, that even from a business perspective, some controls are needed to limit the negative impact of free trade and capital flows on less-developed countries. The theme of this year's meeting was managing the impact of globalization.

As the business and political leaders frolicked in three feet of snow -- today was Sports Day -- the dark side of globalization remained evident. Financiers were monitoring the worsening financial crisis in Brazil. Malaysian Prime Minister Mahathir Mohamad was comparing currency speculators, whom he blames for the steep decline in value of his country's currency, to arms traders and saying governments should act against them. Singapore senior minister Lee Kuan Yew said globalization "has created a totally different world that can unravel age-old values that have held our country together."

The United States broadly shares this concern, while emphasizing that countries need to run market-friendly and democratic policies. Treasury Secretary Robert E. Rubin said in a speech Saturday that the world should "take steps to reduce the risk of the system." There was no immediate reaction to Annan's proposal among those attending.

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