Germany: Making Globalization Equitable

Only the successful creation of a broad social participation in issues of international economic policy will make it possible to counter the social and ecological reprehensibility of neo-liberal globalization with a globalization of social justice and ecological sustainability.

DGB (German Federation of Trade Unions, VENRO(Association of German Development NGOs) and Attac have set the goal ofdemanding that the new Federal Government and the newly elected Bundestagtake on greater commitment for a socially and ecologically more equitable worldorder with a democratic countenance.

The declaration is the result of an intensivedebate carried out over the past two years concerning the political challengesof globalization. At the same time DGB, VENRO and Attac demonstrate with thisdeclaration that they and their respective member organizations – in spite ofthe existing differences of their respective social policy fields of action –wish to actively support and co-design this process jointly as actors in civilsociety. Representatives of the Forum Umwelt und Entwicklung, the ForumMenschenrechte and of the Social Watch Deutschland-Forum Weltsozialgipfel, whichuphold its fundamental objectives, also took part in drawing up thisdeclaration.

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Globalmarkets must be based on global regulations and institutions that place humanedevelopment and the public welfare before the interests of enterprises andnational advantages. A return to a nation state focused policy is not adesirable alternative.

Globalizationin the form of a great increase in the exchange of goods, investment flows andfinancial capital has come to influence nearly all fields of politics and inmany aspects has contributed to polarization and differentiation.

Forexample, in its final report dated June 2002, the Commission of Inquiry“Globalization of the World Economy” of the German Bundestag ascertains:“We observe that around the world the gap between the poor and the rich iscontinually growing further. In the world as a whole, the gap between the mostprosperous fifth and the poorest fifth of the global populations has doubled inthe past decades.”

Evenif developing and threshold countries have increased their share in world tradeon the whole in the past twenty years, only a few of them were able to increasetheir share in the world income, while the poorest developing countries arepractically excluded from the world market.

Inindustrialized countries, the international division of labour acceleratesstructural change. Hereby less well-qualified workers tend to have moredifficulties on the labour market than well-qualified employees in highlyproductive and innovative sectors.

Intensifiedliberalization of trade and the activities of multinational corporations areaccompanied by considerable hazards to economic and social rights. Also, in manycountries grave limits to civil and political rights are still part of the dailyagenda. Until now it has not yet been possible to realize the programmaticobjectives of the Universal Declaration of Human Rights of 1948 or toeffectively implement the two UN covenantson civil and social rights.

Globalizationin its present dominant form did not generate itself. The expansion and hencethe intensification of global competition were politically intended. Decisivedriving forces were not only the enterprises, but also the governments of theUSA, Japan and the EU member states. They paved the way for liberalization ofmarkets and to cutting the totality of public services. Influence of theparliaments is practically non-existent, and the direct influence of thecitizens on the decisions that directly affect them is minimal. On principle,though, the vast advancements in the information and communication technologiesoffer new opportunities for global cooperation in solidarity.

Globalizationneeds a social and democratic countenance. It is not a matter of escapingglobalization, but of politically shaping it.
 

1. Thefight against poverty

Thepresent global political situation makes clear more than ever how important itis to eliminate the extreme injustices and inequalities on earth with all thepower at our disposal. Battling extreme worldwide poverty is a precept ofsolidarity and a human rights duty. At its Millennium Summit in September 2000,the United Nations resolved to cut the number of the extremely poor in the world(now roughly 1.2 billion people) in half by the year 2015. Achieving theobjectives formulated in the UN Millennium Declaration – according to WorldBank calculations – will require not only a change in global structures, butalso a doubling of worldwide development aid (now roughly €50 billion). TheFederal Government supported the objectives of the UN and put them into concreteterms in its “Aktionsprogramm 2015” resolved in April 2001. It is now amatter of also implementing the objectives sketched by this Action Programme.Germany, as one of the richest countries in the world, must take up greaterinternational responsibility than it has in the past. Greater coherence ofoverall policies with the aims of the fight against poverty and of sustainabledevelopment is important. We in particular demand:

