Selective Globalization and Global Trade Ethics
Consultation
of Vichara and National Council of Churches in India NCCI
16th
and 17th August 2003, Kottayam/India
Professor Dr. Christoph Stückelberger,
University
of Basel and General Secretary of Bread for all, Switzerland
Preliminary remarks
I thank you for the invitation to this consultation on the crucial issue of globalization, which is discussed on the basis of my book on “Global Trade Ethics”.[1]. Let me start with four preliminary remarks which might help to understand the personal background of the following contribution.
1. Actual cases show how far globalized todays’ exchange of goods and services is: On my way to India, I received in the airplane food from many different countries. How are they produced? The coffee cream had a bio label, and what about the rice and the chicken? The scandal with Coca Cola and Pepsi Cola in India these days, where these companies were attacked “for poisoning Indians” with unclean products. Two weeks ago, I was interviewed by Swiss newspapers about the case of the Swiss company Syngenta, one of the worldwide biggest agrochemical companies, which was attacked for employing children in their cotton fields in India.
2. I’m involved in different Fair Trade initiatives in India: fair trade tea from the Nilgiris hills in Tamil Nadu, fair trade textiles from Tirupur, fair trade carpets from the area of Varanasi and Bhadohi with the initiative of the Foundation STEP, where I’m international president. I’m also chair of the microcredit institution Ecumenical Church Loan Fund ECLOF International, which has it’s Indian headquarter in Chennai. I am therefore not only involved in criticizing global trade, but also in practical alternatives which show that trade in dignity is possible.
3. I try to build bridges: between the scientific reflection (as Professor of Ethics at the Theological Faculty of the University of Basel in Switzerland), practical development work (as General Secretary of the Swiss protestant development organisation Bread for all) and political lobbying (as member of different commissions of experts of the Swiss government for international relations, gene technology, WTO).
4. Before I speak about my book “Global Trade Ethics”, let me characterize its goal: The basic question of the book is: How can we organize a world economy and global trade which respects fundamental values? The book is an overview and introduction for business people, politicians, practitioners but also for students and scientists. It is not an in-depth analysis. However, it wants to motivate for example CEOs in companies to take the ethical aspects in their respective company seriously.
The following contribution includes five chapters:
Globalization: What is it?
Values: Which ones are fundamental?
Agents: Who is responsible?
Instruments: How can ethics be effective?
Conclusions: Alternative globalization is possible.
1. Globalization: What is it?
The description of the phenomenon of globalization is very controversial. When did globalization start? Some authors say it was 1989, when the Berlin wall fell down, as the end of the bi-polar world. Other voices say globalization started off at the Second World War. Others think it was in the nineteenth century with the technological and industrial revolution and others even start at the beginning of human kind, saying that globalization means imperialism, which is as old as humankind itself. I am convinced that it’s more helpful to limit the term globalization to the recent phenomenon of worldwide interdependence, described by the following characteristics.
1.1
Factors
Five factors characterize globalization:
The technologies for transport are very important. The development of these technologies allows to broaden trade, to accelerate it and to make it cheaper.
The second factor are the communication-technologies . We can not imagine global trade as it is without telephone, internet and English as an almost common language.
The third factor are the financial instruments. Global economy is only possible when the financial instruments allow the transfer of capital and the payment of goods across borders.
The fourth factor is the political frame which allows or stops economic activities between countries.
And the fifth factor are the value systems which become more and more globalized.
1.2 History:
The attempt to cross borders has existed since almost 3000 years. Let me mention the example of the trade in the biblical time, in the Old Testament. 2500 years ago, there was massive trade in the Mediterranean area with the town Tyre as its centre. It had two ports and was very rich. It bought goods from North Africa, Asia and sold it to Turkey, Greece, Spain and Italy. The ethical challenge was already visible in that story.
1.3 Challenges:
One major challenge is the different speed of globalization in the different areas. We can oberserve a very fast economic globalization, a much slower political globalization, and an even slower development of global ethics. That creates tensions between the different cultural, ethical, political and economic developments. And the vision would be: we have to coordinate the different types of development. Because if we remain with this fast economic globalization without the globalization of political institutions or value systems, it will fail. Only if we reduce economic globalization and accelerate political globalization and common values, international cooperation can be sustainable.
Other challenges are vulnerability and interdependence. A recent example is the electricitrical power outage in the USA and in Canada, where 20 millions of people remained without electricity within minutes. The same happened to 50 million Italians in September 2003. This dependence was a catastrophe. It is also very obvious concerning the climate change where the environmental behaviour in one part of the world influences the climate in the whole world.
