Roderick Abbott, the Deputy Director General of the World Trade Organization, today warned that the unequal benefits of globalization were ‘likely to provide the scenario for future conflicts’ between societies and cultures. ‘We must meet that challenge,’ he told the 30th annual Caux Conference for Business and Industry being held in Caux.

By Mike Smith, Andrew Stallybrass, Christoph Spreng

Roderick Abbott, the Deputy Director General of the World Trade Organization, today warned that the unequal benefits of globalization were ‘likely to provide the scenario for future conflicts’ between societies and cultures. ‘We must meet that challenge,’ he told the 30th annual Caux Conference for Business and Industry being held in Caux.

Abbott was giving a Caux Lecture on the theme ‘The global trading system: free, fair or foul?’ He called for a ‘globalization with a human face’. Equating globalization with trade liberalization, he acknowledged a common criticism of the WTO — ‘the difficulties of ensuring that the benefits are more equitably divided among countries and peoples. If this is not addressed, we face the prospect of conflict or even violence.’ He stressed that, ‘the principle of justice for the disadvantaged in society is certainly hugely relevant’ to achieving the UN Millennium goals of eliminating poverty in the world by 2015.

He referred to the clash between the economic impact of America and the values and culture of Islam, which were ‘driving in an opposite direction’. ‘New technology and the Internet are pulling one way, while Islam is trying to protect itself from the corrosive effects of the outside world,’ he said. Another clash was between the cost of patent protection by pharmaceutical companies to finance research and achieve profits and the need to provide cheap medicines to combat HIV/AIDS, malaria and tuberculosis in poor countries.

Business-driven foreign direct investment (FDI) had ‘contributed much’ to economic growth in countries ranging from China and South-East Asia to Mexico, Latin American and Central European countries. But FDI inevitably had a social and environmental impact. While it improved ‘local wage patterns and decent working conditions’, it also contributed, for instance, to traffic congestion and destruction of forests. All countries were not equal, in size, economic power, or in natural resources, he continued. The concept of sovereignty, ‘based on notions of natural justice and morality’, and applied in the UN and the WTO, had led to an expectation of equal benefits from the system. ‘But in reality disparities are in practice obvious. Can we nevertheless aim to achieve a fairer distribution of benefits? I believe the answer is Yes.’ But it would be a tall order to achieve it fully.

He dismissed the arguments of some Non-Governmental Organizations that the current international system is totally skewed against poorer countries. ‘You should not believe the tales that there have been no benefits at all since the 1980s,’ he said. For instance, 24 developing countries, which had opened their markets and liberalised trade, had achieved annual growth rates of five per cent over the past 20 years, compared with two per cent growth in developed countries.

The current Doha Round of WTO trade negotiations had been dubbed the Doha development agenda in which ‘nearly every paragraph refers to development problems’. This was a far cry from the comfortable ‘rich man’s club’ atmosphere that ruled in the 1970s and ‘80s. Some 100 countries of the WTO’s 146 member states regarded themselves as ‘developing’. He singled out the ‘current strong emphasis’ on eliminating the distorting effects of domestic agricultural support in the European Union and the USA. Developing countries have found it ‘impossible to compete in global markets’, leading to production difficulties in their domestic markets.

‘We are challenged to achieve a fairer spread of benefits from trade liberalization,’ Mr Abbott concluded. ‘It remains a big challenge. If the current negotiations do not deliver in acceptable fashion on the development agenda, which is built into the Doha round, then we certainly run the risk of some form of confrontation down the road.’

Conference Report

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