Globalization and Governance

Let me tell you something about my experience as the Canadian Prime Minister's “sherpa,” or personal representative, for the G-7/8 Summits in the mid-1990s. Two decades ago, the first summits focused on macroeconomic issues. I found fascinating in the mid-1990s that, when the leaders were alone talking amongst themselves about their major worries, they talked about a much broader range of global challenges and the management of our increasing interdependence. Of course they talked about the Bretton Woods institutions, the WTO, a possible new environmental organization, and the UN. But they also talked about other particular challenges in some depth. Climate change will not surprise you. But infectious diseases and transnational crime might. Both are subjects that sherpas were asked to prepare for substantive discussion at future summits. Why were leaders so interested in these issues? Quite simply, they understood that they could not deal with them at a national level, and believed that the international machinery was at best creaky.

Globalization, particularly in the economic area, is not new. Impressive numbers can be brought to bear showing the high importance of international trade and investment one hundred years ago. It is also clear from that experience that economic globalization was not and is not irreversible. War can certainly bring it to an end. In today’s context, so can a major backlash against globalization. Such a backlash could even undo other forms of global integration being caused by new technology and the increasing pressure of humans on the planet.

Global “Governance” at Best a Work in Progress
I also want to ensure we all understand in broadly the same way “governance.” It is obviously not synonymous with government. To me, global governance refers to the management of issues which spread across borders and typically involve governments, of course, but also international organizations, civil society, often the private sector, and sometimes—and indeed increasingly—formal or informal networks. These issues require, in many cases, what has been called “global public policy.” To deal with climate change, for instance, it is obvious that there must be just such a global public policy.

These changes in the public policy agenda have clear implications for the role of states and of international institutions. So does the rise in importance of civil society. The number, scope, and influence of non-governmental organizations have grown impressively. This process has been facilitated by the information revolution, which makes it so much easier for people around the world to connect quickly and cheaply. We are also seeing the spread of democratization and its consequences. While not universal in scope or in quality, it has meant that more people now are aware of what is going on and feel a right to be involved in decisions that affect them. They are asserting that right, sometimes on the streets. There is mounting discontent as decisions that have important effects at the local level are taken by international bodies that are not perceived to be part of a governance process for which there are clear accountability mechanisms.

In an increasingly interdependent world, it is obvious—I think to most everybody, but maybe I am mistaken—that one needs better and universally applicable rules of the road. We need means of ensuring we don’t collide, and at a higher level, that will enable us to arrive at our chosen destinations. The rules have to be both effective and accepted as fair. How to bring this off is not obvious and does lead to questions about who should make the rules, how they should be made, how flexible should they be, and who, if anybody, is to enforce the rules. You will recognize these as classic questions about politics and governance. Yet we have no clear system and process of global politics and global governance. We have parts of a system but nothing that is remotely complete. The building has many architects and many workers, and can at best be described as a work in progress.

It is clear we will not have comprehensive global government for a long time, if ever. That does not mean that building governance in a more conscious way for the major global challenges that require policy and management is not urgent. It is. Governance has to reflect the state of global politics, even if it is now a messy one. It also has to reflect a system of accountability that has more acceptance than the present one. And that has implications for transparency and participation.

I have no doubt that global institutions feel quite accountable to those they understand to be their stakeholders. The latter are governments, or more accurately, parts of governments—individual ministries. I would argue that the series of separate links back from international bodies to national governments is part of the problem. The decisions of these institutions can have truly dramatic effects across economies, societies, and cultures. Think about the Asian crisis and that dramatic picture of Michel Camdessus standing with arms crossed waiting for Indonesia to accept the terms established by the IMF. Despite recent efforts to improve transparency, participation, and accountability, these institutions fall far short of what one would expect from a democratically elected government. This is not because of the insensitivity of management and boards. It is in no small part because the stakeholders—member governments—would not have it any other way.

The end result is not satisfactory. There is a need for greater inclusion, a sharing in the benefits of globalization, and better means of managing what economists call global public goods—and “bads”—which cut across a number of institutions. Otherwise the backlash against globalization will mount and we will find ourselves with more and more important environmental and security problems. This would not be a pleasant world in which to live. The good news is that we don’t have to live there.

