Professional Documents
Culture Documents
“Trade exists. But present trade flows are not the ones that we envision for our peoples.
Trade should be gender-fair, equitable, environmentally sustainable and just. There should
be a redistribution of resources and power from the rich to the poor.”
FOEI Asia-Pacific-Oceanic group.
sustainable societies need diversified economies (which implies a likelihood of abuse of power in any one
healthy economies range of sectors and activities, rather sphere.
than an economy dependent upon one
It almost goes without saying that a or two particular commodities) and diver-
healthy level of economic activity is sity within sectors (meaning no monopo- What might economic subsidiarity mean
essential to any sustainable society. lies). Countries and communities should in practice? One principle objective would
However, the nature of that economic have the option to select those economic be to enable people to decide what their
activity is all important. Critically, optimum mechanisms and strategies that they own needs are and the extent to which
levels of economic activity should meet believe best suit their economic, social, they need to trade internationally, region-
people’s real needs and reduce resource cultural and environmental needs at any ally or simply outside their own econ-
use to sustainable levels; and access one time. These decisions should be omies to meet those needs. In other
to resources and benefits from the use made with a view to optimising economic words, local economies should be able
of those resources should be distributed activity and maintaining a degree of self- to choose the extent to which they wish
equitably within and between countries reliance, in order to encourage the devel- to be self-reliant, generating their own
and regions. opment of strong and diverse economies wealth and jobs, yet retain an option to
capable of withstanding and adapting to trade. This type of decision-making would
external shocks. of course require democratic and par-
Importantly, economic growth is not ticipatory economic decision-making sys-
always necessary to achieve these goals: tems nationally as well as internationally
in fact the indiscriminate pursuit of growth In other words, nations should have the (see below). Another important objective
often undermines them. Whilst economic right to steer their economies, within would be to restore decision-making on
growth may be desirable in both South- parameters agreed internationally (con- key economic issues (from market-open-
ern and Northern countries if it delivers cerning equity, human rights and global ing through to budget allocations for
the desired results, improving the quality resource use limits, for example) and on health, education and the environment)
of economic activity - rather than increas- the basis of democratic and participative to democratically-elected governments.
ing its quantity - must be the key concern decision-making (which effectively rules
of policymakers (especially in Northern out old-style state-planned economies).
countries, where resource use is already At the same time, however, it is abso-
excessive). lutely essential that we increase effective
economic subsidiarity decision-making at the international level
in relation to a broad range of issues
economic diversity Economics affects everyone and even
that are vital to sustainable economies
international agreements have many sig-
The prevailing neoliberal economic but cannot be resolved by countries
nificant and widespread ‘side-effects’. For
model reduces self-reliance and encour- operating in isolation. These include,
example, negotiations in the World Trade
ages a high degree of dependence on for example, poverty eradication, equity
Organisation can influence production
the global economy. There is little or and burden-sharing, global resource use
and consumption patterns, domestic eco-
no room for diversity: a one-size-fits-all levels, sustainable production and con-
nomic stability, exchange rates, regional
model is promoted by politicians and sumption and transboundary pollution.
and domestic trade, the viability of small
enforced by influential economic institu- and medium sized enterprises, employ-
tions. This inflexible approach has proved ment, and spending on health, education
particularly difficult for many impover- new goals for sustainable
and the environment - all factors likely
ished countries wishing to build-up infant to have direct or indirect impacts on indi-
economies
industries, promote local employment, viduals. Economic diversity and economic sub-
protect cultural diversity and/or restrict sidiarity do not negate the need for
resource exports. It also encourages an common economic, social and environ-
undesirable level of dependence on the The world of economics needs to be mental goals and rules. Indeed, many of
global economy - witness the 1997 Asian opened up: people need to be more these have already been agreed within
financial crisis, which spread rapidly from directly involved in economic decision- the United Nations, but have not been
country to country. The one-size-fits-all making. This could be achieved in part applied to economics (or in some cases,
model ignores the value of economic by devolving decision-making downwards implemented at all).
diversity. by applying the principle of economic
subsidiarity (ie decision-making at the
lowest appropriate level). Multi-layered It is now clear that high levels of eco-
Diversity is integral to sustainability and decision-making would also be advan- nomic growth do not automatically gener-
this applies to economics just as much tageous because it could help to intro- ate social and environmental benefits. In
as any other field. Economic diversity duce checks and balances between and fact all too often the opposite is true.
includes diverse economic strategies, by decision-making bodies, reducing the Deregulation, combined with increased
towards sustainable economies | 9
production and consumption, is leading • Respect for diversity in biological, cul- exposure to environmental and health
to lower social and environmental stand- tural and economic systems, and regard risks on the basis of independent and
ards and increased resource use and pol- for the welfare of non-human species as accurate information and ethical and cul-
lution. In addition, the wealth generated well as humans. tural preferences.
tends to be very unequally distributed.
controlling investment
flows
Governments need to be able to
control investment flows, both domes-
tically and globally, to promote stable
and welcome investment in the real,
productive economy. Screening of for-
eign investors, locally-decided perform-
ance requirements, preferences for local
and domestic enterprises and regulation
of both domestic and foreign investors -
all with a view to promoting sustainable
economies - should be the norm.
Any intergovernmental investment agree-
ments should focus on new economic
goals (as outlined above) and the regula-
tion and responsibilities of corporations.
