Reprinted with permission from Chemistry Business, The Journal of the American Chemistry Council, July/August 2000.
Despite what you so often read, globalization is not completely an economic phenomenon. It is equally a political one, and it is equally and largely a function of technological change of the information revolution. In fact, I often think that 80 percent of what we call globalization overlaps almost exactly with the information-communications revolution.
As many people have pointed out, there have been previous periods of economic integration that reversed themselves ? principally right before World War I. However, they certainly never reached the breadth and depth of what we are seeing today. What?s never been seen before is the confluence of change in all three sectors at once: the political sector, where there is an evolving consensus around democracy as the preferred form of government; the economic one; and the technological one, through the enormous forces of the information revolution, which you cannot possibly exaggerate.
The political aspect of globalization is probably five to 10 years behind the economic one. Ten years from now, I think we will be talking about changes in international political architecture in the same way people now talk about changes in the international economic architecture. We have become familiar with economic contagion in the spread of financial crises from one country to another. Now, in the case of former Chilean General Augusto Pinochet ? and his indictment by a Spanish court and consideration by British courts over whether he should be extradited ? we are beginning to see political contagion.
Therefore, it is crucial to remember the full picture of globalization. On the information-communications front, it has driven a "power shift," whose principal result has been the end of what was not just the 50-year era of the Cold War, but the 350-year era of concentration of power in the nation-state. This was a period that began with the Treaties of Westphalia in the 17th century, during which time power flowed into the hands of nation-states. In about 1990, with the end of the Cold War and the simultaneous acceleration of the information revolution, that flow reversed itself, and power has since been flowing into the hands of a variety of non-state actors ? notably industry, civil society (and NGOs) and international institutions.
The result has been ? and increasingly will be ? a resorting of roles among national governments, business, civil society and international organizations. Things that nation-states did until 10 years ago that nobody would consider anybody else doing are now being done by business, and by other non-state actors. We are also seeing the emergence of a powerful, important new phenomenon that we saw a piece of in Seattle. That is the emergence of hybrid organizations, in which non-state actors are present, and sometimes the lead actors, along with government representatives, in international negotiations and in international fora of various kinds. A few of these organizations are old, like the International Labour Organization and the International Telecommunications Union. However, most of them are new, and most of them have far more power and influence than they have ever had before.
The emerging influence of the International Standards Organization (ISO) is another example. If you go to ISO meetings, if you watch the negotiation of ISO standards, what you see in the room are businesspeople, government people and NGOs, together, doing technical negotiations. This is the model that we will see increasingly, rather than the one we are all familiar with, where you have the key people ? government representatives ? sitting behind closed doors, and the business lobbyists and the NGOs out in the hall. That is changing, and that is part of what happened in Seattle.
Also, Seattle is not the paradigm of this power shift. It is a misleading lesson to take from Seattle to say that this power shift means conflict, disintegration of international regimes, weakening of international organizations, and a backlash against globalization. If you look at what has happened over a decade, in fact what you would see is almost exactly the reverse. The areas in which international civil society has been most influential begin with the Global Climate Treaty in 1992, which was largely conceived, pushed through and even negotiated by NGOs ? from beginning to end. Then there is the Landmine Treaty, which is in some ways the most important because it broke all of the rules of international negotiation. That is because it was negotiated in 14 months instead of the usual 10 years, despite the opposition of all five major powers, to a preset consensus rather than to the lowest common denominator. All of the rules of international diplomacy were shattered in this negotiation.
Then, you have the negotiation in 1995 in which the Nuclear Non-Proliferation Treaty ? the centerpiece of the global nuclear regime ? was transformed from a temporary to a permanent treaty. Then, you have the more recent negotiation and creation of the international criminal court.
All of these negotiations are major extensions of international governance. In all of them, NGOs played a constructive, negotiating role, and because of that, there was far less media attention than in Seattle.
Well, then what happened in Seattle? First, the disintegration was in large part a result of government unpreparedness. The preparation for Seattle was awful, as was the execution of the meeting. In fact, the former Secretary General of the Commonwealth ? a man who had probably attended every important international meeting for the 40 years of his public life ? said that this was the worst organized international conference he had ever seen. The draft document that the delegations arrived to find was not a draft negotiating document at all, but simply a list of issues. Since the chairman of the conference did not arrive until two days later, there was time wasted before they even got started. Finally, there was a deep division between the developed and developing countries that was not ready for negotiation.
