Global economic governance needs fundamental reforms

SUNS #5228 Wednesday 6 November 2002

Geneva, 5 Nov (Chakravarthi Raghavan) -- "Double standards supported by powerful vested interests govern in many areas of the world economy" and thus there is a need for "a fundamental reform of the existing system of global economic governance," is one of the major conclusions and recommendations out of the recent meeting of the Prague Forum 2000.

Founded in 1996 as a joint initiative of President Vaclav Havel, philanthropist Yohei Sasakawa and Nobel Peace Prize laureate Elie Wiesel, the prestigious Forum 2000 has attracted to Prague a large number of renowned and respected personalities from all over the world to discuss acute issues of globalization.

This year's event, under the theme 'Bridging Global Gaps Conference', brought together a group of about 40 personalities from opposing camps in current debates about globalization. Representatives from the Bretton Woods Institutions, transnational corporations, their critics from civil society groups, academics and politicians, met to identify areas of agreement as well as disagreement in terms of the current global economic framework.

In four thematic workshops, they discussed the profound gaps which are tearing apart from global society, and possible ways of bridging them, and strove to find common ground among differing views and thus provide for a continuing dialogue.

The highlights of the 3-day meet, according to a summary posted on ( are:

* Freedom of expression is a non-negotiable right, but information and media must not be left solely in the hands of free market forces,

* Representatives of the Bretton Woods Institutions join the call for a fundamental reform of global economic rules to ensure a fair playing field,

* Corporate leaders approve of binding legal standards for transnational corporations, and

* NGOs and multilateral institutions agree that eliminating trade barriers and the level of subsidies is fundamental for heavily indebted poor countries.

Participants in the workshop on the 'Information Gap and the Role of the Media: Asymmetry of Information Flows,' included media scholars and practitioners, activists and representatives of multilateral financial institutions. They expressed numerous concerns, and tried to identify the best practices of dealing with gaps in the information society.

While defending the freedom of expression as a 'fundamental and non-negotiable right,' the participants jointly stated that information and media must not be left solely in hands of the free market forces. They saw deregulation, privatization, transnationalization and the extent of commercial competition as a "barrier to media independence."

For example, the global centrality of five news agencies and three providers of images is resulting in agenda setting and the commodification of news.

"Free media is fundamental and non-negotiable. It is built on freedom of expression and is not a translation of market freedom," they agreed.

The participants saw public service to be under threat from a variety of factors, including state abuse, survival in market-driven, competitive environments, and lack of government support.

Feedback and local rights to reply need to be facilitated by transnationalised media.

Developing interactive discussions on responsibility and voluntary codes in and between media and social actors can be compounded and developed, nationally and in international bodies such as the Council of Europe, the participants suggested.

A crucial need is to support and develop wherever possible local and community media. Many channels and networks exist that can be supported, and international media can cooperate with and source. This may be one way of addressing the asymmetry of flows and concentration of sources.

A second workshop address issues under "Gap in the Rules: Double Standards in International Trade and Finance?"

All participants, representing multilateral financial institutions, civil society groups, academia and the government sector acknowledged that double standards, supported by powerful vested interests govern in many areas of the world economy.

In a joint declaration of common goals they called for a fundamental reform of the existing system of global economic governance:

Double standards must be eradicated and a fair playing field for all must be ensured, they said.

The existing multilateral institutions need to be democratized and the voice of the developing countries as well as non-governmental organizations needs to be strengthened

The United Nations must be empowered to ensure compliance by all countries, rich and poor, with international rules

Also, activities of transnational corporations must be effectively monitored

A third workshop addressed the issues of the gap between public interest and private profit - and questions of 'Ethics, Accountability and Sustainability in the World of Transnational Corporations."

The workshop included four participants clearly representing civil society, four representing corporations and four living in both worlds, according to the summary posted at the website.

The final outcome strongly supported the need for establishing a new set of binding legal standards for TNCs within a UN structured framework, in which civil society, NGOs and corporations would all participate.

The participants came up with a statement, highlighting, among others, the following points:

* There is a need to establish a UN-structured framework to implement a concentrated strategy of the goals of accountability, transparency and environmental protection. It would involve corporations, civil society, and NGOs under the same umbrella.

* International binding agreements on corporate accountability, with corporations being made liable for damage generated, including individuals in posts of responsibility, need to be established . * There should be constructive use of tax policy to influence behaviour, by shifting the tax burden towards generators of unwanted waste - "ecological tax shifting".

* Legal requirements need to be developed for corporations to publish the scale and extent of their externality costs, and corporations made legally liable for disclosure.

* Re-educating economists and accountants and changing costs assessments to include externalised costs and to provide for quality of life accounting.

* International binding agreements on corporate accountability, with corporations being made liable for damage generated, including individuals in posts of responsibility.

On the North-South Gap and looking Beyond External debt, another workshop, where representatives of the international financial institutions, governments, civil society and NGOs participated, a final outcome summarized the current debates revolving around the current proposals on debt restructuring mechanisms and highlighted the areas of agreement as well as those of conflict.

While there was a general agreement that the situation in the third world (i.e. developing, heavily indebted countries) would be unsustainable under present scenarios, there was a strong consensus on the need to eliminate the trade barriers and current level of subsidies in the agricultural sector in the developed world. There were, however, several viable alternatives mentioned and thoroughly discussed.

* The debt sustainability is linked directly to improved market access. And the call for the elimination of trade barriers is viewed as one important step in the drive for eradicating the poverty.

* To achieve the Millennium Summit Development Goals, significantly increased level of development assistance is needed, as recognized by the Monterrey Summit on Financing for Development. After a decade of continuously falling aid levels "we now have concrete, time-bound promises of increases in aid volumes from the EU, United States and other donors."

These promises were welcomed by all the panellists who stressed that these have to be delivered as soon as possible.

* Calls for bigger transparency, responsibility and accountability evolved into a debate on the possible creation of an independent institution that could take the assessor, arbitrator role.

* An idea of replacing loans with grants has been raised and defended passionately. All participants welcomed an increased use of grants, in particular for the purposes of education, fighting HIV/AIDS and preventing conflict. This will help reducing the debt burden. An increased level of funding will help expand the use of grants.

The full report of the conference is in the process of being issued. The summary, including participants and the programme can be found at the website (

The participants included: Vaclav Havel (President of the Czech Republic), Yilmaz Akyuz (UNCTAD's Director of Globalization and Development Strategies), Eduardo Aninat (Deputy Managing Director of the IMF), Sylvia Borren of NOVIB (Dutch NGO), Rufus Yerxa (Deputy Director-General of the WTO), Rosendo Fraga (Executive Director of Estudios Union para la Nueva Mayoria), Anthony Giffard (Director of School of Communications at the Washington University), Mats Karlson (Vice-President of the World Bank), Frederik Willem de Klerk (Former President of South Africa who headed the Apartheid regime and with Nelson Mandela won the Nobel Peace Prize for removal of apartheid in South Africa), T.Rajamoorthy (Editor of Third World Resurgence), Robert Reich (American scholar and politician), Jeffrey Sachs (American economist), Paul Tran Van Thinh (former ambassador of the European Commission to the GATT and WTO), Susan George (Vicepresident of ATTAC, France).

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