GENERAL ASSEMBLY CONCLUDES HIGH-LEVEL DIALOGUE ON IMPACT OF GLOBALIZATION
Press Release
GA/9442
GENERAL ASSEMBLY CONCLUDES HIGH-LEVEL DIALOGUE ON IMPACT OF GLOBALIZATION
19980918 Secretary-General Says Process Cannot Be Reversed, But United Nations Must Work to Maximize Benefits, Reduce HarmGlobalization was the dominant feature of the times and there was no prospect of reversing it, Secretary-General of the United Nations Kofi Annan told the General Assembly this evening, as it concluded its two-day high-level dialogue on the social and economic impact of globalization and interdependence and their policy implications.
What had to be done, however, was to devise ways of managing it better, he continued. The international community must find a way to maximize the benefits and "protect those who are in danger of becoming victims". The United Nations broad mandate, near-universal membership and ability to involve non-State actors made it uniquely well equipped to help forge an international response to a global crisis. The Organization had a special responsibility to insist on global solutions, based on global rules that were fair to all, he said.
Ali Alatas, Minister of Foreign Affairs of Indonesia, speaking on behalf of the "Group of 77" developing countries and China, said the convergence of perceptions that had emerged from the dialogue called on the international community to take urgent steps to manage the force of globalization to maximize its benefits and minimize its risks. He hoped that the encouraging step of a new dialogue would lead to resolution of a problem that required urgent attention and common action. Global solutions could only be achieved by such a partnership.
Georg Lennkh, Director-General of the Department for Development Cooperation of the Federal Ministry for Foreign Affairs of Austria, speaking on behalf of the European Union and associated States, said there was a broad consensus that free trade and large capital movements had brought gain. But, not all countries, particularly the least developed countries, had benefited from those gains. There was also a strong call for countries to refrain from protectionism and isolationism. The multilateral financial system must be strengthened to cope with the challenges of globalization.
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In concluding remarks, Didier Opertti (Uruguay), President of the Assembly, said globalization was inevitable. There was no room for voluntarism. In some circumstances, however, the process could act blindly, so it must be carefully channelled at the national and international levels. Governments should not isolate themselves, but rather create an open economy and proper support structures.
The rapporteurs of the two ministerial round tables held earlier today -- on national and international responses to globalization -- also made statements summarizing the results for the Assembly. (See Press Releases GA/9440 and 9441 issued today.)
Statements were also made by representatives of Lesotho, The former Yugoslav Republic of Macedonia, Colombia, Uruguay, Yemen, Nigeria, El Salvador and the United States.
The Assembly will meet again on Monday, 21 September, at 10 a.m. to begin its general debate.
Assembly Work Programme
The Assembly met this afternoon to conclude its high-level dialogue on the social and economic impact of globalization and interdependence.
Statements
PERCY MANGOAELA (Lesotho) said that the least developed countries, such as his own, faced substantial supply-side constraints that impeded their efforts at taking advantage of the globalized economy and liberalized markets. Those problems were compounded by the external debt problem, which, in turn, was exacerbated by the decline in official development assistance (ODA). The international community should intensify its assistance to the least developed countries by meeting the target of 0.15 per cent to 0.2 per cent of their gross national product, so the least developed might be able to build the capacity required for successful integration into the global economy.
If that did not happen, opportunities associated with globalization would continue to elude the least developed countries, he added. Developing countries faced several constraints that were impediments to seizing the advantages of globalization, including: weak technological capacity; a paucity of requisite skills; a shortage of long-term finance; and a lack of transparency in the legal and regulatory framework.
The least developed countries also tended to be heavily reliant on an economic base of commodities that were either non-processed or semi-processed, he continued. The decline in commodity prices, which had been exacerbated by the financial crisis of Asia and other parts of the world, had a devastating effect on the fortunes of least developed countries. Commodity producers in those countries found themselves confronted with a situation of weak demand, large supplies and increasing stocks. Meanwhile, those countries depended upon commodity prices for, on average, one third of their export earnings.
