United Nations
General Assembly
Second Committee

Statement


STATEMENT TO THE SECOND COMMITTEE
by MR. NITIN DESAI
UNDER-SECRETARY-GENERAL
FOR ECONOMIC AND SOCIAL AFFAIRS

3 October 2000

Mr. Chairman,

May I first congratulate you on taking over the chairmanship of this very important committee and, through you, congratulate the other members of the Bureau who will be working to ensure a successful outcome to this session of the Second Committee.

Mr. Chairman, Distinguished Delegates,

The General Assembly this year meets in the glow of the Millennium Summit. The convergence of so many leaders from all parts of the world in New York, the attention that it gave to the Secretary-General’s report "We the Peoples", the Declaration that came out of this process, the discussions that took place in the Roundtables and the contributions that were made by the many parallel events around the Millennium Summit have all helped to focus the attention of the world on a few key issues and to reassert the confidence that the world has in the future role of the United Nations in meeting these challenges and issues.

From the perspective of the Second Committee the most important point that one would have to note is that if there was one theme that dominated discussions in the Millennium Summit, it was globalisation. If there was one goal that dominated the commitments which were voiced at the Millennium Summit, it was the eradication of poverty.

Both of these are matters which connect directly with the agenda of the Second Committee. In many ways, this focus on globalisation as the major factor that the international system has to cope with, and on poverty as the primary goal of policy, particularly development cooperation policy, was something which was also asserted very strongly at the Copenhagen+5 and the Beijing+5 processes which took place in June. I believe this is the challenge that we have to rise up to in the Second Committee.

The Secretary-General’s report for the Millennium Summit, "We the Peoples – The Role of the United Nations in the 21st Century", took globalisation and related issues of governance as its major theme. It recognized the benefits of globalisation; it also drew attention to the backlash to globalisation and suggested certain responses. I will not go into the details, which were discussed in great length in the Millennium Report, but I summarize it in the one phrase from this report: "Globalisation must mean more than creating bigger markets". That I believe is the challenge which the Second Committee has to respond to. What I hope to do in a few minutes is to connect these broader themes of globalisation with the specific items which are on the agenda of the Second Committee this year and to perhaps suggest how this opportunity can be used to advance the debate on globalisation in a constructive manner.

First, the dimensions of globalisation. Fifty years ago the world traded around a billion dollars per day. Today, trade is a billion dollars every ninety minutes. Two billion dollars a day move as foreign direct investment, which means that the six to eight billion dollars that Africa gets is the flow of four days of foreign direct investment. Foreign exchange markets operate now at the level of 1.5 trillion dollars a day. These economic dimensions of globalisation – the growing trade and financial interactions between economies is something that we have long talked about in this Committee. There is a technological dimension – the rapid decline in transport and communication costs. The cost of air travel has decreased by a seventh from before the Second World War. A three-minute transatlantic phone call before the War would have cost something in the region of $250.00. Now, if you pay full rate, it will cost you around $3.00 and if you don’t pay full rate, it could be even cheaper.

The interconnectivity of people is in some ways the most powerful product of globalisation. Air travel has increased a hundred fold. Every day, two million people cross national boundaries. There is, of course, a flip side to this as evidenced by the twenty million plus refugees. And there is another part of this interconnectivty – the growing interaction of people in the form of global and multinational activist, interest and pressure groups. According to the Union of International Organisations, the number of international NGOs or NGOs with a presence in at least three countries has gone up from something in the region of 985 in 1956 to 23,000 in 1998. This is an enormous increase, and we in the United Nations have seen the impact of this growth in what I would describe as an international civil society. The Second Committee has played a powerful role in creating a space where this international civil society can express itself.

Finally, I would draw attention to the ecological dimension. Interactions between national economies are having an impact on national eco-systems, through climate change, ozone depletion problems, hazardous waste, damage to fisheries and increased health risks. All of these are matters which the Second Committee needs to address.

