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    Good Governance Opens New Doors to Advocacy


    © International Trade Centre, International Trade Forum - Issue 1/2006

    © International Labour Organization/M. Crozet The voice of women in business is not heard often enough in trade policy.

    For a model of good governance in trade policy, "make it open, make it fair. And make it inclusive", says Michel Kostecki.

    A question levelled at WTO Director-General, Pascal Lamy, during a 90-minute online "chat" in late February 2006 was: "In your view, what should be the role of the business community in order to bring the Doha round to a successful conclusion?" He responded: "If the business community is uninterested in the Doha negotiations, it will be a struggle to close them successfully. So the business community should assess where its interests lie and make its position known to the governments concerned."

    That is fair enough. But it depends on the business community being able to establish a common position in the face of conflicts of interest, and then on reliable channels through which to advocate this position to government. Is there a blueprint for business advocacy? Michel Kostecki, consultant on business advocacy to ITC, thinks not, due to the wide variety of political systems, social and economic development factors, and traditions.

    "It is really a question of coming up with some common basic principles, implemented in a country-specific manner," Professor Kostecki points out, "and provided the system in place grants access to major players, including non-governmental organizations."

    Good governance in trade policy, he says, provides legitimate channels of access to decision-makers, not only for business, but also for other groups - women, consumers, environmental protection activists and so on. The type of government does not matter to successful advocacy. A centralized state can be business friendly and an elected government entirely uninterested in the concerns of its business community.

    With good governance comes advocacy, but devised in a certain way. "By advocacy," says Prof. Kostecki, "we don't mean advocacy with no rules. It should follow three easy precepts - transparent, legitimate and inclusive. There will always be important private interests. Advocacy can be a bad thing if it hijacks governments."

    According to him, there are cases in some countries where special interests are so powerful that it is unclear to outsiders whether they are negotiating with governments or with industrial lobbies. But balanced advocacy models for both developed and developing countries do exist. Canada has a decentralized power structure, founded upon a large diversity of interests and upon integrating social issues and human rights. In South Africa the principles of the King Report on corporate governance - based on a case where sportsmen were accused of receiving bribes to ensure pre-arranged results in a 1990s series of cricket matches between India and South Africa - have a wider application to good governance in trade policy-making.

    Forging a community of interests

    To be transparent and inclusive, the process has to include open debate to resolve inevitable conflicts of interest, lay down common positions and establish what Prof. Kostecki calls the "community of interests".

    "As discussions between groups move from the specific to the general, they begin to identify common ground for devising positions they can communicate to government negotiators," he says. "For example, business communities in most countries would generally support open markets in products of interest to them. To work towards a common goal of open markets, they set up coalitions."

    He notes examples of the power of community of interest within the WTO itself, for example in the groupings of countries adopting similar negotiating positions to achieve general goals despite individual differences. "Sometimes it is hard to see the logic when you look at the different countries involved, then you delve deeper and understand," says Prof. Kostecki.

    Yet if countries, with their huge differences, can attain these common goals, communities of interest working within countries should also be able to achieve them. There are challenges, certainly, notably lack of negotiating skills within groups towards achieving compromise and deeply-rooted cultural factors such as certain business sectors being chiefly controlled by clans, minorities and families.

    But one of the biggest challenges is the pragmatism, not to say apathy, among members of the business community. Why make all the effort to negotiate positions with peers if the government is just not listening? Prof. Kostecki recalls that at an ITC meeting on business advocacy in an Asian country, three government ministers left the meeting immediately after delivering their addresses. A prominent business leader told him, "They are not at all interested in listening to what I'm going to say."

    The problem is further compounded by the fact that even business associations that do have the ear of the government may not have developed from business partnerships, as in developed countries. Rather they are quasi-government departments, staffed by members of the civil service rather than representatives of the business community eager to defend their members' interests, sometimes in the face of officials unsympathetic to their cause. "Maybe business would rather make money than to get into a fight with the ministry. Entrepreneurs don't have time to waste and sometimes don't believe in government very much," says Prof. Kostecki.

