Ethical Guidelines for International Trade

Holy See's Note to Ministerial Conference of World Trade Organization

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VATICAN CITY, SEPT. 10, 2003 (Zenit.org).- Here is the Note, which the Holy See published in today's edition of L'Osservatore Romano, to the 5th Ministerial Conference of the World Trade Organization. The WTO conference started today in Cancun, Mexico, and ends Sunday.



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Participation of the Holy See in international activity is primarily for the purpose of serving the human being and promoting the dignity of the person, thereby contributing to the common good of the whole human family. In the field of economic relations, and specifically as pertains to trade, the Holy See advocates an equitable system as one of the key factors in development. In this context, the creation of the World Trade Organization (WTO) was a major innovation, because it intended to implement a legal framework of international trade law in which there would be no room for unfair unilateral commercial actions (1).

It is particularly poorer countries and their peoples who are in need of an equitable, rules-based system in which they can participate in global trade on the basis of the highest achievable equality of opportunity (2). The mandate of the Fourth WTO Ministerial Meeting in Doha is precisely that of giving special attention to the development needs of the poor and the WTO is to serve this mandate. Thus, on the occasion of this Fifth WTO Ministerial Conference, which is to be a midterm review, the Holy See, as an Observer member, wants to advance some reflections on the institutional links between trade rules and human development.

Trade rules, notwithstanding their technical appearance, have a political and social nature, with deep and lasting consequences in the life of humanity. The Holy See, without entering into technical and specialized matters, wishes to provide some ethical guidelines inspired by the fundamental and permanent values of the international community and which ought to guide all its activities, including trade.

1. Ethical Guidelines for Trade

An ethical discernment in the context of international trade must be based upon the principle of the inalienable value of the human person, source of all human rights and every social order. The human being must always be an end and not a means, a subject and not an object, not a commodity of trade (3). When placed at the service of human development, the international trade system works for people -- persons and communities.

Trade should benefit people, not just markets and economies. Economic freedom is only one element of human freedom and the economy is only one dimension of the whole of human activity (4). Economic life cannot be absolutized. Economic activities must be pursued within a broader context of human development, the promotion of human rights and especially overarching policies and targets aimed at eliminating poverty (5).

History demonstrates that ensuring some amount of free exchange of goods and services is indispensable for development and peace. However, neither free trade nor any set of rules are fair by themselves. Free trade can only be called such when it conforms to the demands of social justice and it is fair inasmuch as it allows developed and developing countries to benefit in the same way from the participation in the global trading system and enables them to foster the human development of each and all of its citizens.

The prevailing of national interests in current trade negotiations, despite all the declarations of respect for the development targets of the poor countries, does not serve the idea of a "family of nations," which is by nature a community based on mutual trust, mutual support and sincere respect. In an authentic family the strong do not dominate; instead the weaker members because of their very weakness, are all the more welcomed and served (6).

Further, the concept of a "family of nations" calls forth an international collective responsibility for development and for the universal common good. This implies the obligation of the richer countries to tackle and remedy the shortcomings and less favorable conditions of poor countries as if these were internal problems for their own. Trade policy must be organized in such a way as to not be harmful to poor countries but as a contributory factor to their sustainable economic development (7). The amount and range of concessions should be proportional to the development level of countries, and not the contrary. In trade relations, the good of people cannot be finally achieved against the good of another people (8).

2. Present International Trade Arrangements

WTO rules are a specific international legal system that codifies and enshrines the results of a series of national concessions on market access. The economic power of each country and its relative negotiating clout has determined the balance between countries' demands and concessions. By definition such lengthy negotiated agreements are a compromise and thus not able to respond to all economic needs. In such an arena of political struggle, the outcomes could not be fully consistent with human development goals, unless negotiations were guided by a strong commitment for solidarity among countries.

Inconsistencies are identifiable between a trade rules system based on the present legal framework and one motivated by solidarity. First, the present agreements contain limits and exceptions to free trade that are often not supportive of developing countries. Secondly, even if trade were completely free, there is no guarantee that free trade would be the best trade policy for all poor countries. Finally, compliance with WTO rules, harmful in themselves. in some cases, can stifle a more complete development agenda (9).

There exist WTO agreements that rule trade indirectly by establishing domestic economic specifications. Many developing countries have accepted such agreements, which are part of a "single undertaking" type, in the hope of net benefits expected through the inclusion of textiles and agriculture in the multilateral trade regime and so as to avoid the implied risk of being marginalized. The "single undertaking" obliges poor countries to commit to policies with human development implications being uncertain at best.

The challenge is to create a legal framework for trade which gives developing countries both the economic surplus and the political autonomy to achieve human development goals, while respecting legitimate concerns regarding labor, social and environmental standards. Countries need to be enabled to design policies that improve human development outcomes.

3. Trade and Human Development

For the. Holy See, the multilateral trade system will have been truly accomplished when poor countries are able to integrate fully into the international community. This necessitates policies that foster an authentic human development and assist poor countries in capacity building. This development cannot be restricted to economic growth alone since to be authentic human development, every man and woman, and the whole person, must be developed. Any efficient international trading system cannot overlook these human realities and must place authentic human development at its very core (10).

-- To establish a human development oriented trade system, WTO must take greater stock, on a country-by-country basis, of how each WTO agreement, along with its implementing costs and capacity requirements, affect the human development policies of the poorer countries (11). The implementation of the WTO agreements sometimes limits the capacity of governments to deal with poverty and social issues. Consideration is needed as to the impact of WTO rules on people's right to food, an adequate standard of living, health, education, etc. which imply access to medicines, water and sanitation and similar essentials.

