Perspectives on Globalisation by UK Minister & SA Minister of Trade & Industry

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Trade, Industry and Competition

13 February 2001
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TRADE AND INDUSTRY, FOREIGN AFFAIRS PORTFOLIO COMMITTEES; ECONOMIC AFFAIRS SELECT COMMITTEE: JOINT MEETING
14 February 2001
PERSPECTIVES ON GLOBALISATION BY UK MINISTER AND SA MINISTER OF TRADE & INDUSTRY

 

Chairperson: Mr Moosa

Documents handed out:
UK White Paper on International Development: "Eliminating World Poverty: Making Globalisation Work for the Poor"
"Making Globalisation work for the poor: a role for the United Nations": Speech by the Rt Hon Clare Short MP, Secretary of State for International Development, 1 February 2001

SUMMARY
Minister Short said what is lacking in efforts to eliminate poverty is not material resources but political capacity. The debate on globalisation has become muddled and is further confused by protests at international trade meetings. These are led largely by people from developed countries who claim to represent the poor of developing countries. On the contrary, she said, globalisation can be controlled so that it contributes to the elimination of poverty.

Minister Short suggested the World Bank and International Monetary Fund (IMF) must be re-structured so that they can assist in reducing poverty systematically, country by country. She also said multi-lateral trade organisations are better for developing countries than bilateral trade agreements, since the members meet on a more equal footing.

Minister Erwin agreed with Minister Short about protests at international trade meetings, warning against the tendency of such "inchoate responses to dominate debates".

Minister Erwin recommended four processes:
• to speed-up and finalise the volatile world financial system. This requires multi-level agreement;
• to start negotiating with the world trade system to "re-balance production processes";
• to initiate a process where Africa takes responsibility for its own development, while still working with partners in the North. Africa needs more determined leadership; and
• Governments must fashion strategies that engage globalisation and also address the poverty and inequality that globalisation can generate.
The Minister said people must organise to change the world away from the "inertia of the past". He advocated action.

MINUTES
Presentation by Minister Short (United Kingdom)
Minister Clare Short said finding solutions to poverty is the most important historical challenge facing the world today. One out of every five people in the world is living in extreme poverty, during this time of abundance. There is no question that the material capacity to eliminate poverty exists; what is at issue is whether the political capacity is there.

We are at a turning point, Minister Short said. The issues are complex and the debate on globalisation has become muddled. Some confuse globalisation with "Thatcherism", otherwise known as "Reagonomics", which pursued wealth creation, with the idea that increased wealth would benefit all members of society, whether directly or indirectly. She also mentioned the adversarial demonstrations at international trade meetings, such as in Seattle, USA, last year, calling them manifestations of an anti-development movement that is asking developing economies to slow down. She also linked anti-trade protests to fear and protectionism.

Minister Short spoke about the UK's second and most recent White Paper on poverty and globalisation, saying these are relevant issues for all countries and not only developing countries. She identified globalisation as a long trend that began with the industrial revolution and is now speeding up. Globalisation, she said, is sometimes characterised an unstoppable force that spreads inequality. But this is not so, she asserted. It can be controlled. This is also true of South Africa, she suggested, despite its extraordinary and distinct history.

The International Development Targets, originated by the UN Conferences of the 1990s, Minister Short noted, have the goal of moving one billion people out of extreme poverty by the year 2015. In order for Sub-Saharan Africa to reach this goal, it would need 7% growth, which it is not on track to achieve.

One fundamental problem, she said, is that savings leave Africa, meaning that large resources flow out of the continent. She also pointed out that Africa is the most expensive continent to connect to the Internet. There are more Internet connections in New York City than there are in the whole of Africa. In addition 20% of Africans are living in states of upheaval and conflict. The United Nations (UN) needs to assist Africa more effectively in resolving conflict. For example, there are only four and a half million people in Sierra Leone but it has the largest UN peacekeeping operation in the world. The resolution of conflict in Sierra Leone should be much faster.

Minister Short suggested the World Bank and International Monetary Fund (IMF) must be re-structured so that they can assist in reducing poverty systematically, country by country. She also said multi-lateral trade organisations are better for developing countries than bilateral trade deals, since the members meet on a more equal footing.

