Developing countries’ loss of faith in
multilateral politics

Developing countries, as a group, have demonstrated strong and consistent interest in multilateral politics. Examples were the negotiations on the Law of the Sea, the World Social Summit, the United Nations Conference on Environment and Development or the Millennium Summit. Poor countries had historically been active proponents of global politics. This was evident decades ago in the debates about a “New International Economic Order” or later in the “North-South-Dialogue”.

However, global economic institutions failed to address the concerns of developing countries in the 1970s and 1980s – as was highlighted by debt crises and Structural Adjustment Programmes. This was compounded in the 1990s by the pervasive stranglehold of neo-liberal economics on international economic and social policy making. Many developing countries became disenchanted with multilateral politics. In effect, the international financial institutions (led by the World Bank and the International Monetary Fund) laid siege to domestic macroeconomic policies of the indebted countries. While the approach of Bank and Fund did reflect the interests of rich nations, these institutions were not responsible to the peoples whose lives were made miserable by strict governmental austerity.

In a similar vein, developing countries’ eagerness for the re-construction of a multilateral trade system was frustrated during the “Uruguay Round” and, after 1995, by the World Trade Organisation (WTO). Again, international decision making served the rich OECD nations well but showed little respect for the needs and worries of others. It is undeniable that most developing countries believed in and sacrificed much in order to construct a fair, rule-based and transparent trading system. Even though they had not been in favour of binding principles for trade-related intellectual property rights (TRIPs) and trade-related investment measures (TRIMs), they did, in the end, consent to the respective agreements. After all, a yield of immense benefits was promised to members of the World Trade Organisation.


Frustration with the WTO

In the nine years since the WTO came into force, however, developing countries have seen little serious attempt to deal with their concerns. More than 100 implementation problems of trade rules have not been dealt with even though the issue was explicitly raised at the Ministerial Conference in Doha in 2001. Instead, the dominant nations have insisted, to the point of total disregard for the fissures and breakpoints in the system, that trade liberalisation should proceed along their path. Basically this means dealing with those issues that transnational corporations (TNCs) want to have addressed. Thus the term ‘trade-related’ has been appended to just about everything that TNCs desire while ‘trade-distorting’ is used to preclude issues relevant for social and economic development. Ultimately, the intransigence of the OECD countries has led to the Cancún stalemate. Many developing countries are sceptical that there is any real possibility of making multilateral trade serve development.

The EU’s persistent refusal to drop the controversial issues of competition policy, government procurement, investment and trade facilitation remains relevant after Cancún. Regardless of what happens with these so called Singapore issues within WTO context, they will not disappear. They are already deeply imprinted into bilateral and regional negotiations such as the EU-ACP’s Economic Partnership Agreement, the Free Trade Area of the Americas negotiations and assorted EU free trade agreements with a number of countries. The Singapore issues are also deeply interwoven into trade-related programming executed by the World Bank.

A third reason for developing countries loss of faith in multilateralism is the United States’ penchant for opting out of globally negotiated commitments. The world’s most powerful nation has backed away from the Kyoto Protocoll, has done its best to undermine the international criminal court and has gone to war without explicit consent of the UN Security Council. In these and several other cases, the US government has shown little regard for the demands of a consistent and fair system of global governance.

All this is exacerbated by the fact that the most important international decisions are not made in the domain of the UN where developing countries have an effective majority. Matters of macroeconomics, trade and finance are usually removed to specialized institutions. Increasingly new institutional frameworks, such as the WTO, are being created with no accountability to the UN.


Skewed global rules

In summary, developing countries’ experience of multilateral politics has been a mixed picture of skewed global rules, attacks on their state and their sovereignty along with lopsided enforcement. At the same time their national economic policies are constrained by the need to meet the requirements of unregulated and unaccountable international financial capital markets and the multilateral financial institutions. Agenda setting, rule making and enforcement at multilateral level is hardly democratic or transparent. Most often it is driven and circumscribed by donor driven agendas and the concerns and priorities of transnational corporations. Ultimately, the rules emerging from multilateral negotiations seem to end up binding developing countries but not the powerful countries. The latter are often able to technically backtrack, opt-out and, especially in the case of the USA, practice unilateralism at will.

