Business
and the Global Economy
ICC statement
on behalf of world business to the Heads of State and Government attending
the Denver Summit, 20-22 June 1997
Paris,
23 May 1997
Executi
ve
Summary
The International Chamber of Commerce (ICC), the world business organisation,
urges the Heads of State and Government attending the Denver Summit in June
1997 to devote special attention to four key issues of particular concern to
world business.
1. The future
world trade agenda
The ICC attaches the utmost importance to an open multilateral trade and
investment system since that is the mechanism through which growth impulses
leading to job and wealth creation are transmitted throughout the world economy.
Unemployment and low growth cannot be cured by protectionism.
We therefore
very much welcomed the strongly positive outcome of the first Ministerial Conference
of the World Trade Organization (WTO) held in Singapore last December. We call
upon the governments of the Group of Seven (G7) countries to exercise the same
leadership they demonstrated at Singapore to ensure that newly resumed negotiations
in the WTO to liberalize trade in financial services are also successfully completed
within the agreed timeframe.
World business
sees three overriding objectives for the WTO in the years ahead:
to ensure that
the agreements concluded in the Uruguay Round trade negotiations are implemented
in full and on schedule;
to continue
work on the "built-in" agenda mandated by the Uruguay Round; and
to carry
forward the additional work programme agreed at the Singapore Ministerial
Conference with the aim of ensuring that the WTO’s multilateral framework
of rules is kept up-to-date with evolving commercial requirements and technological
advances in the context of the increasing globalization of business and the
marketplace.
The ICC foresees
a growing agenda for the WTO as emphasis shifts from "trade" in its
traditional sense to a wider conception of market access - to the international
rules for doing business on a global scale. That agenda should include: international
rules for cross-border investment, competition policy, customs modernization,
trade-distorting corruption, WTO-consistent regional trading agreements, and
the combatting of protectionist trade measures in the pursuit of environmental
and labour standards.
2. The Multilateral
Agreement on Investment
The ICC is disappointed that the negotiations launched under the aegis of
the Organisation for Economic Co-operation and Development (OECD) to establish
a free-standing Multilateral Agreement on Investment (MAI) have not been concluded
in time for the 1997 OECD Council Meeting at Ministerial level. However, we
recognize the complexity of the negotiations, and are generally pleased with
the progress made so far to create an instrument that incorporates a broad definition
of investment and high standards of liberalization and protection.
The ICC calls
upon the G7 governments to take the lead to ensure that the MAI negotiations
are concluded as very soon as possible and to reject pressures to link the Agreement
with environmental and labour standards.
3. Climate
change
The ICC views with concern the proposal that the Third Conference of the
Parties to the UN Framework Convention on Climate Cha
nge (FCCC), scheduled for
December this year in Kyoto, should adopt a legal instrument that would impose
on the industrialized countries more stringent quantitative targets for greenhouse
gas emissions than they are already committed to. Few, if any, industrialized
countries will achieve the initial aim of the FCCC to reduce such emissions
to their 1990 levels by the year 2000. Without a more thorough understanding
of why current targets cannot be met, it would be highly unrealistic for the
Kyoto meeting to prescribe new and stricter quantitative targets for the first
decade of the next century.
The ICC believes
that the Kyoto meeting should seek to reach agreement on a programme for curbing
greenhouse gas emissions that is pragmatic and achievable, reflects economic
and political realities, and provides maximum flexibility in setting national
goals and implementing response measures.
4. Globalization
"Globalization" is a powerful force for raising living standards
across the world. It is bringing unprecedented opportunities to billions of
people. Yet, despite the proven success and the solid prospect of much more
to come, globalization is increasingly perceived in the public mind as a threat
rather than an opportunity. This is especially the case in the older industrialized
countries.
The ICC believes
that there is an urgent need for both governments and business to do much more
to explain to the public at large the benefits and opportunities that will flow
from globalization and a readiness to adapt to change. The misconceptions that
are growing around globalization must be combatted.
The ICC further
believes that governments and business must work more closely together, at national
and international level, to design the multilateral rules for the worldwide
marketplace which will be increasingly necessary for the smooth functioning
and good management of globalization. Globalization is a business-driven phenomenon,
and business has now become a natural partner of governments to help them in
this task.
Business
and the Global Economy
The International
Chamber of Commerce (ICC), the world business organisation, is pleased to present
this statement to the Heads of State and Government attending the Denver Summit
(20-22 June 1997). The statement addresses four key issues of particular concern
to world business, to which the ICC urges the leaders of the Group of Seven
(G7) countries to devote special attention.
