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Alan Larson, Under Secretary of State for Economic, Business, and Agricultural Affairs Remarks, International Chamber of Commerce Standing Group, Washington, DC, March 16, 2000 |
Thank you for giving me the opportunity to address the Standing Group of the International Chamber of Commerce (ICC), a distinguished organization that has done much to promote an open trade and investment climate. Given that the ICC deals with global business, what better time to discuss the concept of globalization? I would like to discuss several aspects of globalization and their impact on open trade and investment regimes: prospects for advancing the WTO trade agenda; social issues connected to this agenda; corporate responsibility; and anti-corruption efforts. WTO -- New Round At the Seattle conference, the United States hoped to build a consensus with our trading partners to launch a new round of negotiations on agriculture, manufacturing, services, e-commerce, and other sectors that are critically important to the world economy. Despite the setback at Seattle, the Administration and the other Quad members (Japan, EU and Canada) are working hard to narrow our differences and successfully launch a new Round as soon as possible. We are working closely with important trading partners and with WTO Director General Moore on ways to build a consensus for a new Round and to demonstrate to the world that the WTO is still in business. The February 7-8 WTO General Council's decision to begin agriculture and services trade negotiations was a useful step in moving the post-Seattle process forward. In addition, the U.S. has made several proposals to make the WTO decision-making process more transparent and inclusive and to allow developing countries to participate more effectively in the WTO. We are seeking Quad agreement on the need for a more focused and coordinated approach to expand market access and to improve technical assistance and capacity building to developing countries. To continue this forward momentum of the post-Seattle WTO process, the U.S. will use every diplomatic opportunity available -- the U.S.-EU Summit in early June, the OECD Ministerial in late June, and the G-8 Ministerial in July -- to further the initiation of a new Round. International business should demand that governments show the flexibility needed to move forward on a new Round. Trade and Social Concerns A crucial element of our WTO agenda concerns how we handle globalization's effect on workers, both at home and abroad. This is important to help ensure the broad political support at home necessary for keeping our trade liberalizing agenda on course. To be sure, some developing countries fear a protectionist agenda behind developed countries' interest in this issue. However, I believe that other developing countries are beginning to understand the connections between trade, labor, and development. The point is that the gains from trade must be allocated in a manner that is perceived to be fair -- both within countries and across countries. In both cases we are talking about inclusion. Here at home, we need to better demonstrate how trade has helped fuel America's unprecedented economic boom and helped create better jobs. The share of trade in our national economy has doubled in less than a generation and export jobs pay better (about 15 % better) than other sectors of our economy. Where open markets and the free movement of investment capital create uncertainty among workers in our countries, we must not allow displacement to take place due to a "race to the bottom" in terms of social protections and workers' rights. For this reason, we have actively promoted the adoption and observance of core labor standards internationally. Developed countries must make clear that our interest in this social dimension of trade is part of a commitment to lift developing countries up, not to hold them down. The right kind of attention to the social aspects of the trade agenda can yield clear benefits for the developing countries. For example, a pilot program in the Bangladeshi garment sector that returned children to schools actually boosted the country's exports -- countries previously concerned about child labor became willing to import when the children were in school and not in the factory. To maintain momentum on trade liberalization efforts, it is vitally important to seek to demonstrate that all people, in our countries and around the world, can benefit. This is why President Clinton is calling for international organizations, including the WTO, to be involved in a dialogue on labor and development. This will help us to move forward on the path of free trade and economic growth while putting what the President has termed a "human face" on the global economy. Though difficult, this is an achievable agenda. Both sides want a trading system that gives everyone the chance to share in the prosperity that the global economy makes possible. To be complete, development must involve an expansion of individual freedom and the elimination of forms of exploitation such as exploitative child and forced labor. A truly worthy social agenda must put at its very core the importance of lifting the lives of the poorest people in developing countries, people whose opportunities are so limited compared to our own. Guidelines The OECD Guidelines for Multinational Enterprises are an example of how we can lift standards, not lower them. The Guidelines are a set of general, non-binding recommendations by OECD governments to their firms on good corporate conduct, addressing a variety of issues, including labor relations, environment, disclosure of information, and competition. They were developed in cooperation