NASTE CALOVSKI (The former Yugoslav Republic of Macedonia) said that in the context of globalization there was no independence. If the intention was to improve the international economic market, a priority marginalization of the small and weaker economies must be prevented. Globalization was an irreversible trend, but marginalization was preventable.
The present problems in the world economy were generated to a large extent by the fact that globalization of the world economy was not parallel with globalization of international political relations, he said. To remedy that situation, the first priority was to prevent conflicts and find solutions for ongoing ones. The second priority was for all Member States to adopt an open border foreign policy, in accordance with the United Nations Charter. Also, special measures needed to be implemented by the United Nations, the Bretton Woods institutions and regional economic organizations such as the European Union, to integrate markets regarding access and direct investments.
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During the fifty-third session of the General Assembly, he said he would submit a draft resolution to the Assembly's Second Committee (Economic and Financial). It was entitled "Globalization and Liberalization of the World Economy -- Prevention of Marginalization of Small and Weaker Economies of Developing Countries and of Economies in Transition". The world had entered a period of full dependence, and answers to the problems generated by globalization had to be found within that framework. All were responsible for the negative consequences of globalization.
JAIRO MONTOYA (Colombia) said the issue of globalization needed political and conceptual clarity based on a common perspective by different actors. The United Nations was the best place to examine the issue. Among the questions that needed further consideration were how globalization could provide effective and durable conditions which would reduce unemployment and poverty; be compatible with cultural diversity and national identity; preserve the global environment; and lead to a democratic and participatory decision-making process.
It was crucial to remove external factors that limited the scope of globalization, such as the restrictions applied to cross-border movement of labour, he said. Another was the insistence on certain labour and social standards as a precondition to competing in international markets. Also, decisive steps had to be taken to remove obstacles to the access to "know-how" and technology.
Concerning the current financial crisis, he said the international monetary markets needed to be more transparent and predictable. Over the long term, the only way to correct the speculative character of the globalization process was to ensure that the huge amounts of monetary and financial capital were allocated to productive activities and infrastructures.
JORGE PEREZ OTERMIN (Uruguay) said the globalization process stemmed from three powerful forces: technology applied to the search and transmission of information; the formation of free trade areas and integrated economic blocks; and the growing link and interdependence of product and financial markets on a global scale. Many developing countries, particularly the least developed ones, did not have the capacities to allow them to benefit from international trade as a truly efficient instrument that guaranteed sustained economic growth and development. Developing countries struggled to expand their tiny share of participation in the world market. The United Nations must continue to offer strategic assistance to those countries in expanding their trade opportunities.
Lack of labour opportunities was a major problem in the world today, he said. The unemployment in Europe well illustrated the magnitude of the problem. Employment indices had dropped consistently in the current decade. The drop had been caused by the globalization and liberalization of economies. In many parts of the world, the newest phenomenon was growth without creation
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of jobs. Globalization today could not be conceived without science and technology, which could no longer be considered less important activities. Scientific progress was the key to poverty eradication: it improved quality of life, ensured culture and promoted national safety.
He said the key to success in international competition lay in the ability to innovate. Globalization must first and foremost be conceived as a cultural phenomenon before it became an economic issue. It was a fact -- not an ideology -- and it had an impact on capital and currencies. Countries needed more and more to supplement each other's needs and to foster free trade spaces. Uruguay had lived through a crisis in the eighties and had learned its lessons.
ABDUL-QADER BA-JAMMAL, Deputy Prime Minister and Minister for Foreign Affairs of Yemen, said that as globalization was closely connected with each person's future, the international community must conduct a detailed dialogue to address the problems. Globalization was a new tool to control the division of world labour, and each person could interpret globalization in a manner that seemed fit. The matter still required more comprehensive and detailed dialogue in terms of liberalization, investment funding and financing.
He said that the least developed countries understood that marginalization would endanger their countries if they did not help one another, as witnessed in South Asia. The approach of globalization should contain stable and continuous guidelines regarding transactions and monetary policies. The questions, however, were still unanswered. Globalization must not block free thinking and must mean new systems, effective government departments and intensive efforts in broad cooperation. The flow of special capital must also be enhanced, because narrowing the wide gaps between the rich and poor would require true partnerships.