What then is the nature of the problem that we have to address? First, I would say, paradoxically, the problem is "incomplete" globalisation. Many of our problems arise from the fact that the basis of integration varies from area to area. Let me give the example of trade. We have talked about the tremendous expansion of world trade, the opening of barriers, liberalization, the reduction of tariffs. But at the same time, we have a situation where in areas of particular interest to poor countries, like agriculture and textiles, we have not had that same pace of opening up or of liberalization. We have opening up of capital markets and a growing pressure for liberalization of capital markets. But we have not had the same degree of liberalization when it comes to the movement of natural persons, a factor of particular importance with the growing importance of services in national economies. When it comes to technology, much of the focus at the global level has been on protection of technological rights. Even here it is combined with a desire to maintain access, for instance, to biotech resources in developing countries. Many of the concerns that are expressed today arise from what I would describe as incomplete globalisation, globalisation in which the agenda reflects some part of what is happening in trade and finance liberalization, but in which important aspects of particular interest to poor countries are not receiving the same attention, and are in fact are not being liberalized in the same way. It is for these reasons and other reasons that we have a backlash.

The Millennium Summit report recognizes the sources of concern. One is disparity as reflected in the persistence of absolute poverty in the world. This is a matter which we will revert to when we discuss this agenda item in the Second Committee and we will have more to say at that time.

Certainly, one of the very positive features of what has happened over the past few years, particularly since the Copenhagen Summit on Social Development, is the recognition that poverty eradication must become a central element of policy at the national level and in global cooperation. This is a positive feature, something which does try and address one of the reasons for the backlash against globalisation.

But the backlash is not just because of the persistence of poverty and the continued marginalization of certain groups in countries from this process. It is also due to a perception that the gains from globalisation are not evenly distributed, that even the people who gain, protest when they find that others are gaining faster or more than they are. Many of the protestors you saw in Seattle, in Washington and in Prague were not people who are being marginalized by globalisation. They were often people who are part of the new integrated global economy but who had the perception that their gains were significantly less than others. I give the example here of an experiment that was done in some U.S. universities where two students were brought into a game. Student A was given $100 and decided how much of this $100 he would retain for himself and how much he would share with Student B. Let’s say Student A would get $80, Student B would get $20. Then Student B had to decide whether the bargain is accepted or not. The study showed how Student B consistently rejected something which he felt was an unfair distribution of this $100, even though it meant he would get nothing as a consequence. I share this story to give you a sense that even people who gain from globalisation can have a grievance if they perceive that others are gaining far more. This is a dimension of the backlash we have not adequately addressed either in national policy or at the global level.

The second part of the backlash arises from vulnerability, the fact that growing integration exposes economies to greater uncertainty. This is a complex area; it is not an area where answers are easy. Take trade, for instance. In many ways the vulnerability of an economy to trade may even decrease as it opens, expands and diversifies. The real vulnerabilities of trade may arise more in countries which have not fully integrated and depend only on one or two products and on one or two markets. Nevertheless, there are vulnerabilities which arise from growing integration, particularly on the financial side. We saw these in the Asian crisis, and this Committee has devoted a great deal of attention to this.

Part of the backlash is also due to the ecological consequences of globalisation. There is a feeling that the rules of the game as they have been defined for trade, finance and other areas do not pay sufficient regard to the ecological consequences of globalisation. This is again a matter which this Committee has often addressed. And there are other issues, like cultural impact. Many of these areas of backlash have been identified in this Committee.

Where do we go from here? What do we do in order to meet these concerns?