The future
world trade agenda
The ICC attaches
the utmost importance to an open multilateral trade and investment system since
that is the mechanism through which growth impulses leading to job and wealth
creation are transmitted throughout the world economy. Unemployment and low
growth cannot be cured by protectionism.
We therefore
very much welcomed the strongly positive outcome of the first Ministerial Conference
of the World Trade Organization (WTO) held in Singapore last December - and
notably the new undertaking to eliminate customs duties on information technology
products by the year 2000. Business was further encouraged by the landmark agreement,
concluded in the WTO in February this year, to liberalize trade in basic telecommunicat
ions.
We congratulate the governments of the G7 countries on exercising the necessary
leadership to produce these solid achievements.
Comparable
leadership is currently required in a further service sector which is crucial
to business everywhere, namely, financial services. We urge the G7 governments
to work hard to ensure that newly resumed negotiations in the WTO to liberalize
trade in financial services conclude, within the agreed timeframe, in a comprehensive
and truly multilateral agreement based on a substantial improvement in the quality
and quantity of market-opening commitments.
World business
sees three overriding objectives for the WTO in the years ahead:
To ensure
that the agreements concluded in the Uruguay Round trade negotiations are implemented
in full and on schedule. In this context, the ICC is particularly concerned
that the provisions of the Agreement on Textiles and Clothing are not being
faithfully respected by some important WTO members.
To continue
work on the "built-in" agenda mandated by the Uruguay Round. Here
the ICC attaches especial importance to:
harmonizing
and simplifying rules of origin
enhancing
disciplines on subsidies, especially in relation to state-owned enterprises
eliminating
or further reducing tariffs, in consultation with business in the relevant
sectors
extending
the coverage of the government procurement rules, and particularly to far
more WTO members
making
further progress on the harmonization and enforcement of laws to protect
intellectual property rights
expanding
and improving the quality of market-access commitments under the General
Agreement on Trade in Services.
g To carry
forward the additional work programme agreed at the Singapore Ministerial
Conference with the aim of ensuring that the WTO’s multilateral framework
of rules is kept up-to-date with evolving commercial requirements and technological
advances in the context of the increasing globalization of business and the
marketplace.
The ICC foresees
a growing agenda for the WTO since it is no longer sufficient to focus on barriers
to "trade", in its traditional sense, as the primary impediments to
doing business across frontiers. The emphasis today must be on a wider conception
of market access - on the international rules for doing business on a global
scale. We therefore urge the G7 countries to work together and with the other
WTO member countries in the years ahead to:
elaborate a
global framework of rules and disciplines to govern cross-border investment
examine how
governmental and business practices affect market access within the ambit
of competition policy
promote the
modernization of customs procedures, which are currently very costl
y to business
curb corruption
in the interests of reducing distortions to cross-border competition and commerce
reinforce
the primacy of the multilateral trading system by ensuring that regional trading
agreements are complementary to it and consistent with its rules
reject the
use of trade measures with protectionist effects in the pursuit of environmental
and labour standards
inject concrete
substance into the plan of action for the least-developed countries, agreed
to at the WTO’s first Ministerial Conference.
Finally, the
ICC calls upon the G7 countries to respect the WTO’s strengthened multilateral
dispute settlement mechanism, the success of which is crucial to securely establishing
the WTO’s credibility and authority. That mechanism has got off to a good
start. But it will remain vulnerable so long as major WTO members continue to
flirt with unilateral trade sanctions and the extraterritorial application of
national laws.
Next year marks
the 50th anniversary of the multilateral trading system. The ICC
will be celebrating the enormous contribution that system has made to raising
world living standards by organizing a major business event in Geneva. As the
representative of world business, the ICC looks forward to continuing to work
closely with the WTO to assist it in its vital task of keeping the multilateral
rules for the global marketplace aligned with new business realities and requirements.
The Multilateral
Agreement on Investment
The conventional
distinction between trade and investment no longer reflects business realities;
presence in a local market is now frequently vital to be able to compete. Companies
trade to invest and they invest to trade. Yet while the world has developed
over the past half-century a comprehensive and uniform body of multilateral
rules to govern international trade, cross-border investment remains subject
to a patchwork of rules contained in many hundreds of bilateral investment treaties,
other commercial accords and a few WTO agreements.
The ICC urged
the first Ministerial Conference of the WTO to aim to build a solid consensus
for work to begin within the WTO to establish a truly global framework of rules
and disciplines to govern cross-border direct investment. We were gratified
that Ministers took a step in that direction by setting up a working group to
examine the relationship between trade and investment - albeit without prejudging
whether negotiations will be initiated in the future.
