Neo-liberalism: Few winners, many losers
Malaysiakini
Sep 19, 2006
Fauwaz Abdul Aziz

Heads of states at the recently-concluded Sixth Asia-Europe Meeting (Asem6) in Helsinki promised that the grouping would act as “a multi-dimensional dialogue” for “co-operation on political, economic, social, cultural and educational issues.”

They also promised that Asem would promote focused co-operative initiatives linked to policy dialogue on topical priority issues, initiatives “that may involve relevant stakeholders, including the social partners and civil society”.

In spite of such proclamations, and judging from Asem’s 10-year track record, non-governmental organisations are more convinced than ever that big business will continue to dominate and drive the 38-member bloc formed in 1996. 

Several days before Asem6, more than 450 groups and individuals participating in the Asian-European Peoples’ Forum (AEPF) expressed hope that the bloc would not become another platform for the political elite and their backseat drivers - multinational corporations (MNCs) - to bulldoze free-market policies and issues of trade, investment and security through the lives of billions of ordinary Asians and Europeans.

Monitoring Sustainability of Globalisation (MSN) director Charles Santiago said globalisation has been jointly-envisioned, shaped and implemented by the political elite and MNCs to the exclusion of the people, making masters of the former and slaves of the latter.

“After 10 years, we have not seen an Asem blueprint that promotes opportunities and that benefits all in Asia and Europe,” he told a conference of policy-makers and their advisors organised by the Asia-Europe Foundation on Sept 7 at the Finnish Parliament, two days before Asem6.

“Asem has focused on promoting co-operation between governments and representatives of business interests, and its agenda has been geared towards trade, investment, security and political issues.

“The economic pillar promotes pro-market policies as opposed to alternative people-centered policies. Asem at 10 should be a point of reflection of a commitment to a work programme that ensures that benefits of trade and investment are shared in a just and equitable fashion by all.”

He said the cornerstone of a fairer Asem should be a focus on people, specifically meeting the demands of all people: respect for their rights, decent work, including migrant rights, and the empowerment of local communities.

Democratic deficit

Santiago also pointed out that Asem, characterised by “informality, networking, and flexibility”, continues to have a “democratic deficit”.

“Asem’s work programme has only limited possibilities for regular democratic scrutiny in parliaments in Asia and Europe including the European Parliament. The work programme and policies should be democratised and made accountable to the various parliaments,” he said.

“We should call on Asem head of governments ... to commit to a social dimension ... that can be realised at all levels of the Asem process. This could be one way in which the various stakeholders could work together in promoting solidarity, mutual understanding and co-operation between the peoples of Asia and Europe so that globalisation benefits all.”

During the meeting, Santiago presented a detailed joint report by MSN and the Amsterdam-based Transnational Institute on European Union-Asean relations, entitled ‘From Economic Co-operation to Institutionalising Free Trade Neo-Liberal Orthodoxy’. In it, the Big Business bias of the EU-Asean Vision Group was laid bare.

In forging a future EU-Asean free trade agreement (FTA) that sees the elimination of tariff and non-tariff barriers as well as technical barriers to trade, services and investment and their liberalisation, the onus is placed on Asean member-ountries to change legal and administrative regimes perceived as hindering European companies from reaping maximum profits in Asia.

The EU recognises the asymmetries between and within the regions, said Santiago. Beyond that recognition, however, it does not propose any resolutions.

“The rules are stacked against weaker partners who are playing catch-up. It favours European MNCs with in-built advantages and are global leaders in a variety of sectors. The FTA rules are designed to promote and protect the competitive advantage of stronger players, European MNCs in this case,” the report says.

Instead of providing solutions that address the asymmetries, the EU’s ‘Towards a New Asia Strategy’ policy paper (which had led to the launch of Asem in 1996) had recommended in 1994 that efforts be undertaken to include “all the appropriate steps to obtain from Asian partners modifications of their legislation and administrative regulations which hamper the development of European trade and direct investments”.

Said Santiago: “What is obvious in the Asean-EU FTA scheme is that the rules governing international trade are being rewritten along the neo-liberal model, aiming to level the playing field between the various players.

“Underlying the FTA plan is an implicit notion that it is Asean that needs to reform its economy if it wants to do business with Europe. European investments would find Asean attractive only if it meets European expectations.

“In fact, the roadmap towards an FTA dictates that Asean governments, not withstanding the different stages of growth, should commit to embracing a development strategy that is going to place them and their companies in direct competition with powerful European MNCs.”