What should the Bretton Woods institutions and the International Monetary Fund do? he asked. In his view, they must transform, in order to prevent crises and create a development programme for least developed countries.
AUSTIN OSLO (Nigeria) said that to a large extent the current global financial turmoil, which had severely affected the South-East Asian economies, could be traced to the efforts of those countries to embrace globalization. Indeed, their economies had been liberalized to absorb foreign direct investment flows. When volatile currency markets ensued, those countries suffered adverse social and economic effects and the potential existed for the effects to be felt by other world economies.
Since the early 1980s, net inflows into the 40 nations, mostly in Africa, classified as "highly indebted poor countries", have averaged 1.5 per cent of national income per year, he continued. That increased their external debt from $55 billion in 1980 to $206 billion in 1996. For those
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countries, the current global financial turmoil, rooted in efforts at globalization, would compound an already bad situation. Due to falling commodity prices, the global market could not provide those countries any respite from their foreign debt burden. Unless a deliberate policy was taken to cancel those debts, any effort to mount the "globalization train" would be fatally crippled.
There were also socio-economic factors that could stunt the efforts of willing nations at integrating into the global economy, he said. All nations should assist one another in removing all obstacles, tariff and non-tariff, in the way of integration. Whether in deregulation or liberalization, eventual globalization should have a human face and aim at maximizing the economic and social benefits of the nations and citizens involved.
RICARDO CASTANEDA (El Salvador) said a candid exchange on the current issue could contribute to overcoming the negative impact of globalization. Globalization and liberalization of markets had provided challenges and risks to the international community. One of the advantages of globalization was that private capital flows had reached unparalleled proportions. However, there were countries with small economies which were increasingly marginalized by globalization. The dangers of the growing interdependence of the world economies became apparent in the analysis of the recent economic financial crisis. It was imperative to establish national and international mechanisms to avoid the globalization of the economic crisis, and the dramatic capital flows leading to financial crises. Also, social safety nets to protect populations must be established.
In the era of globalization and liberalization, the role of trade was becoming more important in developing countries, he said. Private capital flows from developed countries to developing countries was growing, but there was an uneven distribution. El Salvador, as a small country, was marginalized in that area. The ODA remained an important resource to achieve sustained human development. Most social projects such as education did not attract much private capital investment, so ODA was a very important complement. El Salvador recognized the importance of integration into the world economy and had already achieved a stable macroeconomic situation. It had seen major tariff reductions, and programmes of modernization in telecommunications and energy. It had also implemented national competitiveness programmes. One of El Salvador's objectives was to open itself in order to promote national and foreign investment. It had difficulty in attracting direct investment capital. The United Nations should be encouraged to continue efforts to promote dialogue on the issue.
Mr. MANGOAELA (Lesotho), Rapporteur of the first ministerial round table on national responses to globalization, said that the high-level dialogue had revolved around the challenges and opportunities arising from globalization. The topics included: the need to have a level playing field for developed and developing countries, to ensure an equitable sharing of the benefits of
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globalization; the need for national policies by developing countries to facilitate integration into the economic processes; and the need to protect the vulnerable segments of populations adversely affected by globalization.
Globalization was an inevitable process that was now a universally shared perception, he said. It was widely believed that it could provide substantial opportunities to all countries. There was hardly any leeway for a country to opt out of the process, as there was too much to lose. In addition, the international community should not overreact to the pressures and costs that globalization imposed on countries or segments of the population. Globalization was not an evil force.
He noted that while tremendous gains had been made from globalization, the benefits remained unevenly distributed. Some countries had been bypassed by the globalization process and the costs appeared to be much higher than the benefits. The social consequences included aggravating poverty and declines in employment, education and health. The resulting asymmetric distribution of benefits and risks warranted a new contract between developing and developed countries, based on genuine solidarity and shared responsibility. The international community must create a level playing field for all countries to take full advantage of the process.
Managing globalization was viewed as a fundamental issue, he continued. The policy approach should contain a proper balance between maximizing opportunities and minimizing risks. A properly sequenced approach was advocated, as opposed to "big bang" liberalization. Developing countries needed to bear the primary responsibility for their development policies. Among other steps, they should: increase domestic savings and investment; strengthen institutional, legal, regulatory and supervisory capacities; and improve economic management in the public and private sectors. Further, social safety nets must be included in national strategies to mitigate the negative consequences of globalization.
