Globalization is a fact of life, Annan believes

By Kofi A. Annan

DAVOS, Switzerland: In the two years since I became Secretary-General of the United Nations, our relationship with the private sector has taken great strides forward. We have shown through cooperative ventures -- both at the policy level and on the ground -- that the goals of the United Nations and those of the world business community can be mutually supportive.

Now, I want to challenge the leaders of that community to go a step farther. I am asking them to join me in a global compact of shared values and principles, which can give a human face to the global market.

Globalization is a fact of life. But I fear we may have underestimated its fragility. The spread of markets far outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take. And history teaches us that such an imbalance between the economic, social and political realms can never be long sustained.

The industrialized countries learned that lesson in their bitter and costly encounter with the Great Depression. To restore social harmony and political stability, they adopted social safety nets and other measures, designed to limit economic volatility and compensate the victims of market failures. That consensus made possible successive moves towards liberalization, which in turn brought about the long postwar expansion.

What we need today is a similar compact on the global scale, to underpin the new global economy. If we succeed in that, we could usher in an age of global prosperity, comparable to that enjoyed by industrialized countries in the decades after World War II.

With that in mind, I am asking corporate leaders to embrace, support and enact a set of core values in the areas of human rights, labor standards, and environmental practices.

Why those three? First, they are all areas where the private sector can make a real difference.

Secondly, they are areas in which universal values have already been defined by international agreements, including the Universal Declaration of Human Rights, the International Labor Organization's Declaration on fundamental principles and rights at work, and the Rio Declaration of the 1992 United Nations Conference on Environment and Development.

Thirdly, there is enormous pressure from groups interested in reaching adequate standards in these three areas to load the trade regime and investment agreements with restrictions.

Their concerns are legitimate, but restrictions on trade and impediments to investment flows are not the best means to use. Instead, we should find a way to achieve our proclaimed standards by other means. I fear that if we fail to do so the open global economy -- and especially the multilateral trading regime, which is one of the great achievements of the last 50 years -- may be threatened.

How can we promote these standards? Essentially in two ways.

One is in the public policy arena.

Business can encourage states to give the multilateral institutions the resources and authority they need to do their job.

The United Nations as a whole promotes peace and development, which are prerequisites for successfully meeting social and environmental goals alike. The International Labor Organization, the United Nations High Commission for Human Rights and the United Nations Environmental Program strive to improve labor conditions, human rights and environmental quality. We hope in future to count business as our partners in these endeavors.

The second way they can promote global values is by taking action in their own sphere.

Many of them are big investors, employers and producers in dozens of countries across the world. That power brings with it great opportunities -- and great responsibilities.

They can uphold human rights and decent labor and environmental standards directly, by their own conduct of their own business.

Indeed, they can use these universal values, which people all over the world will recognize as their own, as the cement binding together their global corporations.

They can start by making sure that in their own corporate practices they uphold and respect human rights, and are not themselves complicity in human rights abuses.

Firms do not need to wait until every country has introduced laws protecting freedom of association and the right to collective bargaining before making sure that their own employees, and those of their subcontractors, enjoy those rights.

The least they can do is to make sure they themselves are not employing under-age children or forced labor, either directly or indirectly, and that, in their hiring and firing policies, they do not discriminate on grounds of race, creed, gender or ethnic origin.

They can also support a precautionary approach to environmental challenges, and undertake initiatives to promote greater environmental responsibility.

And they can encourage the development and diffusion of environmentally friendly technologies.

The relevant United Nations agencies -- the United Nations High Commissioner for Human Rights, the ILO, the United Nations Environment Program -- all stand ready to assist them, if they need help, in incorporating these agreed values and principles into their mission statements and corporate practices. And we are ready to facilitate a dialogue between them and other social groups to help find viable solutions to the genuine concerns those groups have raised.

In doing so, firms may find it useful to interact with us through our newly created web site, www.un.org/partners -- a "one-stop shop" for corporations interested in the United Nations.

More important, perhaps, is what we can do in the political arena, to help make the case for and maintain an environment which favors trade and open markets.

What I am proposing is a genuine compact, because neither side of it can succeed without the other.

Without the private sector's active commitment and support, there is a danger that universal values will remain little more than fine words-documents whose anniversaries we can celebrate and make speeches about, but with limited impact on the lives of ordinary people.

And unless those values are really seen to be taking hold, I fear we may find it increasingly difficult to make a persuasive case for the open global market.

Let us remember that global markets and the multilateral trading system we have today did not come about by accident. They are the result of enlightened policy choices made by government since 1945.

If we want to maintain them in the new century, all of us -- governments, corporations, pressure groups, international organizations -- have to make the right choices now.

The writer is secretary-general of the United Nations. This article is based on a speech which he made to the World Economic Forum in Davos on Jan. 31, 1999.