States Must Still Lead, but in an Inclusive Way
Let me now turn to the changing roles of states, the traditional locus of authority and accountability for governance. The reality of major global challenges that can only be met through intensive international cooperation is a major change affecting the efficacy of individual states. We live in a world in which, despite some rather impressive concentrations, I would argue power is increasingly diffused. Sovereignty has been ceded upwards to international institutions. Non-state actors (civil society and the private sector, nationally and globally) have simply asserted their increasing power. And sub-national levels of government are increasingly constitutionally required to be part of the process. There are clear contenders to the state’s formerly unchallenged exclusive authority.

But it does not follow the state is going away—far from it. What is needed is for the state to learn how to share power. This requires more than better information and even consultation. Let me recall two examples that I have experienced. First are the negotiations on a multilateral agreement on investment (MAI). Experts in the field who met at the OECD conducted them. A variety of differences emerged that required difficult and absorbing negotiations, but meanwhile those involved lost sight of the developing opposition to the MAI in civil society that eventually did in the negotiations. That opposition was an alliance of convenience of groups that in other circumstances would have had difficulty agreeing the time of day.

My other example is the treaty to ban anti-personnel landmines, so often heralded as a success by my former boss, Lloyd Axworthy, who was Foreign Minister of Canada. Let me say very clearly that if we had concentrated our efforts on lobbying other foreign ministries around the world, we would not have come very far. Instead we built on and helped develop a coalition of NGOs. We worked with the late Princes Diana—a transnational personality if ever there was one.

What this means is that governments need to act in different ways. While they can and must lead, they need to do so in an inclusive way. They need to become more and more comfortable working with civil society—not necessarily all of it, but key parts. Subordinate orders of government (in a constitutional sense) need to be brought into the tent. Nonetheless, the state retains its unique authority. It is uniquely accountable to its electors. NGOs may be increasingly powerful, but have in many cases questionable representativeness and accountability. The state is an indispensable part of governance at the global level. Global environmental change, transnational health and crime problems cannot be solved without the state. This is quite apart from the fact that many, indeed most, policy issues and program services are best handled at the national level.

We are living in a world in which there is simultaneously integration and fragmentation. Traditional lines between “domestic” and “foreign” have broken down. Old national loyalties are being undermined. There is increasing distrust of governments and other institutions. National borders are more porous. It is harder and harder to frame policies strictly at the national level. Events move more rapidly. These are challenging times for policymakers.

The Role of the United States
Before closing I would like to say a word about the United States, obviously the country that has by far the most power in the world today. The leadership of the United States in building a rules-based system with strong institutions to manage those areas in which we are interdependent is crystal clear. That won’t happen if the United States succumbs to the inclination to act unilaterally. I am not worried about isolationism. I worry instead about the concept of U.S. exceptionalism, as well as attachment to sovereignty, which I know is deeply rooted in American political culture. I am absolutely convinced that the idea of a world in which there is one set of “rules” that the United States establishes for itself and another for the rest of the world won’t fly. Think about the example of the International Criminal Court. There would not be an ICC without the leadership of a number of Americans. If the United States wishes to be able to bring to justice war criminals, can there be a system for Serbs and Rwandese, not to mention Canadians and Germans, that cannot by definition apply to Americans? Excuse me, but I think not.

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My conclusion, therefore, is that while globalization, global change, global interdependence—whatever you want to call it—is going forward and leading to the development of innovative forms of governance that increasingly often include civil society, the state is not going away. Other actors have joined it on the world stage. The state needs to learn some new roles, to operate in different ways. And there are more and more opportunities for those of us at present not in governments to have influence. There are some interesting political implications from this. The capacity of elected governments to deal with an increasingly important set of problems is circumscribed. This reflects on how governments are seen and what they must say to their electors. As externally agreed decisions and rules have growing impact, including on social cohesion, who is to be accountable and how will that accountability be exercised? There will be a large political cost to fudging the answers.

Global politics on the great issues of poverty, sustainable development, climate change, and the like are now only working in a rudimentary way. There is no assembly or parliament; nor is there likely to be one for a while. Yet something has to be done at the global level to permit non-governmental voices to be heard in a more systematic way. It seems to me that there is something the Trilateral Commission, as a good NGO, can do to facilitate this process.