-- The world trade regime should support the development agenda of poor countries. Nations will have to identify their own priorities while recognizing needs according to the particular conditions of their people, their geographical setting and cultural traditions (12). When multilateral trade rules intrude into the domestic domain, the autonomy of a government is reduced. Prerequisites of an institutional and economic type are essential to convert any better market accessibility into improved progress in human development.

-- Trade-related questions which are of special interest to fostering human development for the poorest countries need to be addressed. These include market access for products in which the poor countries have strengths or competitive advantages, without referencing reciprocity, and a greater flow of goods and services between countries. In any economic sector, including the international trade system, a rules-based approach is in place precisely to protect the weakest. Reforms in market access for products of poorer countries (agriculture, textiles, etc.) cannot be put aside indefinitely (13).

-- Free trade can work when both parties are fairly equal economically, thus stimulating progress and rewarding effort. However, today the nations involved in the international trade system are far from equal. Hence, it is unjust to apply a "one-size-fits-all" approach to unequal members rather than reflect their varying, economic conditions. The goal of development, particularly authentic human development, must be central in the WTO rules, which should be asymmetric and applied to groups of countries at similar levels of human development (14). Greater flexibility in policy-making must be enjoyed by developing countries in a context of open markets in developed countries for their exports.

-- In the implementation of trade rules, poor countries must be allowed sufficient flexibility when facing compliance so as to adopt fundamental development measures (15), particularly the increase of social programs whose "raison d'etre" should be the protection of the weakest. While market access facilitates a level of development, it is not sufficient in itself and needs to be complemented by asymmetric rules. Due to falling commodity prices and specialization in products, poor countries presently gain substantially less from trade than do industrial countries. At the same time they are unable to compensate domestic entities suffering due to increased openness of the domestic market.

-- The integration of the poorer countries into an equitable world trade system is in the interest of all, inclusiveness is both a moral and an economic value since it promotes justice as well as a long-term economic efficiency (16) and authentic human development. No model of economic growth or international trade that neglects social justice or marginalizes human groups and human development is sustainable in the long-term, even from the purely economic point of view (17).

4. The Doha Declarations and Development

The Doha Ministerial Conference produced two declarations that address the needs of poorer countries and their peoples, in a much more specific and satisfactory way than previous attempts. However, such commitments cannot remain as declarations of merely good will or as a "best endeavor commitment," but must serve as the starting point for the construction of a genuine trade and development international legal mainframe on these and similar issues.

To facilitate the realization of such declarations, a new interpretation is required along with the recalling of the Doha mandate to give special attention to the development needs of the poor. This will include a greater flexibility and a decisively more development-friendly approach than has been demonstrated, accompanied by a courageous implementation of the Doha Declarations aimed at the elaboration of new rules consistent with the Millennium Development Goals.

It is now a fact that the achievement of such goals is dependent upon the decisions of developed countries, which must assume their particular responsibility for the universal common good and that of all humanity opening to a worldwide horizon.

In the wake of recent wars and terrorist attacks, the relationship between authentic development, especially human development, and true peace has become even clearer. It has been said that peace is the state that exists when each person is treated with dignity and allowed to develop as a whole person.

Political and economic relations between nations and peoples need to be built on a new basis. Self-interest and efforts to reinforce positions of dominance must be left aside. Developing nations should be assisted, by means of special trade conditions to become true partners in a more just international order; partners who have a vital contribution to make to the good of the entire human family (18).

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1) Cf. World Trade Organization, WT/L/22l, 2 July 1997.

2) Intervention of the Observer of the Holy See to the IV Ministerial Conference (Doha, Qatar), 12 November 2001.

3) Cf. Pope John Paul II, Address to the Plenary Session of the Pontifical Academy of Sciences entitled "Globalization: Ethical and Institutional Concerns," 27 April 2001.

4) Cf. Pope John Paul II, Encyclical Letter Centesimus Annus, 39.

5) Note of the Holy See on the Preparation for the Doha Ministerial Conference, "Development Dimensions of the World Trade Organization."

6) Cf. Address of Pope John Paul II, Fiftieth General Assembly of the United Nations, 14, New York, 5 October 1995.

7) Cf. Pope John Paul II, Encyclical Letter Sollicitudo Rei Socialis, 43-45, and Centesimus Annus, 52.

8) Cf. Pope John Paul II, World Day of Peace Message, 1 January 1983.

9) Cf. U.N. Development Program, "Making Global Trade Work For People," New York, 2003.

10) The Holy See shares many of the ideas on a Human Development Orientated Trade System expressed by the U.N. Development Program publication entitled "Making Global World for People," New York 2003.

11) Intervention of the. Observer of the Holy See at the IV Ministerial Conference (Doha, Qatar), 12 November 2001.

12) Cf. Pope John Paul II, Encyclical Letter Sollicitudo Rei Socialis, 44.

13) Intervention by the Observer of the Holy See at the IV Ministerial Conference (Doha, Qatar), 12 November 2001.

14) U.N. Development Program, "Making Global Trade Work For People," New York, 2003.

15) Note of the Holy See on the Preparation for the Doha Ministerial Conference, "Development Dimensions of the World Trade Organization."

16) Intervention by the Observer of the Holy See to the IV Ministerial Conference (Doha, Qatar), 12 November 2001.

17) Pope John Paul II, Address to the Plenary Session of the Pontifical Academy of Social Sciences entitled "The Study of Tension between Human Equality and Social Inequalities from the Perspective of the Various Social Sciences," 25 November 1994.

18) Cf. Pope John Paul II, Speech to the New Ambassador of the State of Eritrea to the Holy See, 6 December 2001.