JANIS PRIEDKALNS (Latvia), Rapporteur of the second ministerial round table on international responses to globalization, said that in the view of the speakers at the round table, globalization represented the dynamics of the world economy at the end of the century. One of the advantages of globalization was that capital today had unparalleled mobility. At the same time, however, globalization entailed risks for societies and economies.
He emphasized that marginalization posed problems for those countries that needed more trade and foreign investment. The gulf had widened between those countries that benefited from globalization and those that did not. The challenges transcended economies and were specific to individual countries. Recent events had shown that the financial crisis was not just an East Asian one.
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New measures and mechanisms were necessary to meet current economic challenges, he said. Global regulations were needed, particularly in regard to foreign exchange turnover. Problems had arisen due to sudden, disruptive changes in the capital accounts. Two alternatives had been offered to address the situation: first, redraw global financial rules; second, redesign the global financial architecture. In the view of most of the speakers, globalization was irreversible. It was also indifferent to social progress. Globalization policies should support human development and the United Nations should assume leadership in that process, in order to make globalization an overall positive development.
ALI ALATAS, Minister for Foreign Affairs of Indonesia, speaking on behalf of the "Group of 77" developing countries and China, said a convergence of perceptions had emerged from the discussions over the last two days. The international community should take urgent steps to manage the force of globalization in order to maximize its benefits and minimize its risks. The Group of 77 had called for a renewal of the dialogue four years ago in the hope that it would not only strengthen economic cooperation among all countries, but would do so on a new basis -- one that derived its importance from a sense of common benefit, mutual interest and genuine interdependence. Hopefully, an equitable global partnership would be the result.
The very encouraging step of new dialogue would hopefully lead to the resolution of a problem that required urgent attention and urgent common action, he said. Global solutions could only be achieved by such a partnership. In the context of globalization, the challenges of the new millennium must be faced together.
GEORG LENNKH (Austria), speaking on behalf of the European Union, said he welcomed the interactive format of the meeting, calling it a constructive discussion on the social and economic impacts of globalization. There was a broad consensus that free trade and large capital movements had brought gain. However, not all countries, particularly the least developed countries, had benefited from those gains. There was also wide consensus that appropriate policies at the national level were necessary. The social dimension, especially a better distribution of growth, must be an integral part of domestic and international policies.
There was a continued need for ODA, not only for institutional tasks, but also for purely humanitarian needs, he said. There was also a strong call for countries to refrain from protectionism and isolationism. The multilateral financial system should be strengthened to cope with the challenges of globalization. The United Nations, with its broad mandate, was a unique forum to discuss the matter. In the end, many questions had arisen, and now was the time to give thought to common responses.
BRIAN ATWOOD, Administrator of the Agency for International Development of the United States (USAID), said President William Clinton had pledged that
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the United States would work with its international partners to mitigate the impact of the current financial crisis, and would intensify efforts to reform its trade and financial institutions so that it could better respond to current and future challenges. It was unacceptable that economic turmoil should plunge millions into sudden poverty and misery. The United States would not stand by and watch that happen. Everyone could take heart in the faith of the Minister for Foreign Affairs of Indonesia that even the most severely affected economies were capable of an early recovery, given an environment that was conducive to rigorous reform, access to development finance and export markets, and participation in technological progress. The answer lay not in resisting globalization -- that was neither possible nor desirable -- but in making it work better.
The range of problems identified was formidable, he said. There must be a distinction made between the problems confronting those countries which had aggressively embraced the globalization process by liberalizing their economies, and those which had not. Similarly, it should be recognized that those countries which had already effectively addressed the structural causes of poverty by investment in human capital, expanded democracy and sound employment-enhancing policies, faced a very different problem from those countries which had not. Balancing reform and relief, country by country, would require careful attention. The USAID was already adjusting its assistance programs to take into account the consequences of the crisis.
