Global Policy Forum

By Pascal Lamy*

His Excellency President Ricardo Lagos,
His Excellency Minister Ignacio Walker,
Ladies and Gentlemen,

This is the first non-routine trip that I have taken the initiative to undertake as Director-General of the WTO and the fact that I have chosen Chile to start this trip is not simply a result of convenience or chance. I have made it a point to start this trip in Chile, because of the exemplary role this country plays in international trade and in the WTO. Chile has had a consistent policy of making foreign trade a factor of development and has done it in a harmonious and efficient manner. At the same time, it has had a concern with the social, the human side of trade, especially under the competent authority of President Ricardo Lagos, who I am proud to call a friend, and whom I salute with admiration and respect.

I am very pleased to be participating in today's seminar on Humanising Globalization because this subject matter touches upon difficult questions that MUST be addressed.

Do we need to, should we, humanize globalization? Why do we ask ourselves this question? In my view, more and more people demand that we "humanize" globalization because of the perceived negative effects that globalization has engendered on some people. And we should care about the effects of globalization on individuals. In this sense, I fully agree with Ricardo Lagos that "human beings must be at the centre of the world we are building, a world that must be able not only to think, create, reason and dream, but also to dialogue."

What is globalization?

Globalization can be defined as a historical stage of accelerated expansion of market capitalism, like the one experienced in the 19th century with the industrial revolution. It is a fundamental transformation in societies because of the recent technological revolution which has led to a recombining of the economic and social forces on a new territorial dimension.

We can today say that globalization and increased market opening has had very positive effects and some negative consequences.

Globalization has enabled individuals, corporations and nation-states to influence actions and events around the world — faster, deeper and cheaper than ever before — and equally to derive benefits for them. Globalization has led to the opening, the vanishing of many barriers and walls, and has the potential for expanding freedom, democracy, innovation, social and cultural exchanges while offering outstanding opportunities for dialogue and understanding.

But the global nature of an increasing number of some worrisome phenomena — the scarcity of energy resources, the deterioration of the environment and natural disasters (including recently, hurricane Katrina and the Asian tsunami) the spread of pandemics (AIDS, bird flu), the growing interdependence of economies and financial markets and the ensuing complexity of analysis, forecasts and predictability (financial crisis), and the migratory movements provoked by insecurity, poverty or political instability are also a product of globalization.

Indeed it can be argued that in some instances, globalization has reinforced the strong ones and weakened those that were already weak.

It is this double face of globalization that we must seek ways of addressing if we want to "humanise globalization". To do this, we need to "reform globalization" with a clear view to enhancing the development of social, economic and ecological aspects of humanity. This is also in line with the millennium development goals that can be achieved through a "reform of globalization from within and for development".

Nobody would dispute that there is a widening gap between global challenges and the traditional ways of working out solutions, our traditional institutions. One of the most striking consequences of this gap — the notion of individual powerlessness and the political constraints of governments — has two impacts: first, it impacts the confidence and trust in the national system of governance, and second, it destroys any hope of being able to influence one's future. The future becomes a matter of anxiousness, because citizens are not convinced that there is a captain to pilot their plane.

We need more global governance

It is not globalization that creates this feeling of anxiety, it is the absence of the means to tackle it appropriately. In other words, it is the absence of governance at the global level that is problematic. The new issues raised by global crises and by certain political developments oblige us to contemplate new forms of governance. To address global questions, problems, threats, fears, at the appropriate level, we need more governance at the global level responsive to emerging global challenges.

At the same time, globalization needs to be humanised: if solutions must often be global, the negative effects on individuals and societies must also be tackled. Humanising globalization means that we must take care of the victims of globalization. To achieve this, global solutions must be sought for addressing the negative impact of globalization at all levels — individual, community and universal levels.

The two points which I would like to submit to you, today, are the following:

1. the reform of globalization implies enhanced "global governance";
2. the example of international trade sheds light on both the opportunities and the difficulties of this governance.

1. What is Global Governance? How can the interdependence of our world be better managed?

For me, global governance depicts the system that helps society achieve its common purpose in a sustainable manner, that is, with equity and justice. Interdependence requires that our laws, our social norms and values, and other mechanisms for framing human behavior — family, education, culture, religion, to name only a few of them — be examined, understood and operated together as coherently as possible so as to ensure our collective, effective sustainable development.

In order to set the basis to enhance and promote the interdependence of our world, we need, in my view, at least three elements:

First of all, we need common values: values allow our feeling of belonging to a world community, embryonic as it may be, to coexist alongside national specificities. Globalization brings into contact peoples and societies which through history have made choices that are sometimes similar, sometimes very different from one place to another. A debate about collective values, regional or universal then becomes a necessity. This debate on shared values may allow us to define the common goods or benefits that we would like to promote and defend collectively on a global scale. The systemic nature of those goods requires very different handling from other objectives of international cooperation. These collective benefits provide the basis for world governance.