§        that the Federal Government produce a bindingtime schedule ensured by a law on development policy, so that German developmentfinancing (ODA) can be doubled by the end of the present legislative period andits share in the gross national income (GNI) of currently 0.27 percent beincreased to 0.7 percent in the year 2010;

§        that the Federal Government multilaterally workfor a further-reaching remission of debts for the Heavily Indebted PoorCountries (HIPCs) and for new mechanisms for permanent disencumberment (inparticular a fair and transparent insolvency procedure). Also the IWF and WorldBank must turn from the previous policy of structural adjustment obligations;

§        that the debate on innovative funding sources onan international level (such as Tobin Tax or use fees for global common goods)be actively pushed ahead;

§        that German development cooperation focusregionally primarily on the Low Income countries (LICs) and Least DevelopedCountries (LDCs);

§        that all measures of German developmentcooperation, including its investment projects, be largely orientated by sectorto the following areas:
- directly to fight against poverty and to social services (such as education,health, water supply, ensuring food and social security);
- human rights, including core labour standards;
- environmental protection;
- the needs of women and the population of rural regions.

§        that the Federal Government work towards a betteruse and further development of the UN agreements on human rights, in particularwith regard to drawing up a behavioural code for the right to food;

§        that coherence problems be eliminated and thatthe development policy tolerability of German and European agricultural andforeign trade policies be ensured, particularly through the eradication of allecologically and socially damaging export subsidies.

2.Sustainable development and environmental protection

Inthe last two centuries, industrialization and greater use of the soil have ledto a drastic expansion of the consumption of natural resources and hence toglobal environmental problems. The global greenhouse effect, the increase in UVrays and certain types of pollution are worldwide phenomena. Tropical andsubtropical regions are particularly affected by the changing climate due to anaccumulation of extreme weather events. The recent flooding catastrophes inEurope show that not only the developing countries bear the brunt of theseenvironmental catastrophes, but also increasingly the rich countries, which nowget a taste of what it means when there are not enough financial and technicalmeans to take compensatory and assistance measures. The poor population inespecially affected by the extreme weather events, having no escape options.Global environmental policy therefore is crucially related to the fight againstpoverty and must begin chiefly in the industrialized countries, which are theprinciple causers of many global environmental problems.

Wetherefore demand:

§        New global funding instruments must be introducedto realize the environmental and development targets of Johannesburg. Animportant role can be played by globally uniform charges for the use of globalcommon goods such as air space and the seas. The Federal Government should takeup the relevant proposals of its Scientific Advisory Council on EnvironmentalChanges (Wissenschaftlicher Beirat Globale Umweltveränderungen - WBGU) withoutdelay and take the required initiatives in the competent international bodies.One first step in this direction should be the EU-wide repeal of tax exemptionfor aviation fuel. Subsidies with detrimental environmental effects must bedrastically cut down or reformed. Comprehensive agricultural reforms are needed.Agricultural subsidies must be aligned to social, ecological and animalprotection services. The agricultural reform proposed by the European Commissionmust be supported.

§        Before further steps are taken in the bilateraland multilateral liberalization of trade, their effects on the environment,poverty, social circumstances and development should be examined. Studies byindependent experts and the equal participation of social interest groups areneeded.

§        Priority of multilateral environmentalconventions over the trade and investment provisions of the WTO.

§        Nuclear energy may not be defined as asustainable form of energy production, as the European Commission attempted todo in early summer.

§        At the same time it is essential that the shareof domestic renewable energy sources be further expanded.

3.Reform of the international financial architecture

Thepresent structures of the deregulated global financial markets are responsiblefor the instabilities and financial crises of the past decade. Moderncommunication technologies, new financial market products such as derivates andspeculative hedge funds enabled the short-term mobility of previouslyunimaginable financial masses and promoted speculation attacks on nationalcurrencies. Financial market crises are linked with huge social costs in theaffected countries and have contributed to enlarging the economic and socialinequalities of the world.

