Putting Dignity & Rights at the Heart of the Global Economy 2 Governance in the Global Economy At the center of any social and economic system are the principles and rules that govern interactions among institutions and people. Who makes these rules? In what venue? Who benefits from them? What are the consequences of breaking them? The answers to these questions are at the heart of governance. Governance enfolds individuals in an overlapping series of rules and practices that extend from the household, workplace and social institutions to the national, regional and international levels. Individuals and communities navigate through these dense systems of formal and informal rules, juggle many different ideas of governance, and negotiate with a plethora of governing structures. Our challenge is to transform governance at all levels—international, national, private sector, local and individual—in order to reinforce dignity and equity in today’s global economy. As we emphasized earlier, we should not fall into the trap of thinking that there is only one way of organizing economies to eliminate poverty and balance economic growth with environmental sustainability. Economic institutions need to be adapted to the needs of a particular place and people. As Joseph Stiglitz suggests, “new and complex situations call for experiments; not one but many experiments.” While experimentation is essential, all economic systems that enhance human rights and dignity have certain core characteristics: participation, transparency, accountability and equity. Participation is the cornerstone of good governance. Rethinking governance structures and the transformation of the global economy must be guided by those whose lives will be changed, and this must involve greater leadership roles for women and people of color. As Nolleen Heyzer, Executive Director of the UN Development Fund for Women, stated at the 2004 Summit of the Americas, “In a world that is growing more complex, the development of a more inclusive society based on democratic governance enables all citizens to participate and shape policies and practices to bring about greater equality, peace and security. Women are the vital, but often missing, link in this process, and in spite of their potential to offer innovative solutions, especially in times of crisis, they are rarely those to whom nations turn first.” In recent years, the rhetoric of participation among institutional actors has increased much more than action. For example, as discussed earlier, the IMF and the World Bank, in response to outside pressure to increase civil society participation in constructing poverty reduction plans, initiated Poverty Reduction Strategy Papers. One of the core principles of these plans is to “promote national ownership of strategies through broad- based participation of civil society.” Yet, many civil society groups have found this process to be simply another attempt to build ownership around standard Bank and IMF policies with only token participation by civil society. The challenge remains to build genuine participatory governance structures at the local, national and international levels grounded in the Universal Declaration of Human Rights. American Friends Service Committee Working Party on Global Economics 49 Putting Dignity & Rights at the Heart of the Global Economy International level There is a democratic deficit at the global level: the size and power of international economic institutions have overwhelmed the existing political mechanisms for representation, transparency and accountability. Affected populations around the world consequently feel even further removed from economic decision-makers, for their voices and the voices of their governments are overpowered by wealthier countries. At the international level, the global economy does not have the kind of safeguards and enforceable legal mechanisms that many national economies have implemented to ensure transparency and accountability. The United Nations is the most representative multilateral institution. However, there are two principal decision-making bodies: the General Assembly, which includes all members and in which each nation has an equal vote, and the smaller Security Council, in which the major powers wield disproportionate influence through exercise of their veto in the Security Council. Moreover, the United States has periodically withheld its dues from the United Nations or its more specialized agencies to apply pressure. The UN has held conferences and reached policy decisions on a wide range of subject areas in its economic and social brief, including gender, racism, sustainable development, population, housing, social development and human rights. These government-to- government meetings have incorporated substantial input from civil society. UN conferences have produced important declarations, conventions and programs for action. Examples include the Rio Declaration on Environment and Development, the Millennium Development Goals, the International Convention on the Elimination of All Forms of Racial Discrimination, the Convention on the Elimination of All Forms of Discrimination Against Women, Convention on the Rights of the Child, and the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families. Although singularly representative, the United Nations does not manage the global economy or set its rules of operation. The IMF and World Bank are part of the UN system but as autonomous specialized agencies, not under UN management. The AFSC believes it is important for a reformed UN to take a more active role in governance of the international economy. For example, a more effective UN Economic and Social Council (ECOSOC) could have a role in providing transparent and effective oversight of the World Bank and the IMF. The UN could provide a mechanism and resources to ensure participation by civil society in the deliberations of the international financial institutions. The International Labor Organization (ILO) is the oldest of the organizations under the UN system, founded in 1919, predating the United Nations by a quarter century. Its membership is unique, in that each of the 177 member states names four persons to its delegation: two representing government, one representing business, and one representing labor. Each delegate votes individually. Since its inception, the ILO has adopted 182 Conventions, each by at least a two-thirds majority. Five principals, embodied in seven Conventions, have been lifted up as “core labor standards” discussed earlier. Member states are encouraged, but not required, to adopt each Convention and incorporate its provisions into domestic law. Four of the five core labor standards (excepting the Convention on child labor) have been adopted by a majority of ILO 50 American Friends Service Committee Working Party on Global Economics Putting Dignity & Rights at the Heart of the Global Economy member states. The United States has ratified 14 of the 182 Conventions, including only 2 of the 7 core Conventions: Elimination of Forced and Compulsory Labor and Abolition of Child Labor. Member states submit an annual report on each Convention they have adopted. ILO members and workers in member states that have adopted a particular Convention may call violations to the attention of the ILO. But the ILO has no real enforcement powers to back its recommendations beyond moral suasion. Solid enforcement mechanisms—going well beyond the limited, last-resort avenues under Article 33 of the ILO Constitution, which were invoked in the case of forced labor in Myanmar—are essential if the ILO is to uphold labor rights and labor rights are to be taken seriously. The World Trade Organization (WTO) attempts to make decisions by consensus, backed up by a one-country, one-vote provision. Effectively, however, major decisions have more often been made in small “green room” caucuses, usually dominated by the rich countries. “Negotiations” often take the form of arm-twisting. Dissatisfaction with this process has risen to the level that alternative proposals are under discussion for formally named, more representative working groups for detailed negotiations. Providing training for delegations from smaller countries would also help level the negotiating table, especially if they could cooperatively develop specialists on key concerns within their groupings. Many of the negotiations are technical in nature, and access to a wide range of technical expertise is crucial for effective participation. If trade agreements are to reflect the needs of poor countries, the negotiation process must be more open, transparent and representative. Furthermore, as the domain of trade agreements has widened to include services and investment, a greater share of domestic economic activity is involved in trade policy. Domestic social and environmental policies can be put at risk. Countries need to consider the social and environmental impacts before entering into new trade agreements. Trade rules in these areas should reinforce people’s human rights to water, healthcare, housing, and education, not undermine local and national programs and policies regarding these public services. For example, if a country puts water delivery systems on the trade- negotiating table without the involvement of affected domestic interest groups in the decision-making, allowing private foreign corporations to provide this service, they have effectively privatized water delivery without any public