Global Governance in the Context of Globalisation: The Imperatives of Economic Change

• Author: Maurice Odle
• Pages: 83-99

Global Governance in the Context of Globalisation 83

Introduction

At the same time that there is acceleration in the intensity of the globalisation

(including the complementary regionalisation) process, there is increasing

concern about inequities and scepticism about the gains that will accrue to

developing countries from their deeper insertion in the world economy. This

paper will focus on the economic rather than the political and cultural aspects

of the process. The gist of the paper is that global governance has tended to

become more arbitrary than accommodating to the interests of the disadvantaged;

that corporate capital has assumed a more concentrated, corrupt and co-opting

form; that financial crises are now more systemic than serendipitous and the

solutions more perverse and pauperising; and that there is less coherence and

more contradiction in tackling the phenomenon of underdevelopment.

Existing proposals for dealing with the current crisis of development fail to

tackle the fundamental issue. There is an imperative for global governance to be

better structured and more cognisant of differences in levels of development, to

be more flexible with greater scope for safeguard adjustment to adverse economic

changes and for policy makers in developing countries to be placed in a less

constrained position in managing development.

I) Imbalance in Global Rules and Asymmetry in Compliance/

Enforcement

Global governance should be expected to be transparent, democratic, power

balanced, accountable, incorruptible and working in the interest of all. However,

this is not always the case with respect to the pillars of the globalisation process

– trade, finance, investment and technology. The developed countries have

GLOBAL GOvERNANCE IN THE

CONTExT OF GLOBALISATION: THE

IMPERATIvES OF ECONOMIC CHANGE

MAURICE ODLE

CHAPTER Five

84 GLOBAL GOVERNANCE

contrived to introduce an architecture which serves to maintain their dominant

position through a mix of instruments that exact compliance from developing

countries while retaining for themselves certain degrees of freedom. The system

is obviously iniquitous in its evolving forms. Examples of such manifestations

are indicated in the following sections of the paper.

1. Warped Mandates and Skewed Implementation

The critical departure of today’s globalisation process from the

internationalisation tendencies of the past is its rules based nature. The system

is becoming increasingly mandatory and no more so than with respect to global

trade. The WTO system has member countries locked into a system in which it

would be difficult to achieve “roll-back” of measures on which agreement has

already been reached.“ Standstill” is required with respect to existing protectionist

measures, and “progressive liberalisation” in the future is a commitment made

with respect to services and the positive list approach.

Although mandatory, the trading system is essentially unequal in its

construct, with rapid progress in liberalisation being sought in those areas in

which the developed countries have a technological lead and head start, such as

telecommunications and financial services, and painfully slow progress being

evinced in areas in which the developing countries’ comparative disadvantage

is smaller, such as agriculture and textiles. The unequal nature of this structure is

compounded by certain implementation practices employed by the developed

countries, such as those with respect to sanitary and phytosanitary measures

and anti-dumping determination, that are tantamount to protectionist devices.

At the same time, the trading system is very lukewarm in its recognition of the

need for special and differential treatment for developing countries, is miserly

in its admission of the necessity for waivers and safeguards, allows for transition

periods (of typically between five and seven years) that are much too short to

permit any significant change in supply capacity to compete on a level playing

field, and holds in check any tendency to flout the rules by the threat of being

enmeshed in very costly dispute settlement procedures and the possibility of

retaliatory and cross retaliatory measures.

While compliance is thus assured on the part of the developing countries,

the developed countries (despite the rules being in their favour) have no

compunction in violating these results when their economic interests are

perceived to be at stake, at least by the politicians and their special interests.

This is no more evident than in the recent cases involving the USA raising tariffs

on steel imports and increasing subsidies to farmers. The penalties are bearable

in an economy of such magnitude, strength and resilience.