Inview of the global character of the present economic weakness, internationalcooperation in economic policy is dreadfully meagre. In particular in the fieldof exchange rate policy, the lack of cooperation by the G3 (USA, Euroland andJapan) has negative consequences. There is a lack of “crash barriers” forthe exchange rates, which could credibly be asserted vis-à-vis the foreignexchange market. This lack narrows the leeway for growth-promoting, confidentshort-term economic policy and impedes the overcoming of recessive tendenciesthat have lasted since the second half of the 1990s. In addition the trade andcredit relationships of the threshold countries are impaired by the highfluctuation intensities of the exchange rates. Uncontrolled sudden price dropssuch as those in Brazil, Argentina or Turkey create huge macro and microeconomicproblems, which extend far beyond the borders of the country directly affected.

Considerablereforms are therefore necessary so that the potentially beneficial function ofthe financial markets can be effective for sustainable economic development.

Financialmarkets need a solid institutional framework, which limits speculation andcontrols illegal movements of funds.

Wetherefore demand:

§        Stricter duties of disclosure for the banks,risk-adapted minimum reserves and tougher banking supervisory provisions, topromote great risk awareness. However, small and medium-sized enterprises maynot be cut off from the supply of credit and may not be discriminated againstwith poorer ratings by comparison to larger enterprises.

§        Creditors must bear a larger part of the disencumbermentcosts when their behaviour leads to states coming into financial market crisesor payment difficulties (bail-in). The development of an internationalbankruptcy and insolvency law, the formation of committees of creditors, debtrescheduling clauses and the approval of moratoria can serve this purpose. Also,intensified monitoring and controls of derivates and over the counter tradingare necessary.

§        A market-economic instrument to restrictfinancial fluctuations is an increase in transaction costs of capital flows.This should be effected with a currency transaction tax, stricter equity capitalprovisions for banks, a registry of loans or enterprises at the Bank forInternational Settlements as well as the regulation of financial and tax havens.

§        Promotion of the establishment of functional andstabile national financial systems in developing countries. Controls on themovement of capital can also be a good instrument for protecting the financialmarkets of developing and threshold countries.

§        Improved cooperation by the three major currencyregions of the dollar, the euro and the yen, in order to overcome the recessivetendencies in the global economy and regain short-term economic policy leeway.

§        Effective controls of tax havens and unregulatedoffshore financial centres. In addition to the improvement of such internationalinitiatives, the haven countries must be included in an exchange of informationbetween national regulatory authorities and the eradication of the excessivebanking secrecy. Additionally the offshore business of domestic enterprises mustalso be subjected to intensified investigations on the part of the Germanfinancial regulatory authorities

§        Sanctions against those countries cited on theOECD blacklists of uncooperative financial centres.

Inthe scope of the OECD project on harmful tax practices, over 30 offshorefinancial centrers have committed themselves to the principles of transparencyand information exchange. Now, relevant legislation should be rapidlyimplemented and applied in these financial centres.

 4.Working to shape social world trade

TheDGB and its member unions, the German non-governmental organizations andmovements in environment and development policy advocate just participation ofdeveloping countries in world trade and social economic policy on aninternational level. This encompasses:

§        the elimination of trade barriers vis-à-visdeveloping countries (e.g. export subsidies in agriculture, escalation ofcustoms duties, import restrictions, antidumping);

§        prolongation of the implementation deadlines ofthe Uruguay Round;

§        the possibility for exceptions in certainliberalization obligations in order to promote sustainable development indeveloping countries. If necessary, existing conventions must be amended. Theneed for reforms in intellectual property rights (protection of speciesdiversity and life-saving drugs) and in the agriculture sector to ensure thefood security (introduction of a development box) is apparent;

§        the integration of fundamental workers’ andhuman rights as well as ecological minimum standards in the multilateral tradeand investment regimes;

§        for this purpose, a standing forum between theInternational Labour Organization, the World Trade Organization and otherinternational institutions should be established;

§        another module in the scope of a structuredcooperation between the international organizations is the observer status forthe International Labour Organization at the WTO, the IWF and the World Bank;

§        strengthening the International LabourOrganization and its financial means for implementing the internationallyaccepted Core Labour Standards;

§        placing Core Labour Standards on the agenda ofbilateral trade policy of the European Union;

§        making the ILO Core Labour Standards, theinternationally accepted environmental standards of the World Bank and theinternational conventions for the protection of human rights criteria for thegranting of investment guarantees and for export credit  guarantees indeveloping countries.