This is the context that any effort to coordinate politics internationally for a better provision of Global Public Goods must come to grips with. It will be of no surprise that expanding multilateral frameworks that include issues as health, cultural heritage, sound environment et cetera are likely to become a controversial and conflict prone issue. Even though many policy makers and economists in developing countries are fundamentally in favour of dealing with these issues (as well as those of financial stability, information, peace and security) on a fair and reasoned basis, there are serious reservations about Global Public Goods (GPGs) becoming the centrepiece of new global policy arrangements. Several crucial points must be addressed first.

Who would make the definitions and classification, and in whose interest? Would the term GPG appended to areas that OECD/G-7 governments identify? Would they constitute a binding obligation for the developing countries but only an option for consideration by the rich countries? Is there any likelihood of G-7 governments being provided with more ways to intervene and constrain the remaining policy flexibility of developing countries?

There would be, and rightly so, concerns about the nature of and the motivation behind a Global Public Goods agenda advanced by the rich countries. Would a GPGs agenda adopt some variant of the ‘single undertaking’ approach now ingrained in trade negotiations?

For many developing countries, discussion of GPGs may be seen in the context of attempts by OECD governments, and in particular the EU, to alter the mode and nature of official development assistance (ODA). It is clear that this agenda is being pursued simultaneously on a number of fronts. In the case of development assistance, growth led by trade and foreign direct investment is explicitly portrayed as a substitute for (diminishing) ODA. Similarly, the seemingly unrelated Singapore issues are being interwoven into the process of ‘coherence’ that is now being institutionalised between the Bank, the Fund and the WTO.


Preconditions for poor country participation

Thus from the standpoint of developing countries, Global Public Goods are not being discussed in a vacuum. Governments are familiar with how global rules are being set, implemented and enforced. Therefore, a useful framework for GPGs would have to be aware of widespread suspicion regarding multilateral politics. Five preconditions must be met to make meaningful participation possible.

Any convincing GPGs agenda must explicitly address the issues of poverty, gender and equity. After all, it cannot be assumed that GPGs are inherently gender sensitive and will promote gender equality. Accordingly a GPG framework must focus on poverty eradication,
equity and rights, deal with asymmetries in access to resources, education and training and enhance access to common property resources and essential service at the domestic, regional and global levels.

GPGs must be seen in the context of not all countries having the same developmental needs. Too often, the needs of disadvantaged countries have been assumed away – for instance in trade negotiations where it was simply taken for granted that liberalisation was unambiguously good for all. Accordingly a GPG framework must explicitly deal with structural weaknesses at all levels (including the sub national one) and address policy impacts at the macro, meso and micro levels.

The GPG discussion must take into account and aim at correcting the current imbalance and power asymmetries between developing countries and developed countries. This will include dealing with the international financial and trade institutions as well as standard setting bodies. One will also have to look at the role and accountability of these institutions as facilitators of the contemporary globalisation phenomenon. In this context, it must be made clear what policy instruments will serve the provision of GPGs and how they will affect the space and flexibility developing countries have for policy making.

The GPGs agenda must examine its compatibility with structural adjustment programmes which are the result of the current policy framework shaping economic development programmes and coordinating public policy worldwide. The elimination of subsidies and regulations has not enhanced the provision of public goods domestically and, by their very nature, privatisation programmes do not emphasise the relevance of public goods. In this sense it would be desirable for the GPG aganda to transcend structural adjustment programmes and make them obsolete.

Finally, the GPGs agenda would have to elaborate on its impact on government budgets, spending priorities and programmes. How will any GPG regime affect government expenditure, borrowing and revenue collection?

Ultimately, any framework that seeks to promote Global Public Goods will some how have to be based on coherence in international economic and social policies. This must include commitment by all actors to the international norms of human rights and to the principles of sustainable development, poverty eradication, gender equity and human development. In other words, any convincing GPG framework will have to conform with what has been agreed to in the major UN conferences over the past twenty years. Without significant clarity on these matters, the GPG discussion will not go far – and that would be a pity, given its clear benefit to development and the need to change the global governance system.