1.4 Ethical judgement
How can we come to an ethical judgement of globalization? In the Old Testament of the Bible the prophet Ezechiel shows us how he did it with regard to the king of Tyre. The king of Tyre had accumulated huge wealth by his “global trade”. The prophet Ezechiel describes the beauty of that trade (Ez. 27,11-24). But suddenly, this world trade centre was destroyed and the prophet tries to find reasons. He gives a theological and a social answer: The king turned himself into God “you did set your heart as the heart of God (Ez. 28,5 – 6). The social reason was that the king abused his trading power for the purpose of exploitation of the people (Ez. 28,16).
The lesson learnt by this story is that global trade can contribute to human wealth but can also destroy it, if the traders, the economist, or the politicians put themselves on the throne of a God. Taking the example of the European Union today: the integration into one market increases wealth and was primarily established to avoid a Third World War and to maintain peace in Europe. On the other hand, if the European Union exploits developing Countries by its trade relations in WTO, it has to be criticized like the prophet Ezechiel did it. From an ethical Christian point of view, we can come to an ethical judgement of globalization by saying:
Globalization must be our goal if it involves an attempt to understand the world as One Mankind and One Ecosystem, as well as their interdependence. And globalization must be our goal as long as it envisions fertile ground supporting life in dignity with a fair share for everyone.
Globalization must be rejected if it involves an attempt to reduce the world’s multiplicity to one standardized economic, cultural and political model which is created by only a few agents, and in which the economy has priority over any other sphere of life and action.”[2]
Let me add a reflection about the word globalization: it includes the word “globe”. It’s a secular word. If you go back to the religious term, we find in the New Testament the word “oikos”. Oikos means the world, the earth as the common house, the house of God. The word “Oikos” still exists in English as “Eco…” - in three dimensions: Economy is the responsible household in production and distribution of goods. Ecology is the responsible use, maintenance and renewal of the natural foundations of life, ecumenism is the responsible community of people and peoples with different religions and cultures. This alternative globalization, referring to the oikos, could be called “oikolisaton”!
2. Values: which are fundamental?
2.1 Eleven values
I would like to offer eleven values as a common value-system, which can be accepted by different cultures and religions, even though not everybody agrees on all in the same way.
I design the values as a tree of fundamental values: each branch is one value. That shows the interdependence of these values, which belong to one tree.
The eleven values are:
preservation of life
justice
freedom
sustainability
peace
solidarity
dignity
partnership
trust
power-responsibility
forgiveness
Three of the branches have different leaves, that means different dimensions of that value.
2.2 Preservation of life
Life as such is a value. Its preservation is fundamental and a pre-condition for all the other values. The basic needs, such as food, clothing, housing, and education are the pre-conditions.
2.3 Justice
The main problem of economy is that justice is not the major concern for economy. Economy has not only to deal with the production of wealth but also with its just distribution. Justice in the Judeo-Christian tradition and like in other religions such as Islam is a major concern. What do we mean by justice?
It includes several dimensions, “leaves” on that branch of justice. I will only mention three of them:
Performance-related
justice
Performance-related justice means that every person must be given their due on the basis of their performance.
Needs-related
justice
Needs-related justice means that the fair exchange of goods must take into consideration human needs. Also handicapped people, children and aged people have the right to eat, even though they can no more or not yet produce goods.
Distributive justice
That means to bring performance-related justice and needs-related justice into the right balance.
2.4 Freedom
Freedom means, in the popular meaning, to do what you like to do and to have the freedom to choose between different options. This includes to have the purchasing power to buy one or the other good. Poor people have no freedom, because they have no choice. The Christian vision of freedom is different. It means freedom from sin. Free to do the good and to avoid the evil. The freedom to serve the others and their community and not only oneself. For economic ethics, the crucial question is the relationship between freedom and justice. Absolute freedom without justice means pure capitalism: those with capital destroy those without capital. On the other side, justice without freedom means a dictatorship of communism: All have to be equal, forced by the political power. The ethical challenge is to combine freedom and justice and to find the right balance. In economic ethics as in economic practice it is possible and it must be possible to reconcile freedom and justice as two fundamental values.
2.5 Responsible use of power
As a last example of these fundamental values, I want to mention the responsible use of power. We have to link power and responsibility. You can not act in a responsible way if you don’t have the power, little or big, to put into practice what you feel is your responsibility. On the other hand, if you have power without responsibility it is not a value. Power then becomes a destructive power. There are different kinds of power: The power of competence, the power of communication, the physical power, the power of innovation a.s.o. Everyone has a smaller or bigger amount of power, as parents, as workers, as CEOs, as politicians and as children.