Meanwhile,
the ICC has welcomed the negotiations launched under the aegis of the Organisation
for Economic Co-operation and Development (OECD) to establish a free-standing
Multilateral Agreement on Investment (MAI) that will be open for accession to
both members and non-members of the OECD. The MAI will provide important benchmarks
for any future negotiations in the WTO.
We are somewhat
disappointed that the MAI negotiations have not been concluded in time for the
1997 OECD Council Meeting at Ministerial level. However, we recognize the complexity
of the negotiations, and are
generally pleased with the progress made so far
to create an instrument which incorporates a broad definition of investment
and high standards of liberalization and protection. Business attaches major
importance to such investment factors as the protection and remuneration of
intellectual property, freedom to organize capital structures and to take a
local partner, the absence of performance requirements, and competition policy
that does not discriminate against foreign investors.
The ICC calls
upon the G7 governments to take the lead to ensure that the MAI negotiations
are concluded as very soon as possible and to reject pressures to link the Agreement
with environmental and labour standards. We also urge them to facilitate the
close involvement of non-OCED countries in the negotiations since the non-OECD
area is where the preponderance of restrictions on international investment
exists. It should be a major objective to encourage a substantial number of
countries outside the OECD area to accede to the MAI.
Climate
change
As the representative
of world business, the ICC has followed and participated in the United Nations
Framework Convention on Climate Change (FCCC) process since its inception.
The ICC views
with concern the proposal that the Third Conference of the Parties to the Convention,
scheduled for December this year in Kyoto, should adopt a legal instrument that
would impose on the industrialized countries more stringent quantitative targets
for greenhouse gas emissions than they are already committed to. Few, if any,
industrialized countries will achieve the initial aim of the FCCC to reduce
such emissions to their 1990 levels by the year 2000. Without a more thorough
understanding of why current targets cannot be met, it would be highly unrealistic
for the Kyoto meeting to prescribe new and stricter quantitative targets for
the first decade of the next century. Numerous important questions about the
impact and implementation of further reducing emission targets cannot be answered
in the short time available before Kyoto.
The ICC believes
that the Kyoto meeting should seek to reach agreement on a programme for curbing
greenhouse gas emissions that is pragmatic and achievable, reflects economic
and political realities, and provides maximum flexibility in setting national
goals and implementing response measures.
Meanwhile,
business will continue to:
develop and
participate in voluntary programmes, in partnership with governments, to respond
to the challenge of climate change
implement
economically viable projects that reduce greenhouse gas emissions as part
of its growth and development planning
design and
produce more energy-efficient goods and services
invest in
scientific research into climate change, and in new technology to curb greenhouse
gas emissions
disseminate
in the emerging economies both energy-efficient technology and sound environmental
management and operating practices.
Climate change
is an issue that business takes very
seriously. The scientific uncertainties
that still surround it argue for flexible, pragmatic and cost-effective responses
which can best be developed through a close dialogue between governments and
business.
Globalization
In its latest
World Economic Outlook, the IMF paints a remarkably rosy picture of the world
economy and argues that the prospects for maintaining buoyant growth over the
longer term have improved considerably in the 1990s. Much of this progress the
Fund attributes to the growing integration of the world economy and the globalization
of business.
The ICC agrees
with the judgement of the Fund. We believe that "globalization" is
a powerful force for raising living standards across the world. It is bringing
unprecedented opportunities to billions of people.
Yet, despite
the proven success and the solid prospect of much more to come, globalization
is increasingly perceived in the public mind as a threat rather than an opportunity.
This is especially the case in the older industrialized countries. Misunderstandings
abound, and public debate is increasingly dominated by critics of globalization
who are striking a responsive chord because it is human nature to fear change.
The ICC believes
that there is an urgent need for both governments and business to do much more
to explain to the public at large the benefits and opportunities that will flow
from globalization and a readiness to adapt to change. The misconceptions that
are growing around globalization must be combatted. We congratulate the IMF
on its authoritative analytical contribution to the public debate in its latest
World Economic Outlook. We trust that the G7 governments represented at Denver
will encourage the propagation of the IMF’s conclusions, since it is in
the older industrialized countries that they most need to be heeded.
The ICC further
believes that governments and business must work more closely together, at national
and international level, to design the multilateral rules for the worldwide
marketplace which will be increasingly necessary for the smooth functioning
and good management of globalization. Globalization is a business-driven phenomenon,
and business has now become a natural partner of governments to help them in
this task.