First, we must recognize that the concerns that arise from marginalization and from the persistence of poverty require growth. The greatest justification of globalisation is economic growth and employment generation. It is therefore vital that we address the question of how to revive the processes of growth. In DESA’s recently released World Economic and Social Survey, there is a review of growth performance, particularly of least developed countries. The Survey identifies some of the factors at the national level rather than at the global level which are central and which we need to support. The record of growth is quite depressing in many of the developing countries. Very few have achieved the consistent 3% growth which is needed to double per capita incomes over a period of twenty-twenty four years, or one generation. If we want to double income in one generation, that is what you are going to need. The World Economic and Social Survey also provides into a closer analysis of the few countries which have been able to show relatively long periods of sustained 3% plus per capita growth. I invite you to look at this. Essentially, it focuses on the importance of an agricultural breakthrough in countries where a large percentage of the population continues to depend on that sector. It stresses the central importance of education, of creating technological capabilities and the role of institutions and institutional change. In this Committee, we have also focused attention on the global dimensions of these approaches, and on the fact that the efforts of developing countries need to be supported with overseas development assistance, debt relief, and with sustained technical assistance and support. I hope that we can address this issue here.

While growth is central, we need to have an assessment of what type of growth will address the disparities, the vulnerability, the ecological consequences which have provoked the backlash against globalisation. If globalisation means simply reproducing some of the social inequalities which exist in some places on a widespread scale, that backlash will continue.

However, revived growth with an attention to disparities, with an attention to vulnerability, with an attention to ecological consequences is vital - but is not enough. We also have to recognize that there is a "governance deficit" and a related "democracy deficit" in the management of globalisation. And we have to address this problem. The governance deficit arises partly because of the shift in power, if you like, from governments to the private sector and most particularly to transnational corporations, which have increased to over 50,000 with 450,000 foreign subsidiaries. We have not found a way to influence activities of transnational corporations which operate in multiple jurisdictions. We have, of course, the emergence of certain standards in global trade law, environment law, commercial law and other areas. But we need something more than that, something which influences the mindset of corporations, so they internalize the types of concerns about the social dimension and about the ecological dimension which have driven our thinking of development in the United Nations and through that the thinking of regional organizations and governments. That is part of the reason for the development of the Global Compact which the Secretary-General put forward a couple of years ago and which is being developed further.

A second area of governance which is widely recognized as a problem is coherence. Given the interconnections between trade and finance, between these areas and the ecological dimension, between these areas and the concerns about poverty, we need a mechanism to ensure greater policy coherence so that decisions about ODA, debt relief and trade concessions are taken in a coherent way when it comes to North-South relations. More generally, we need to ensure that decisions about macro-economic stability, growth, etc. are also taken in a more coherent way.

Third, we need a system which reflects and gives a greater voice to those who do not necessarily have a strong voice in institutions which today play a major role in shaping the parameters within which globalisation takes place. We have to amplify the voices of small countries, poor countries, and equally important, we have to create the space for non-governmental organizations.

I believe this year’s agenda of the Second Committee affords you opportunities for addressing all of these issues. We have before us the prospects of a major meeting on Finance for Development. That meeting has an ambitious agenda and the potential to address many of the concerns about globalisation that I have outlined so far. We will be having a major conference on Least Developed Countries next year, which you will be discussing later. I believe that also affords opportunity. Your discussions on Rio+10 give you the chance of reinstating the ecological consequences as a major item which needs to be included in discussions on globalisation, the discussions on poverty that we will have, on debt, all of these can feed into this process. Most important of all, the discussion the ECOSOC had this year on information technology, which we take up again here when you discuss the outcome of ECOSOC, will allow you to respond to some of these concerns about globalisation in a constructive and positive spirit.

Mr. Chairman,

Let me conclude with a positive note. In some ways, the very fact that we have a forum like the Second Committee, the very fact that we have these protests in Washington, Seattle and Prague, is itself a product of globalisation, of the improvements in interconnectivity and communication that globalisation has made possible. Development cooperation is in some ways a product of globalisation. Globalisation itself generates the tools with which we can address the concerns that we have. So the answer does not lie in saying globalisation should end. The answer lies in understanding how the potentials generated by globalisation, not just in the economic sphere, but more importantly, in the political sphere, can be used to address these concerns. I believe the Second Committee has shown its capacity to do that in the past. I have every confidence that it can continue to do so and we look forward to working with you closely in this area.

Thank you very much.


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Date last posted: 04 October 2000
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