The first step towards a value-based world economy is to agree that we have to link all our economic activities to these fundamental values. There is no value-free economy. The only question is to which one of the different values it refers and what the priorities are. Liberalization means that you put the value “freedom” on top and that all the other values are subordinated.
2.6 Fair price
Let’s take the example of the price: what is a fair price? How can the values I mentioned help to define a fair price? We can take the example of coffee, tea, textiles, or any other goods or services. What is the fair share due to each of the different participants in the production-chain, from the raw material to the recycling of the product? Each producer, such as a coffee farmer, trader, or importer, should have a fair share according to the performance-related justice. Often, the farmers receive only a small percentage of the product’s final price. The fair trade movements and associations have begun to increase farmer’s salaries in order to improve performance-related justice. More and more consumers in industrialized countries, as well as middle class consumers in developing countries, are up to paying a slightly higher price for a product if such a price guarantees a higher salary for the main producers, the farmers[3] . The fair trade price calculation allows more performance-related justice.
With these fundamental values, we have an instrument for the value judgement not only regarding a fair price but also a fair salary, fair interest rates, fair custom tariffs, fair taxation, fair profits as I mention in my book.[4]
2.7. Global or contextual values?
The fundamental values mentioned above have both a global and a contextual dimension.
Every human being wants justice, freedom, and a life in dignity. Every human being wants recognition of the work he has done, but in different cultures this can have various significances:
Monetary compensation, recognition by awards, or even spiritual rewards. Alternative globalization, or globalization with a human face, means finding and respecting the balance between global values and their cultural contextualisation.
3. Agents: Who is responsible?
Who is responsible for ethical trade – consumers, CEOs or world organisations such as the WTO? Each of them has a role to play. The people’s movement believes that by destroying WTO or killing CEOs, a better economy and more ethical trade will be established. My experience has led me to a different conclusion. We must convince as many agents as possible to act within their respective positions to support an alternative value-based globalization and economy.
3.1 Categories
There are four performing categories of agents: individuals, the private sector, the civil society and governments; each of these categories includes again different agents.
We can also distinguish between four types of value-creating institutions: standard-determining institutions, standard-implementing institutions, standard-enforcing institutions and standard-developing institutions.
3.2 Normative institutions
In a globalized world, the standardization institutions play a key role in introducing and enforcing economic values. Standardization entails the definition of standards for products, processes or institutions by means of voluntary agreement or binding laws. Examples include the Global ISO System, the Fair Trade Labelling Organizations International FLO or the Forest Stewardship Council, FSC for sustainable forestry.
Standardization-institutions are responsible for reflecting and analysing their norms and values. They must clear the ethical foundations behind them. One key issue is the participation in the definition of norms. Taking the example of the International Organization for Standardization ISO as a world organization, it is still very much determined by the North. The headquarters in Switzerland with branches all over the world define the norms such as the technical norms in ISO 9000 and the environmental norms in ISO 14000. Although they have a development committee which includes representatives from developing countries, they are, however, weak in influencing the standardization-process of the ISO.
After the standardization, accreditation, certification and verification, the next steps lie in the process of controlling the standards. Here again the accreditation of institutions and people who are responsible for determining and controlling whether or not norms and standards are being respected, is of crucial importance.
Here again the selection of the accreditation institutions and the selection of certifiers is a weighty ethical responsibility. Here again the question of equal participation of the South is an ethical issue. Take for example the Standard SA8000. Responsible for that standard is Social Accountability International SAI in New York, and all the five globally operating companies for the accreditation and certification system are based in Europe and in the USA. In the field of the certification institutions, we must again ask how to include Southern agents in that process. More and more European consumers are choosing organic products. The organic certification “bio” is normally given by specialised European institutions and environmental consultants. The development cooperation of the Swiss government has begun to support the establishment of certification institutions in the South, for example the certification of organically-grown products in India. It represents a step towards the value of participation in the certification systems.
3.3 Example WTO
The WTO has a special responsibility for the values defined in Global trade. The question is whether or not this institution can be reformed. The WTO as it is now does not correspond to the value system which is defended in my book and this conference. Therefore, if the WTO is to be an instrument for a multilateral regulation of trade, major changes will have to be made. The current system of the WTO is based primarily on the value of freedom, free trade by liberalization of trade. The just distribution and the value of preservation of life of the poor is far behind that first goal.. Of course, justice is integrated in the WTO system, but only with one aspect of justice, such as the procedural justice which means that the WTO members have – theoretically – the same regulations to follow and the same rights to defend. The other dimensions such as performance-related justice or needs-related justice are not taken into account in the WTO system.