The elimination of poverty, Minister Short said, is an achievable goal. It needs a shared, broad political understanding. South Africa can play a pivotal role in this, she suggested, partly because it is a "middle-income" country with "no one in the middle". She commented that, in her opinion, the South African transition to democracy is going well and that South Africa is now respected internationally for its peaceful transition from apartheid to democracy.

Minister Short concluded her comments by saying the world is now at a crossroads. There can be either progress or inequality, instability and danger. The answers required are not currently on the political agenda and traditional politics and parliamentary systems are inadequate.

Minister Erwin's Presentation
The Minister first commended the UK White Paper and remarked that what is needed to eliminate poverty is systematic debate and not just negotiations. He agreed with Minister Short that the complexity of a problem can be a deterrent to a solution. He recommended they find realistic propositions and fight for them.

As problems, he identified the fact that resources continue to leave poor countries. This does not allow for any accumulation to occur, he said. In addition, industrial production processes continue to take place in the developed world when they would be more effective in the developing world. Resources and energy are no longer centred in the northern hemisphere. Minister Erwin recommend there be as much economic integration in the southern hemisphere as there is in the North. He added that trade is crucial.

Minister Erwin recommended four processes:
• to speed-up and finalise the volatile world financial system. This requires multi-level agreement;
• to start negotiating with the world trade system to "re-balance production processes";
• to initiate a process where Africa takes responsibility for its own development, while still working with partners in the North. Africa needs more determined leadership; and
• Governments must fashion strategies that engage globalisation and also address the poverty and inequality that globalisation can generate.
The Minister said people must organise to change the world away from the "inertia of the past". He advocated action.

Discussion
(Q) An ANC Member wanted to "quibble' with Minister Short's view of protestors at international trade meetings. He said he had engaged with some of them and found them inspiring and serious academics with a primary focus on the economy and not the environment. He said serious attempts to mobilise opinion are needed.

(A) Minister Short responded she is not in favour of protests. She said the understanding of globalisation is already so muddled that protests confuse the message even further. She noted that many protestors are people from developed countries who claim to represent the poor of the world.

Minister Erwin added that critical social forces need to give more leadership; for example, he said, the union movement is crucial, as is the environmental movement. We must prevent "inchoate responses" from dominating the agenda, he asserted, emphasising that such responses will be more prevalent in the North. He said he shares Minister Short's views on protests and warned people not to underestimate the power of inchoate views to dominate debate. He suggested that bringing in unions and civil society makes for better agreements.

(Q) Ms Mahomed (ANC) asked Minister Short how the World Bank and the International Monetary Fund would be restructured and how that restructuring would benefit developing countries. She also asked for short-term strategies and how to accumulate resources.

(A) Minister Short said both the World Bank and the International Monetary Fund must commit to international development targets and poverty reduction. She spoke of both equality and economic growth, saying when there is economic growth the poor usually receive a percentage share of the growth equal to what they had before. Therefore, equality must be emphasised along with economic growth.
As for short-term strategies, she noted that Uganda has consistently been achieving ten percent annual growth, saying that if it is possible in Uganda it is possible in other places as well. The Minister also pointed out that economies improve when women are educated, so a target is to send girls to school. Health care systems also have to reach out to everybody.

(Q) An ANC Member asked what role Socialist International can take in the elimination of poverty.

(A) Minister Short agreed that Socialist International is an important forum that should be leading the debate but acknowledged reluctantly that it is "not in very good shape lately". She said socialists are in a "muddle" about the role of the state and are having difficulty adjusting.

(Q) An ANC Member asked about the policy of the UK toward the industrialisation of Africa, given that it has resources but lacks skills.

(A) Minister Short said the government cannot tell companies where to set up but can share information that will influence such decisions.

Closing Remarks
Minister Erwin
Aid is important but has weaknesses: it is badly managed, has too many managers and it destroys the managerial capacity of the recipient. He suggested resources go to capacity building.

Minister Erwin added he agrees with Minister Short on Socialist International in that the political left is not clear on how it would manage states. He suggested SADC is slow because there is no common view on what the role of the state is.

Minister Short
Thinking has to be clarified. Uganda proves growth is achievable. The move to drive Africa forward must be more than academic.

 

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