 5. Nounrestricted liberalization of the service markets

Internationallytraded services are a new topic in world trade. This sector is considered themost dynamic growth sector, reaching a value of $1.34 billion in the year 1999alone, or one fifth of world trade. Particularly because liberalization of theservices market affects the future market and social order of the global labourmarket, the anchoring of the universally accepted ILO Core Labour Standards inthe WTO Agreement is crucial. Migrating workers in particular must have theopportunity to organize in trade unions and conclude collective bargainingnegotiations. It also cannot be accepted that the regulation of the servicesmarket – especially of the public sector – is a trade barrier and thereforethat international obligations aim at evading EU law or that the right ofnations to higher quality standards and norms is restricted as distortions ofcompetition.

Wetherefore demand:

§        that distinct market order principles beobserved. Public services and important social service sectors, such aseducation, health, environment and water, must be excluded from the GeneralAgreement on Trade in Services (GATS). For this it is necessary to make theunclear GATS provisions on sovereign tasks more precise. The WTO countries mustcontinue to have the right to regulate their own public services;

§        that market opening for financial services shouldonly take place in national economies with developed financial institutions,which can deal with the liberalization of the financial market. This does notexclude temporarily restricted capital movement controls;

§        that a universal supply of affordable and highquality services is guaranteed by the principle of universal services (e.g.telecommunications);

§        that social and ecological composition ofcompetition in the transport sector is necessary to balance out external costs;

§        that a sustainable market order for tourismservices is strived for, dedicated to the protection of natural and culturalenvironments;

§        that social order principles must prevent unfairtrade caused by social and wage dumping in the electronics trade, in freedom ofestablishment, in public procurement and in cross-border freedom to provideservices;

§        that GATS obligations not be taken up in the caseof serious market disturbances (unemployment, wage and price dumping). Ifliberalization obligations have already been taken up and should such seriousmarket disturbances occur, it must be possible to defer the GATS obligations fora temporary period;

§        that the work place and favourability principleswith regard to wages, working conditions and workers’ rights be generallyanchored in the GATS agreement;

§        that the German Federal Government thereforeadvocate a European policy in the totality of public services.

6.Regulations for multinational enterprises

Thepolitical reformation of globalization processes must also be accompanied by abinding regulation on the activities of multinational corporations.Multinational enterprises must acknowledge their social, ecological and humanrights responsibilities and obligations and take these into consideration intheir actions. Voluntary standards or codes of conduct are an important firststep, but are not enough. The objective must be the creation of legally bindinginternational regulations with effective controlling mechanisms and sanctions.The draft of the UN Subcommission on the Promotion and Protection of HumanRights or the International Framework Convention on Corporate Accountabilityproposed in Johannesburg by the trade unions and NGOs can serve as the basis forsuch regulations.

Inthe meantime, we expect of the Federal Government:

§        that it vigorously follow up on its obligation topromote the implementation and application of the OECD Guidelines forMultinational Enterprises (MNEs), for example through information and publicrelations work as well as relevant consulting programmes;

§        that all interested social groups be equallyinvolved in the work of the national contact office according to the principlesof transparency and accountability;

§        that it vigorously demand that multinationalenterprises headquartered in Germany comply with the OECD Guidelines and withthe ILO Code of Conduct for Multinational Enterprises in all of their socialactivities, including the cooperation with supplier enterprises; in this contextit should encourage enterprises to conclude framework agreements with the tradeunions;

§        that it only then grant export credit andinvestment guarantees when the applicant enterprises pledge to comply with theOECD Guidelines.

Thisraises the issue of a suitable international code of rules for foreign directinvestments.