4. Instruments: How can ethics be effective?
From an ethical point of view, both identifying the agents and judging these different instruments are important for ethics in trade. I will mention only briefly three instruments out of about fifteen that I analyse in my book.
4.1 Labelling
A label is a voluntary designation of products or an identification of companies, which contains information about products, production methods or corporate standards. Labels are therefore a benchmark for value systems, which show consumers what is behind the product. That is a very fruitful instrument but one that requires two ethical conditions: first, the standards behind labels must be ethically reflected because not all labels are reliable. Secondly, the independent monitoring of labels is crucial for the ethical credibility of these labels.
4.2 Company ratings and campaigns
The rating of companies, especially of those accredited in the stock market, becomes an increasingly powerful instrument in influencing the policy of a company. A bad social and environmental rating of a company, due to the violation of environmental standards or social responsibilities, can be harmful to the financial performance and the credibility in the stock market. The same corresponds to campaigns that have increasingly formed in developing countries, such as the “Global March against Child Labour” from India or the “Jubilee 2000”-campaign against indebtedness. But here again the criteria behind the ratings are decisive. Not every rating is credible. It is important to analyse carefully the values and standards behind the ratings, as well as behind the campaign against a sector or a company.
4.3 Legal instruments and international conventions
National laws or international conventions are an important instrument for ethical trade because they are legally binding for every agent in the field. The equal treatment of the agents is one aspect of procedural justice. With legally binding instruments, even “black sheep” in a specific economic sector can be forced to behaving according to ethical standards. The disadvantage is that laws need democratic majorities and a legal law-controlling system combined with mechanisms of sanctions.
From an ethical point of view, the different instruments should be used in combination. Voluntary instruments such as labels and codes of conduct, have the advantage of being established in a short time because they are voluntary. The legal instruments have the advantage of being binding for everybody, but have the disadvantage of taking a long time to be established.
5. Conclusions: Selective globalization as new answer
5.1 From a market access perspective to an ethical trade perspective:
In the interesting study “Making Global Trade Work for People” (London/New York 2003, page 41,), the UNDP summarizes its key message about trade liberalization, its limits and alternative globalization:
“The only systematic relationship between countries average tariffs and nontariff restrictions and their subsequent economic growth is that countries dismantle trade restrictions as they get richer … Economic integration with the world economy is an outcome of growth and development, not a prerequisite … Institutional innovations have been crucial for successful development strategies and outcomes… The design of the multilateral trade regime needs to shift from one based on a market access perspective to one based on a human development perspective… A world trade regime friendly to human development would provide a domestic policy space and give developing countries flexibility to make institutional and other innovations”.
That means that the UNDP is calling for a selective globalization! Trade liberalization is not a guarantee for improvement of economy and for alleviation of poverty. Selective protectionism can be combined with selective globalization and liberalization. That leads me back to my value judgement on globalization (point 1.4 above), or that globalization is a heresy if it claims to be the solution for all problems and the salvation for humankind. However, if it is seen as an instrument for some specific cases to improve wealth, peace and sustainability, this selected globalization can be accepted – under the condition that alternative ways such as selective protectionism is accepted as well. The problem with the current trade system is that the situation in different countries is too different, so that it is not possible to implement the same rules for all players. If you compare it with a football game, it’s like one team is composed of handicapped people and the other is made up of strong healthy men. The handicapped even have to carry baggage and therefore the starting position is unequal and unfair if the same rules apply to both parties. We have in the WTO the mechanism for a special and differential treatment which should help the developing countries to have a better starting position. However, at this point, the instrument is weak and not sufficient for equal starting positions.
5.2 Global campaign “Trade for people, not people for trade”
On the 10th December 2002, the “Human Rights Day”, the Ecumenical Advocacy Alliance launched the global campaign “Trade for people, not people for trade”. In Switzerland, we initiated this campaign on the 1st of September 2003. The goal is to take the human rights as the benchmark for all trade activities; this means that human rights, both social and environmental rights, have the priority over economic criteria. This also means that we want to call for and force governments to change the WTO trade regulations so that social and environmental rights and criteria are no longer subordinated to economic criteria as they have been up to this point.
5.3 Closing remark: selective globalization is possible
Let me close with a theological remark. God wants the earth as his „oikos“, as a garden of peace, sustainability and wealth with justice. As long as global trade serves this vision of the Kingdom of God, we have to fight for it. But if man replaces God, like the King of Tyre in the Old Testament, and turns this global oikos into a system of hegemony and oppression, then we must fight against it. This selective, alternative globalization with an ethical trade and a human face is possible! It’s worth to struggle for it.