    Business advocacy models

    Yet there are a number of documented examples of business advocacy achieving its goals. Some went on to play a subsequent role in the country's trade negotiating positions, others influenced government policy through highlighting trade concerns.

    For the former, Prof. Kostecki cites the case of the Brazilian Bar Association. During the General Agreement on Trade in Services talks, a member of the Association was part of the Brazilian delegation and was able to explain and defend the interests of members to both national and international negotiators. For influencing government policy, he quotes the case of the advocacy group, Philfoodex, in the Philippines, which successfully campaigned for a change in national sugar policy in the face of a powerful national lobby and a quota system that allowed Philippine sugar exporters to sell to the United States at prices significantly higher than world prices.

    Philfoodex represented some 600 food producers and exporters. They were caught between trade liberalization (resulting in cheaper imports) and domestic production, which was uncompetitive, even against less efficient foreign producers, due to the high cost of sugar, for which they were paying more than world prices.

    The opportunity to create coalitions exists not only within countries or regions, but also within business communities from a variety of countries. According to Prof. Kostecki, this concept of the local or the regional "loses significance in an Internet-connected world. You may have people who are in the business of online services, for example in India and the United States, and manage to achieve consensus on liberal policies within WTO. Sometimes competing businesses find a community of interest between and among developing countries, or between developing and developed countries.

    "Business advocacy takes time. But there are cases where you can achieve rapid results, for example, where legislation is poorly conceived, due to incomplete understanding of some technical niceties. A few words from an expert, transposed into legislation, can lead to swift results."

    Inclusiveness gives credibility

    Good governance on trade policy also requires inclusiveness, bringing in voices that may seldom be heard. Business in developing countries frequently comprises a wide variety of small and medium-sized companies and an informal sector that can account for up to 40% of the economy. Another absent voice is that of women. Despite their substantial contribution to the economy (up to 70% of some African economies), they are often excluded from the decision-making process for a variety of reasons, frequently deeply embedded in the culture.

    "The empowerment of women really needs to be addressed," says Prof. Kostecki, "because they are frequently the breadwinners in developing countries, and discrimination against them is not only wrong but wrong-headed given their contribution to the economy." He acknowledges that attitudes to women are largely cultural: "The most culturally-neutral way to proceed would be through business partnerships, because the small business sector is frequently dominated by women in developing countries."

    In some cases, business is excluded from policy because, in the eyes of government and officials, it lacks credibility. This may be the case especially in a number of least developed countries, where business people, because of their financial independence and frequent travel, are sometimes perceived as corrupt. The result is that the relationship of business with government is not as a trusted adviser on trade-related issues (market access, for example) but as a suspect element, obliged to fill out government-imposed paperwork. And the main trade concern of business becomes getting through customs without too much hassle when leaving the country rather than having government facilitate exports through international trade negotiations.

    Keeping advocacy balanced

    The essential is to be able to tread the fine line between legitimate business advocacy, dedicated to specific goals in international trade negotiations including development, and an overbearing business lobby that puts pressure on government and is dedicated to serving no interests but its own.

    Prof. Kostecki sees ITC, with its focus on business and privileged access to international organizations, as unique in its potential to integrate good governance in trade policy. In practical ways, it can help business associations in developing countries to modernize and become more entrepreneurial in spirit, for example by providing Internet access to the decision-making process and linking business interests throughout the world.

    "Decision-making in trade policy is of vital interest to the WTO," stresses Prof. Kostecki. "The outcome is not the issue, it's the process itself. What we are saying is, 'Make it open, make it fair. And make it inclusive. If there is a debate at home, you will be more active in WTO negotiations.'

    "That is the way to link good governance with negotiations. It may still be that big business can write the agenda. They have the resources. But if the debate is open and inclusive, no one is left out to protest in the street," he concludes.

    Christopher Simpson, Trade Forum contributing editor, interviewed Michel Kostecki, who is Director of the Enterprise Institute and Professor of Marketing at the University of Neuchâtel, Switzerland. Laurent Matile, ITC Senior Officer, Multilateral Trading System, also contributed to this article.