KOFI ANNAN, Secretary-General of the United Nations, said what started last year as an Asian crisis was now clearly global. No part of the world was unaffected. The crisis also threatened to further widen the gap between rich and poor, both within countries and at the global level. However, globalization was the dominant feature of the times and there was no prospect of reversing it. What had to be done was to devise ways of managing it better.
"We have somehow to maximize the benefits and to protect those who are in danger of becoming victims", he continued. Many developing countries were going through very difficult times, and the temptation to retreat into nationalism or populism could be strong. He was encouraged however, to see that in almost every developing country those false solutions were being rejected. If something had been wrong, up to now, it was that developing countries had too often been passive, rather than active participants in the search for a collective response to globalization.
He said that none of those institutions -- the Group of Seven, the World Trade Organization (WTO) and the Bretton Woods institutions -- were infallible, but all had a great deal of wisdom to offer. One of his priorities had been to forge closer working relations with them. The United Nations, however, did have a unique and indispensable role to play. Its broad mandate, near-universal membership and ability to involve non-State actors, all made it uniquely well equipped to help forge a global response to a crisis
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that was global not only in the geographical sense, but also in the range of issues that it raised. The Organization had a special responsibility to insist on global solutions, based on global rules that were fair to all.
The Organization also had a responsibility to ensure that nations came together to find solutions based on commonly shared founding principles, he said. It must also insist that the interests of those hardest hit by the crisis were not forgotten. In the current year, according to latest estimates, the cost to developing countries of the collapse in commodity prices was equivalent to roughly 8 per cent -- and for Africa as much as 15 per cent -- of the value of their 1997 exports. Those figures implied terrible hardship for millions of individuals.
The industrialized world, so far, had been little affected, he continued. However, as its leaders were beginning to recognize, that state of affairs could not continue indefinitely. A week ago, the President of the new European Central Bank warned that international financial turmoil would have "a dampening effect" on world growth. On Monday, President William Clinton of the United States said that the future prosperity of his country depended on whether it could work with others to restore confidence, manage change, stabilize the financial system and spur robust global growth. The six-point programme which the President announced seemed an important start.
The crisis could not be solved unless the industrialized nations shouldered their responsibilities and resolved to work with others to find solutions that took the interests of all countries into account, he said. If they did that, even the agonizing crisis could have some positive side effects. It could be an opportunity for the world to finally approach global problems in a truly global spirit.
DIDIER OPERTTI (Uruguay), President of the General Assembly, said the meetings had shown the usefulness and value of holding such a dialogue on globalization. It was an important issue and the dialogue would lead to further interaction, which in turn would lead to finding solutions. The first step had been taken in establishing and identifying areas that needed new measures. The United Nations had played a key role in promoting the dialogue. Globalization was inevitable and not an option. There was no room for voluntarism. In some circumstances, the process could act blindly, so it must be carefully channelled at the national and international levels.
Globalization made it possible to circulate resources which enhanced growth and well-being, he said. Countries must have solid macroeconomic policies, as well as a physical and human infrastructure to face up to the task. Developing countries had the primary responsibility of satisfying requirements, but assistance was needed. Disparities in wealth had posed problems for small developing countries. Governments should not isolate themselves, but rather create an open economy and proper support structures.
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There was also a need to increase the flow of ODA to alleviate the debt burden of the poorest countries.
He said the current architecture of the world financial system showed that it did not have the proper mechanism to handle a crisis. A basic element of the new mechanism must be transparency. Each country would be in charge of determining the pace and sequence of capital flows. There was a need for the United Nations to strengthen ties with the WTO. A trade system that was transparent and based on well-established norms was also needed. Further, it was imperative to improve the level of ODA and to alleviate long-term borrowing. Developing countries were threatened by marginalization, and there was a need to offer them greater opportunities to avail themselves of the benefits of globalization. Because of the inherent instability of financial markets, they needed to be monitored, deregulated and supervised. It was also clear that the institutions necessary for monitoring were somewhat behind -- they needed to be speeded up and revised. Developing and developed countries should work together to produce a new contract based on shared responsibility in order to create a new, fair framework which would allow all countries to benefit from globalization.
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