Wedo not fundamentally reject such a code of rules. A multilateral investmentframework, which links basic investment protection for direct investments to thecompliance with international environmental and social norms and includes themin the development policy priorities of the investment country, could strengthenthe contribution of direct investments to development and employment as well asto higher social and ecological standards.

Atthe WTO Ministerial Conference in Doha, the subjects of investments andcompetition were taken up for the work programme of the WTO for the next 2years.

However,the WTO is not the suitable framework for these subjects; for the objective ofthe governments that advocate investment negotiations in the WTO is solely toliberalize national investment regimes and to limit already restricted nationalregulation competencies. In addition, the application of general WTO principlessuch as national treatment of investments can stand in the way of developmentpolicy objectives, for example if preferential treatment of resident small andmedium-sized enterprises is needed to form a solid industrial basis. In thepast, the negotiations in GATT and WTO have brought about little progress in thepriority for international environmental agreements and entirely ignored humanrights and core labour standards. This is no foundation upon which an investmentorder can be expected within the WTO, the aim of which is not liberalization,but rather development and social progress.

Wetherefore demand that the Federal Government:

§        advocate an international investment order beyondthe WTO, which is based on minimum social, environmental and human rightsstandards. An international investment order may not undermine governmentalfreedom of action, but must expressly enable the government of the investmentcountry to set investment conditions according to its own opinions and decisionsabout the development process.

§        The preliminary WTO negotiations regardingcompetition are also headed in the wrong direction. We therefore demand:

§        an international competition authority capable ofintervention, which is given the responsibility for controlling major mergers,market-dominating positions and business practices that restrict competition.Such an institution should be situated outside the WTO due to the possibleconflict of objectives in trade and competition policy. For on the basis ofobjectives made for the public welfare, such as Universal Service Obligations,restricting market access and granting certain exclusive rights, e.g. regionalmonopolies of local waterworks, may be justified.

Becauseof location competition for investments, many governments have allowed for taxcompetition that endangers the income foundations of the states. Hence, the taxburden has continually developed to the advantage of the enterprises and to thedisadvantage of wage-earners and consumers.

Wetherefore demand that the Federal Government do all that is possible to restrictunfair international tax competition in corporate taxes and to achieve a minimumtaxation of enterprises also internationally.

Forthis purpose, the following measures may be suitable:

§        long-term harmonization of the bases ofassessment and alignments, perhaps also harmonization of tax rates within theEU;

§        short-term consistent application of theheadquarter country principle. The tax authorities of the investment countryshould notify the tax authorities of the headquarter country of the profits ofinternationally active enterprises. Subsequent taxation can then be made ifforeign taxation was less than domestic taxation.

 7.Democratization of the globalization process

Thesigners of this declaration agree that extensive democratization is also part ofthe political design of the globalization process. Since neo-liberalglobalization is being pushed forward on national, regional (European) andinternational levels, all of these levels require democratization. A smoothtransition for the advancing liberalization of trade is being paved, forinstance, in the Federal capital of Berlin, in the EU Commission in Brussels aswell as at the headquarters of the WTO in Geneva. However, in all of these threecities, civil social groups (trade unions, non-governmental organizations, civicmovements) have less ease of access to information than the lobbies of industry.Often even parliamentarians are informed by the respective competent ministrieslate, poorly or misleadingly. Nevertheless, effective participation is not onlylimited to equal access to information. It also requires hearing rights andprocedures for the early involvement of civil social actors in importantinternational economic policy decisions.

Butdemocratization of the globalization process also involves distinct improvementof the representation of the developing countries and their respective civilsocieties in international institutions. In many cases this requires thedevelopment of democratic structures and sufficient capacities in thesecountries. It must be remembered that democracy needs proximity. Effectivepolitical participation demands that decisions are made as locally as possibleand as internationally as needed. Which concrete decisions should be made beston which levels must be reconsidered case-by-case.

Wetherefore demand of the Federal Government:

§        that it support the democratization processes andefforts made in developing countries through counselling and funding theestablishment of democratic institutions and structures;

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