R. K. Morris
President
The Global Business Dialogue

Observations on the Topic

THE STATE, INTEREST GROUPS AND GOVERNANCE
At
La Conférence de Montréal
Montréal, Quebec
Canada

April 19, 2001

Good morning. First let me say that I am extremely grateful to have been included in this very distinguished panel, and I am grateful to Professor Michaud and to the organizers of the conference for inviting me. The five broad points I would like to discuss are these:

1. As Mr. Baltare and I are both speaking as practitioners, I would like to take just a moment to say what I what I understand a practitioner to be.

2. In matters of international trade and investment, it makes sense to think of national governments as the controlling authorities.

3. Business and other communities of political interest, whether they be local or global, should focus their arguments primarily on national governments.

4. Governments, however, need to engage the world at large.

5. And finally, the growing importance of international organizations gives rise to the need for a new consensus about the processes by which these organizations themselves should be governed.

I. A PRACTIONER OF WHAT?
Practitioner is a good word with the welcome ring of ambiguity. Government affairs representative might be a more common corporate designation. Lobbyist is perhaps the most common and least charitable. What do such people do? Do they raise money for politicians? In some cases yes, but certainly not in all. Of the 27 years I have spent in government relations work in Washington, only three of them were with an entity – an electronics company -- that contributed to political campaigns.

No, the common thread for business practitioners, business lobbyists, including some of the major business organizations, is not money. The common thread is that each one is engaged in the process of trying to help policy makers in government understand the practical implications of the decisions that come before them in the course of their duties. This is a job that – one way or another – needs to be done in every successful society. It has a special character in the United States because of the peculiarities of the so-called U.S. Presidential system. The hallmark of that system is relatively weak party discipline and a strong need for each Senator and Member of Congress to retain the support of the men and women in his or her state or district.

A vote that could kill 5,000 jobs in a Congressional district – and certainly blocking trade with China could do that for some members – will probably also cost that Member his job. A business representative whose company employs people in the district of a given Member knows things that the Congressman needs and wants to know. He will be listened to whether or not his company contributes to the Member’s campaign.

Parenthetically, I would add that one of the most difficult things that a business lobbyist has to do is to visit a member of Congress to explain why his or her company is laying off a large number of people in that member’s district. It is the lobbyists who have to do these kinds of things that are, I think, the practitioners of this discussion.

In many respects the business lobbyist is no different from those representing other interests, such as the broad array of environmental groups, human rights representatives etc.

There is one difference, however. The business lobbyist usually represents the regulated entity – those to whom the rules will be directly applied. It is businesses and business people who make the products and the investments, who run the legal and financial risks, who are subject to significant legal penalties for failure to adhere to the laws governing trade and investment, and whose affairs are directly and profoundly affected by virtually every sentence in a trade or investment agreement.

In a domestic setting, especially one in which virtually all interested parties are welcome to express their views to politicians, this distinction does not matter. It is the job of politicians to weigh the value and importance of the inputs they receive in an open society. The issue does become significant, however, when those in authority attempt to limit the sources from which they receive petitions or advice.

I don’t mean to make this sound too sinister. Most legal systems, for example, limit the right of participation in any given proceeding. Put differently, not every person or group with a view on a case has standing to express that view in court.

II. VIVA THE STATE
Will there be a world government someday? Will continental amalgamations – the European Union, the FTAA, ASEAN Plus 3, the Indian Subcontinent, and a Pan Africa accord evolve into a single world government, albeit with subsidiarity as appropriate, as the Europeans would say? Maybe. But few if any of us will see it.

We are each citizens of the world, but our hopes for reasonable opportunities for political expression and for economic growth flow through the stewardships of nation states or their designated alternates. That may seem a strange phrase, but it works. It embraces both the European Commission, which is the designated alternate for the Member States of the European Union on matters pertaining to international trade. It also embraces the Government of Hong Kong, which has the responsibility for these and other issues, as the designated alternate for China.

The temptation on the part of some interest groups to bypass governments in favor of lobbying multinational institutions is understandable. Why shouldn’t everyone have a seat at the table. It may seem reasonable, but it is wrong.

It is wrong because it shortchanges democracy. It is opposed by business because it shortchanges business in a way that weakens societies generally. It should be opposed by anyone who is supportive of multilateral institutions like the WTO because, over time, it will inevitably corrode their effectiveness and their credibility.

Samples of Concern
Let me share with you some other voices. This is an excerpt from an e-mail I got from a "practioner" with a leading U.S. company:

"The point I repeatedly make to activists is that, if they don’t like the positions of their governments, they have an absolute right to work through the political process to change [them]. I was a fan of Nader’s 2000 campaign – [the American activist Ralph Nader ran for president in 2000 as the candidate of the Green Party] – as perhaps the least hypocritical thing he ever did. And guess what? 2.6 percent of voters thought his ideas were right. Most NGOs who [say] that the WTO is undemocratic, conveniently ignore the fact that more than 80 percent of member governments are democratically elected.

"I am convinced [the real problem of some NGOs have] is with democracy. They want their ideas to prevail even if no one agrees with them and certainly without doing the hard work of politics."

GMA’s Better Idea
A similar, if more formal, expression of these thoughts was set out in a letter last September by a senior executive of the Grocery Manufacturers of America or GMA. GMA is the world’s largest association of food, beverage, and consumer products companies. Writing to the chair of the Committee of Government Representatives of Civil Society [for the FTAA], the GMA executive said:

"GMA believes that national consultations are the best means to incorporate private sector concerns into trade negotiations. GMA encourages all FTAA participating countries to undertake national measures to solicit comment from all stakeholders while developing country objectives and priorities for FTAA negotiating groups."

