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‘Without new employment, sustainable growth will become a mirage…’


MARCH 18, 1994


‘Without new employment, sustainable growth will become a mirage…’


In a seminar organized by the Friedrich Ebert Foundation in New York, to promote a discussion in anticipation of the UN Secretary General’s forthcoming “Agenda for Development, “Neil Kinnock, leader of the British Labor Party and member of Parliament, spoke on “Development Strategies for the Future.” “The mission of achieving fairer trade as well free trade will have to be high on that agenda, “he asserted.

Kinnock noted that in two months most of the countries of the world will gather in Marrakech for the formal signing of the recent GATT accords.  But the concentration by technocrats and trade negotiators on the technical details has “rather obscured the question of what trade means to ordinary people’s lives from Boston to Bombay: what it means for their livelihoods, for their access to the goods and services they need , for their quality of life.”

He outlined they key features that will after a rapidly changing world trade system–the increasing globalization of corporate activity and economics; the redrawing of the world trade map and the shift to regional trading blocs; and the uneven distribution of the fruits of trade.

Multinationals, he said, now account for almost a quarter of all production in global market economics.  “Of the world’s 100 biggest economic units, half are countries, half are transnational corporations.  That is a sobering fact for politician or any others seeking to try to plan for fairer trade.” In addition, poorer and less developed countries fear being left out in the cold by regional trading blocs like the European Union, NAFTA and ASEAN.  Trade inequities have been further exacerbated by the heavy dependence of poor countries on exporting raw materials to the industrialized countries.  Fluctuating commodity prices have resulted in ”a spiral of debt, austerity and poverty over the last decade in the South of the world.”

Developing countries still face severe restrictions on basic industrial exports such as textiles and clothing.  Kinnock pointed out.  The gap between the rich countries and poor countries is growing wider and the most urgent challenge the planet faces is poverty alleviation, “especially when warfare and environmental degradation are both products and causes of deepening poverty.”

He outlined the necessity of establishing a World Trade Organization to take over from GATT –a project that will be discussed at Marrakech.  To be successful, “WTO should represent the combination of common sense and common decency, of enlightened self-interest and justice, “he said, suggesting “four new benchmarks” by which a successful trading system should be measured.

Though removal of trade barriers would add $200 billion a year in economic growth, he said, “we must go beyond the ambition for growth, we must ask what real income and jobs gains it will bring.  It is crucial that patterns of trade are promoted to deliver real advances in the form of new and increasing employment.  Without that sustainable growth –not only in the developing countries but in the industrialized world too-will become a mirage.”

“The next measure of success must be equity–how effectively will the trade system share out the benefits between and within nations?”

Kinnock noted that OECD/World Bank studies recognize that the gains of the GATT Uruguay round will not be a net loser, hurt by the rising costs of food imports and the likely fall in prices of commodities like tea, coffee and cocoa, upon which several African economics depend.  “Just as it has been said the quality of a society should be judged by how it treats its weakest members, so the world trade system must be judged by what it does to address the needs of the poorest countries, “he declared.  “Measured against that criterion, GATT has failed.” Any new world trade management system has to ensure that the poorer countries are not locked out of prosperity.

The third benchmark against which the success of the developing trade system must be justified is ecological.  “Will trade rules promote environmentally sustainable forms of production, or will absence of rules promote unrestrained environmental exploitation?” In considering this issue, trade agencies must take into consideration the fear many developing countries feel that environmental rules will be a cunning new protectionist device to keep out their products.

The fourth criterion must relate to democracy.  The critical questions here, he said, are to what extent governments will have a meaningful say in trading regimes and to what degree they will be influenced by giant transnationals.  And whether governments will engage in open discussion with their people about trade decisions that affect everyday life.

To be truly effective, Kinnock said, the World Trade Organization should also be a forum for productive debate between rich and poor countries.  President Clinton’s conception of a “World Social Charter” as an integral part of global trade rules should be endorsed, because trade should uphold basic labor and human rights.  Here the International Labor Organization could provide valuable input.

Lastly, he said, it is essential that the World Bank, the International Monetary Fund and the United Nations rethink their policies and work closely with the World Trade Organization.  They must help eradicate poverty, increase employment opportunities and work towards developing an equitable distribution of wealth and resources in the new economic world order.

In the debate that followed Kinnock’s address, Dent Ocaya-Lakidi of the Senior Fellow Africa Program at the International Peace Academy, said that only a “Marshall Plan” could help Africa join the world economy.  He suggested that apart from debt restructuring, biodiversity should be given a commercial value and its fruits should be treated as technology, with the same value that industrialized countries.

Inge Kaul, director Human Development Report, UNDP, endorsed Ocaya-Lakidi’s view and said tropical forests should be considered in the global context, since they are a vital world resource and their preservation should be paid for by rich countries.

Industrialized countries should realize, Kinnock said, that in the long run it is to their benefit to have a redistribution of capital to create new markets for their products.  He said studies show that money invested in helping African countries today would in five years expand trade for industrialized countries by 30 percent.

Duncan Pruett of Freidrich Ebert Foundation told The Earth Times that Kinnock’s views on development and trade were especially significant in that they offered a fresh perspective on Western aid and the vital links between trade and development.  “The Labour party in Britain has always had an international outlook and Mr. Kinnock has been a moving force in the party for many years,” Pruett said.