The situation reminded me of the disintegration of the Multilateral Agreement on Investment a couple of years ago. When governments are deeply divided, unready to negotiate and fractured upon themselves, and then you add the element of fractious NGO participation, you do get a terrible mess. You get a different result when governments are better prepared. In particular, you get the possibility of constructive action rather than chaos.
Secondly, the group of protesters in Seattle was a very mixed bag, and as always, the noisiest, least constructive element got the most attention. The differences between what the trade unions were there for, what the established environmental groups were there for, and what the activists were there for, are profound.
Certainly, there was a group whose motivation was a "backlash" against globalization. There was an equally important group, whose interest was not in stopping globalization, but rather in steering it. Here in particular, I categorize many of the established environmental groups, though not all of them ? by a long shot. There are the Sierra Clubs, who basically still are taking a Luddite anti-trade view, but there are also groups like the World Resources Institute, the National Wildlife Federation and many others. These groups are knowledgeable about trade disciplines, WTO jargon and trade rules; they believe in trade; and they believe in economic growth as the principal means to get environmental sustainability. They were the ones in Seattle who were having learned, boring, detailed, technical debates and were issuing papers, with all kinds of specific, constructive suggestions, but you didn?t hear about them.
In the case of the environmentalists, what happened in Seattle was the outcome of seven years of frustration with the Clinton Administration and its failure to pick up the ball on the environmental trade issue. In 1993 when the President took office, this issue was in play. It was six months after the Rio Environmental Summit; it was the middle of the tuna-dolphin controversy between the United States and Mexico; it was the moment when the Administration knew it had to get the North American Free Trade Agreement and the General Agreement on Tariffs and Trade (GATT) approved by Congress. This was the moment to pick up this issue and begin the hard work ? it was going to take long, hard work ? to develop the environmental side of trade rules. The Administration didn?t just drop this ball; it failed to even pick it up.
However, it wasn?t just seven years of frustration; it was three decades. GATT had a committee on the environment for 30 years, which never met. Finally in the early ?90s it met for two years, and came up with a final report in which it said it could not agree on a meaning for what the word "environment" meant, and that was as far as the committee got.
So there is a history here, and the Administration, in its classic brinkmanship way, saw it just a few weeks before Seattle, leapt into crisis mode and overreacted.
Among the people who were there to "stop globalization," the activists, there were both people who were just crazy, and people who needed a cause and wanted to throw rocks again. However, there also were people who were reacting to the real downsides of globalization, which have so far not been addressed.
First, the effects of very rapid change are unsettling. Americans probably assimilate rapid change more easily than any other society in the world. Yet, even for us ? as any presidential candidate who listens to voters can tell you ? the unsettling effect of recent rapid change is a palpable, political phenomenon. There is also the question ? which I don?t think we know the answer to yet ? of whether globalization is causing the now well-documented increase in inequality around the world ? both within societies and between societies. While the cause-effect relationship is not known, the phenomenon is now clear. Also, of course, there is the obvious disruption of labor markets.
Globalization has resulted in a power shift that brings the private sector a good deal more power, more power to set policy in ways it never has before. Hence, the private sector has become an important policy actor in the last 10 years, and with that power comes more responsibility, which has not yet been taken on.
You see one element of it in the discussion about companies and social responsibility, but that?s just a piece of it. For instance, you see the oil industry, because of its large presence on the ground, sometimes being asked to be almost a proto-government in some countries. Taking on this responsibility is a difficult, fundamental redefinition of a company?s role. It won?t happen overnight, but I think it does call for a different approach to policy-making, one that is less episodic, that is far less single-company-driven, and even less sector-driven. However, it will require leadership from private sector executives to help define for the private sector a role that shoulders the responsibilities that civil society is demanding that business take on.
Part of this power shift is that both industry and NGOs are principally single-issue actors. They have largely one interest to promote. Very often the most effective, most passionate and most able of them are the ones with the narrowest tunnel vision. To offset that narrowness, they rely on and expect the help of states, which are the only entity among the major actors whose job it is to integrate single interests and produce something that looks like a common interest.
We will see global governance moving toward these triangular new entities that integrate government representatives, private sector representatives and NGOs as constructive, engaged actors, often on equal footings. Industry leadership needs to provide this kind of sustained involvement, not just when we need to get China into the WTO, but day by day. It will require nothing short of industry defining and following through on a major role change.
Copyright 2000 American Chemistry Council