When that letter was written, it was not clear just what civil society input would mean in an FTAA context. Would it be simply a mailbox – an address to which any interested person could submit comments? Or would there be a selected group of individuals designated to speak for civil society?

Whatever the negotiators do, they would be well advised to heed the advice of Grant Aldonas, a former senior staffer in the U.S. Senate. In discussing NGOs and the WTO last November, Aldonas said: "You cannot set up a system that allows the [business, environmental groups, or labor] to short circuit the domestic political process."
The same point holds true for the FTAA.

III. BUSINESS AND CIVIL SOCIETY
I don’t know how things play out linguistically in Spanish or in French, but in English there is a clear disconnect between the obvious literal meanings of phrases like NGO and Civil Society and the usage of those terms. In a literal sense – and arguably in every other sense – businesses that are not owned and controlled by governments are non-governmental organizations. They are also important members of civil society. Yet increasingly both of these terms have been used to suggest that they do not include business.

To the extent that governments – whether in the FTAA process, in the WTO or elsewhere – are to make decisions about inputs from NGOs and Civil Society, they have an obligation to define the terms. I have not yet seen the 420 pages of the FTAA negotiating document; I hope it contains such definitions. I am not confident that it does.

However it is defined vis-à-vis NGOs, business is shortchanged when it is asked to make its case at the supranational level. The contributions of business – products, services, employment, taxes, charity and contributions to development and the quality of life around the world are vital and tangible at the local and national levels. They are diluted abstractions in debates with non-business NGOs in multilateral forums.

IV. GOVERNMENTS NEED TO REACH OUT
The world is interconnected by a thousand global communities, it is the responsibility of governments to help them work together more productively. The age of e-mail is still the age of nuclear bombs and intercontinental ballistic missiles. The nations of the earth – large and small – will interact. The question is how, and each of us has an obligation to make that interaction as productive and as constructive as possible.

There is a bit of a commercial there. I run the Global Business Dialogue, which is founded on the premise that there is a global business community and dedicated to the goal of assisting that community in its dialogue with governments and others. There are many other global communities, though, from individual corporations, to the alumni of the world’s great universities, to a fair number of families. Governments can and should help all of them by facilitating global cooperation.

The Fast Track Example
One example of what I mean is near the top of the U.S. legislative agenda. It used to be called fast track. Today it is called Trade Promotion Authority. By whatever name, the problem it addresses is this. Because of its Constitutionally mandated separation of powers – particularly the separation between the legislative and executive branches –America needs a technique for assuring the world that what its trade negotiators agree to will not be subsequently picked apart by Congress.

There was a time – perhaps in 1974 when the first fast-track authority was enacted – when the United States could argue that this was something it needed for itself. It is more than that now. U.S. trading partners demand it.

Example. Brazil’s ambassador to the United States, H.E. Rubens Barbosa, has an article in the Spring 2001 issue of The Washington Quarterly. In it he suggests that, yes, the FTAA can get started – as it has – even if the U.S. does not have fast-track negotiating authority. But, he says, and I quote:

"It is absolutely essential … that all government representatives have full plenipotentiary negotiating authority from their countries when they begin to negotiate specific issues, such as lists of products, [and] tariff reduction timetables…"

He goes on to point out that, if the negotiations were to go forward in the absence of fast-track or trade promotion authority in the United States, "…[A]ll other countries would be negotiating an agreement pending further changes and second thoughts by the U.S. Congress, which is not a viable scenario." (Emphasis added.)

That is not bad news but it is sobering news. The good news is that the Bush Administration seems intent upon seeking fast-track/TPA authority from Congress, and Congress appears to be prepared to address the issues that will inevitably arise. Does that mean difficult discussions about labor and environmental policies and their relationship to trade? Yes it does. Will it also mean that Congress will need to consider how America’s trading partners view these same questions? I think so.

If America goes through that debate, the blood pressure of every participant and every spectator will go up. But the result will be policies democratically decided by those who were elected to decide them. The theater of Seattle, Bangkok, Washington and Quebec aside, that is how important decisions should be made.

From national governments who listen to citizens to negotiators to governments who listen to citizens. That is the virtuous cycle of trade negotiations. That is the model we need to implement.

V. PROCESS OF NEGOTIATIONS AND ORGANIZATIONS
Finally and briefly, once there are agreements in place, like the Uruguay Round and NAFTA, we need to work to ensure that the institutions upon which they depend, like the World Trade Organization, are clearly understood. To make the most obvious point, everyone needs to understand that the WTO is not a government but the servant of governments.

It is the misunderstanding about this point that has given rise to fears about world government where none should exist. But there is another issue. Accepting the principle that the WTO and other negotiating facilitators, including the FTAA process, are meant to serve governments is not enough. We also need to ask some tough questions about the seemingly obvious. It may be that the having negotiators receive inputs directly from civil society will prove to be a good thing. Doubtless publishing the negotiating text will be a benefit to a lot of people, including many in business. And yet either of these decisions, if not both of them, could prove disastrous.

The argument here is not that the Ministers erred in including these provisions in the Buenos Aires communiqué. It is simply that the invocation of words like transparency and civil society should not be treated as a free pass to good and non-contentious results. They are not. Rather they are a call to a very serious consideration of the effects of the procedures that are associated with those words on the world’s democracies and on trade. Thank you.

--GBD--