with business and labor and adopted in 1976 as part of the Declaration on International Investment. They seek to encourage the positive contributions multinationals make to economic and social progress. These Guidelines express standards of behavior that are in many cases exceeded by OECD multinationals; they reflect a common baseline of appropriate activities for these firms. Multinationals from OECD countries export much needed capital, technology, and management expertise to developing countries. They have taken a leadership role in promoting best practices in all areas; labor standards, environmental protection, information disclosure, and anti-corruption policies are prominent efforts. These multinationals are emblematic of the positive effects of globalization, precisely because they exhibit high standards wherever they operate. Multinational companies benefit from this "race to the top" attitude toward such areas as environmental and labor policies. Good corporate conduct reinforces brand-name identification for three important groups: customers, shareholders, and the developing country governments that make investment rules. It engenders brand name loyalty among customers who can be assured of environmentally and socially sound policies and practices. It engenders sustained interest in shareholders who can be assured that that the firms in which they are investing are in business -- and profitable business -- for the long run. In a recent ICC meeting on the OECD Principles of Corporate Governance and the OECD Anti-Bribery Convention, noted expert Ira Millstein stated "we are seeing real evidence . . . that investors and lenders . . . are using their capital to demand good governance." Shareholders are looking at liability risks that can depress share prices and decrease share value in assessing investment decisions, and considering such factors as adequacy of disclosure and corruption as part of sound corporate management. The Guidelines can help forestall a backlash in developing countries that fear the social impacts of multinational activities. For society in general, and labor and NGO interests in particular, the current review of the Guidelines can inspire confidence that globalization can benefit all. These social partners find reassurance in business cooperation to promote standards of good corporate governance. By actively and constructively engaging in the review, business is helping to broadcast its achievements in disseminating the benefits of foreign direct investment. Anti-Corruption Anti-corruption efforts are another area where standards are being lifted. As we saw in the 1997-1999 Global Financial Crisis, lack of good governance, transparency and accountability in public and private spheres can create a climate that breeds financial instability. These elements of corruption worsened the environment for investment, trade and economic growth all around the world. Still in the newspapers and on our television screens are continuing tales of corruption in places like Indonesia and Russia -- countries where the restart of economic growth is critical for political stability and for the welfare of millions. Governments worldwide are now recognizing the critical importance of addressing the malignancy of corruption in a meaningful and effective way. The industrialized countries took an historic step in this direction when they agreed to the Bribery Convention in December 1997 negotiated under the auspices of the OECD. That agreement makes bribery of foreign officials a crime, and commits the major economies to taking strong measures against it. It is the most effective instrument of its kind and is aimed at the reduction of practices that have distorted economic decision-making, sidetracked economic development, and undermined democratic values. I can report to you today that this particular effort is showing more promise now than at any other time. Twenty of thirty-four signatory states have implemented the treaty. We expect another three to four to follow suit in the coming weeks. I am particularly pleased that France is on the verge of passing implementing legislation that seems to discard an earlier desire to preserve the ability of French firms to continue to pay bribes on old contracts indefinitely. While I am increasingly optimistic, I am still concerned about the tardy ratification by some important economic states such as Italy and the Netherlands. In addition, we are still waiting to see concrete actions from the U.K. and Japan that would remedy some very serious weaknesses in their implementing laws. I believe this distinguished audience can play an important role in ensuring that our efforts against corruption and bribery succeed. In fact, without business being on the right side of this issue, it will not succeed. You know well the insidious effect of corruption. Many of you have strong measures to assure that your own corporation or organization does not engage in such activity. You willingly comply with laws in your countries outlawing the bribery of public officials. Therefore, through your organization and through all the other associations in which your companies may participate, I urge you to support the vigorous implementation of the Convention. Conclusion Let me state clearly that the U.S. is strongly in favor of increasing global economic integration, and decreasing trade barriers. We are in favor of international commerce, and support responsible multinational companies as they spread the "positives" of globalization -- sharing of capital, technology, and management expertise. Through your leadership we can build a world economy that advances both our interests and our values. [end of document]
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