A report by Olivier Hoedeman of the Amsterdam-based Corporate Europe Observatory and made available to participants, highlighted the role of the Asian-Europe Business Forum (AEBF), specifically, in hammering out and presenting pro-Big Business proposals to Asem leaders.

“(It) has a formal institutionalised role within key Asem bodies such as the Senior Officials Meeting on Trade and Investment (Somti), the meetings of the Economic Co-ordinators and the Investment Expert Group (IEG). The relationship between the AEBF and the powerful Somti is intimate, if not symbiotic,” states the report.

“In advance of Somti meetings, which are attended by high-level government officials, each country submits a written response to the outcomes of the last AEBF summit. During the meetings, with the AEBF leadership is present, the recommendations are discussed in detail. Representatives of Somti, in turn, attend AEBF’s Steering Committee meetings, to report the follow-up on AEBF recommendations.”

Europe’s social model

According to renowned political economist Susan George, the predominance of Big Business threatens not only the welfare and interests of Asians but will also erode Europe’s social model, particularly its wages and working conditions, full employment, quality public services (which are at the same cost or at no cost at all) which include good schools and health care, a decent environment to raise children and more leisure time.

Among the main culprits of the threat to the European social model, she said in her presentation, is the European Constitutional Treaty (ECT), which until its rejection in 2005 by France and the Netherlands, was set to come into force by Nov 1, 2006.

This text, she pointed out, made 24 references to “free and undistorted competition”, while the free “market” recurs 78 times.

“One might argue that Europe’s prosperity and, therefore, the economic well-being of its citizens depends on the free circulation of goods, services, capital and people, as the ECT constantly repeats,” she said.

“But when one discovers just how the (European) Commission understands and hopes to implement such “free circulation”, one also understands that the well-being of citizens has nothing to do with it.”

She cited the ECT’s ‘Bolkestein directive’, a proposal that workers from outside the original 15 EU countries be allowed to work in a European country under the laws of their country of origin. The receiving country need not even be informed of the presence of foreign workers, let alone demand declarations to work inspectors or social security among other work conditions.

“Such a measure would mean throwing away more than a half-century of hard-won labour law, as hours, wages, conditions would be determined outside the country where the service was supplied. The authorities of the suppliers’ country of origin are theoretically supposed to oversee them. The Bolkestein directive was, in other words, an attempt for force Europe into the ‘race to the bottom’.”

George also cited the ECT’s proposal to discourage government subsidies to public services (part of Europe’s social wages). While such subsidies can be outlawed by the European Commission, the suggestion that the unanimous approval of all 25 EU states be required before a national subsidy can be implemented would lead to lowest common denominator policies on subsidies.

While the ECT does not set a European-wide minimum salary or seek an upward harmonisation of wages, it does not say anything against the lowering of salaries, said George.

“Capital, on the other hand, enjoys complete freedom (in the ECT). Any restriction on capital flows within the Union, or even with regard to non-EU members, must be agreed unanimously,” she said.

An historical development

Juxtaposed against this scenario, and complicating it, is the threat of competition that is posed by Asian economies, said George.

European countries, she said, had developed gradually from low-wage societies producing primary commodities to semi-processed goods to textiles and footwear, and on to small manufactures.

In the present scenario, however, many Asian countries whose socio-economic development has not caught up to Europe’s social model but is mired in extremely low wages and low social protection, are nevertheless churning out products in the high-tech, high-value sectors.

“The situation we confront today is, increasingly, one which has never before occurred in human history,” said George.

This poses a challenge for civil society to formulate alternative policies and models based on co-operation rather than competition.

“I believe that Asians, along with their famous work ethic and many other virtues, want the same things as Europeans ... they want better wages and working conditions, full employment, quality public services including good schools and health care, a decent environment in which to raise their children, more leisure time for family and friends... This is what the European model is about and there is no intrinsic reason it should be confined to Europe.

“The way for them to have such a life is to prevent their leadership from following the exclusively neo-liberal path which will always result in a few winners and many losers. We saw Asian organisations, particularly of farmers and fishermen, fighting for such goals in Hong Kong at the (December 2005) WTO negotiations and were hugely impressed with their toughness and courage,” she added.

“Together we need to create many occasions and seize the opportunity ... to discuss how Europeans and Asians can co-operate rather than accepting competition as a way of life.”