We need to favour the progression towards a Global Charter of values which goes further than the UN Charter of Rights which is 60 years old. On this I share Ricardo Lagos' view when he says that "we need to persist in our efforts to ensure that democracy and freedom continue to spread and take root in all regions of the world, because this is the way to build a world that is not only fair, but also more secure, for all."

Second, we need actors who have sufficient legitimacy to get public opinion interested in the debate, who are capable of taking responsibility for its outcome, and who can be held accountable. We must also ensure that the collective interests of all people are taken into account in our management of international relations and in the way we operate our regional and global systems of values, rights and obligations. The interdependence that unites us can be reflected at several levels of human activity. The problems and difficulties facing us may be local, regional or global, as are the interests to be defended and protected. Consequently, the representativeness of the interests concerned should also be reflective and consistent with the aspirations of the societies specifically affected by globalization and its operational tentacles. International organisations have their own legal personality and therefore the potential capacity to take decisions to further the interests of the institution and its membership. But they lack the means, instruments and political responsibility that would allow them to play a more decisive role.

Third, we need a recognition that multilateralism is indispensable; we need mechanisms of governance that are truly effective and that can, inter alia, arbitrate values and interests in a legitimate way. These could also be described as mechanisms that guarantee respect for the rules, or as a form of international justice.

But we do not have to start from scratch! There are some embryos of governance in international relations and we can learn from these how to strengthen global governance.

2. The example of international trade sheds light on both the opportunities and the difficulties of this governance

Although international trade is not the only one, it is a very visible dimension of globalization; the WTO, as trade regulator, is definitely at the heart of global governance.

I am fundamentally convinced that the international trading system and its benefits, belong to all of us — it is an international public good. And this has implications. Everyone should benefit from the ultimate increase in wealth efficiency that results from the removal of global distortions in prices and which encourages countries to produce according to their comparative advantage. To quote Ernesto Zedillo, the WTO is the only instrument that can be used to deliver the global public good of non-discriminatory multilateral trade. I agree with him, as the WTO is essentially public in consumption, its benefits should accrue to all people.

The WTO is a small governance system where we already have a few elements in place: we have a multilateral system that recognizes different values, including a consensus on the benefits resulting from market opening, but also other values such as the need to respect religion or the right to protect the environment and it is now clearly recognized that non-trade values can supersede trade considerations in some circumstances. We have a system that is based on state and government but which has been able to adapt to take into account new actors on the international scene; and we have a system that has a powerful mechanism to solve disputes.

But the international trade system and the WTO are far from being perfect and many things could be improved. For the opening up of markets to produce real benefits in the everyday lives in the countries concerned we need rules that provide for a level playing field, that ensure capacity building, and that enable Members to improve their domestic governance.

But while the opening up of markets stimulated by the WTO has the potential to produce benefits for many, it also has its costs, whose distribution is largely beyond the WTO's control.

We cannot ignore the costs of adjustment, particularly for the developing countries, and the problems that can arise with the opening up of markets. These adjustments must not be relegated to the future: they must be an integral part of the opening-up agenda. We must create a new "Geneva consensus": a new basis for the opening up of trade that takes into account the resultant cost of adjustment. Trade opening is necessary, but it is not sufficient in itself. It also implies assistance: to help the least-developed countries to build up their stocks and therefore adequate productive and logistical capacity; to increase their capacity to negotiate and to implement the commitments undertaken in the international trading system; and to deal with the imbalances created between winners and losers from trade opening — imbalances that are the more dangerous to the more fragile economies, societies or countries. Building the capacity they need to take advantage of open markets or helping developing countries to adjust is now part of our common global agenda.

Part of this challenge falls under the WTO; but the WTO's core role is trade opening, we lack the institutional capacity to formulate and lead development strategies. The challenge to humanise globalization necessarily involves other actors in the international scene: IMF/WB and the United Nations family.

CONCLUSION

I remain convinced that the WTO's mandate of opening up markets represents an essential contribution to the development of so many human beings on our planet. Favouring sustainable development strategies that take into consideration the individual and collective interests of all will contribute to humanising globalization.

Globalization involves international cooperation. We can only succeed if we want to live together and if we are prepared to work together; we must invest in international cooperation. This cooperation requires political will and energy and implies accepting the debate on the benefits and costs of cooperation.

Taking into account its potential impact on individuals, we need to politicize globalization — in other words, if we want to mitigate the impacts of globalization, we need to supplement the logic of market capitalism efficiency of the WTO with a renewed attention to the conditions in which that logic could favour development. For this we need to remember that trade is only a tool to elevate the human condition; the ultimate impact of our rules on human beings should always be at the centre of our consideration. We should work first for human beings and for the well-being of our humanity.

I want to believe that the new "Geneva Consensus" has the potential to succeed in contributing to the process of humanising globalization and establishing further justice and equity.

Thank you

About the Author: Pascal Lamy is the Director-General of the World Trade Organization (WTO) since September 2005

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