(As such, the WTO would be an entirely
inappropriate forum in which to negotiate
such an agreement.)
a presumption in favour of
the real economy
We also need to focus on separating the
‘money’ economy and the ‘real’ produc-
tive economy, since the former is now
much more profitable than the latter and
draws investment away. There should be
a presumption in favour of the real econ-
omy in all government decision-making
processes. In addition, national and inter-
national regulation and incentives should
be developed in order to boost invest-
rebalancing trade tural land, water, seeds and other produc- environment, health or optimal economic
tive resources; and the ability to make welfare in other countries and to take this
There is a clear need to rebalance
decisions concerning the use of those into account when developing policies.
trade, deprioritising international trade,
resources. In order to do this, com-
giving a higher priority to local and
munities’ rights to make decisions con-
regional trade (and small and medium-
cerning their local, traditional resources ending export-led
sized enterprises) and promoting more
local self-reliance.
need to be recognised, even where no development
legal rights have previously been allo-
Economic forces, particularly export-led
cated; and people need to have an input
development are leading to an increasing
into relevant economic-decision making
Whilst a certain degree of international concentration of land and power in the
bodies (see economic subsidiarity and
trade may be inevitable and even desir- hands of the few; and the marginalisation
economic democracy above).
able, healthy and sustainable local econ- and impoverishment of the many. Export-
omies and communities are the key led development only benefits a minority
to meeting people’s basic needs. How- of people. Add to this the fact that the
This is not to say that all decisions should
ever, they are being undermined by the underlying theory is no longer valid and
be taken locally. The nature of the issue
current trade liberalisation process in the need to rebalance trade in favour
in hand should determine whether it is
many ways. In general, an undue focus of the local, and it becomes clear that
dealt with locally, nationally, regionally or
on international trade causes imbalances export-led development policies should
internationally. Implementing the princi-
between the local and the international to be abandoned.
ples of economic subsidiarity and eco-
the detriment of the local. In particular,
nomic democracy, with decision-making
smaller local businesses find it impos-
taking place at a number of different
sible to compete with large transnationals
levels in a democratic manner, should
operating with economies of scale; and in
enhance input from the local level,
many countries existing sustainable com-
encourage diverse economies and pro-
munities are threatened.
vide checks and balances that discour-
age the abuse of power at any one level.
governments and
accountability
It is right and proper that governments
negotiate international agreements that
have been mandated by their citizens.
However, governments should be fully
accountable for their actions and this
can only happen when it is possible
to determine what those actions are.
The external transparency of intergovern-
mental trade and other similar negotia-
tions needs to be increased significantly,
through a variety of means, including the
involvement of independent observers in
all relevant meetings and the introduction
of a presumption in favour of derestricting
all official documents.
stronger rules required or replaced in line with substantive agree- World Bank and the IMF operate. Specifi-
ments as outlined in this position paper. cally, the introduction of new economic
International law, rules and enforcement
goals, the introduction of economic sub-
need to be strengthened. At the moment,
sidiarity and rebalancing trade would
the powerful hold sway in the WTO, the
bring trade and economics mean decision-making being devolved in
Bretton Woods institutions and the United
Nations.
institutions into the United part to the regional and national levels;
Nations budgetary decisions being taken on the
basis of a significantly different set of pri-
Current conflicts are mirrored by the orities; an end to involuntary export-led
In the WTO, it is generally the case institutional divide between the United development; and an end to market
that only those rule-changes and nego- Nations, the World Trade Organisation opening as a condition of debt relief.
tiations that benefit the already strong and the Bretton Woods institutions (the
are initiated and discussed (in spite of IMF and the World Bank). International
the WTO’s one-nation one-vote struc- and regional trade and finance institu- multilateral treaties on the
ture). Because the resulting agreements tions should be incorporated fully into the
tend to suit the more powerful players,
environment take
United Nations (which itself needs to be
enforcement of WTO agreements is precedence over trade
improved and strengthened) as originally
strong. In the Bretton Woods institutions - intended. Multilateral treaties on the environment,
the World Bank and the IMF - the voting development, health, labour and human
structure means that the richest and rights, take precedence over trade.
strongest countries have the whip-hand sustainable economies and Global trade rules should be amended to
anyway. Since loans can be withheld and reflect this point.
the WTO
high credit-ratings lost, enforcement is
relatively easy. Sustainable economies, based on the
principle of economic subsidiarity and giving governments
economic diversity, will still require multi-
incentives to cooperate
Within the United Nations, the same lateral rules and intergovernmental insti-
power struggles have been played out tutions, but these institutions will not be Given the competitive nature of intergov-
in a slightly different way. Many useful based on out-of-date neoliberal econom- ernmental relationships it is not surpris-
agreements have been reached, but - ics. Debates concerning the continued ing that multilateral cooperation is rare.
again because of the influence of those existence of the WTO are therefore aca- Nevertheless, this kind of cooperation is
who stand to lose - few are implemented demic. Either it adapts to support sustain- essential if we are to resolve a range
and enforcement is non-existent. Corpo- able economies, losing its mandate to of urgent yet intractable global problems,
rate influence is increasing, with a Global promote ‘free trade’, or it is replaced by a including international debt relief and cli-
Compact proposed between the UN and more suitable institution. mate change.
business.
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For further details of the impacts of
free trade, please see The World
Trade System: how it works and what’s
wrong with it and The World Trade
System: winners and losers, a resource
book, available at http://www.foe.co.uk/
campaigns/sustainable_development/
publications/trade/