EN Official Journal of the European Union C 354/43

Opinion of the European Economic and Social Committee on ‘For a new Governance of International Organisations’

2010/C 354/07

Rapporteur: Ms VAN WEZEL

Co-rapporteur: Mr CAPPELLINI

At its plenary session of 25 February 2009 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on

For a new Governance of International Organisations.

The Section for External Relations, which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 4 March 2010.

At its 461st plenary session, held on 17-18 March 2010 (meeting of 17 March), the European Economic and Social Committee adopted the following opinion by 132 votes to 0 with 4 abstentions.

1. Conclusions and recommendations

1.1 The world economy became more integrated than ever before. With major global crises in a multipolar world there is a need for a new governance and greater legitimacy for international organisations. This legitimacy needs to be based on common values, standards and objectives, on coherence and effectiveness and on inclusiveness towards all countries and their citizens. The EESC supports the EU in taking actively part in developing such a new governance of international organisations.

1.2 Even before the current crisis it was acknowledged that reform of international organisations, UN organisations and the Bretton Woods Institutions was necessary, but since the outbreak of the financial and economic crisis the process of reform gained further momentum. As soon as it became clear that the impact of the financial crisis was irreversible the G20 took the lead in responding. Despite the well received results of the G20 process, the legitimacy of its decisions is being questioned. The EESC request the EU to develop effective linkages between the G20 process and the representative UN institutions and to strengthen ECOSOC.

1.3 Emerging and developing countries need a more prominent role in the governance of international organisation. The EESC supports the further restructuring of the World Bank and IMF to increase the representation of these countries.

1.4 The governance of international organisations should be based on the UN Charter and the UN Universal Declaration of Human Rights. The EU has been a strong promoter of multilateral cooperation and the EESC fully endorses this policy. However the EESC notes that the environment for promoting the multilateral values has changed and therefore the EESC considers the need to revisit the EC Communications on the EU’s policies towards multilateralism (1).

1.5 Even though international organisations may have clear objectives, they are lacking effectiveness due to inadequate monitoring of the follow-up of their decisions and assessing their impact. The EU developed monitoring systems that are good practice and could be adopted on an international scale to monitor complex multi-level interventions. The EESC encourages the EU to introduce these monitoring systems to international organisations.

1.6 The EESC supports the increase of the authority of international organisations to regulate financial markets at the international level in order to prevent a new financial crisis. The EESC supports greater regulation at European and international level in the following areas: increasing reserves, regulating hedge funds, opening up tax havens, discouraging excessive and perverse remuneration, reduction of leverage risk, and supra-national consolidation of supervisory authorities.

1.7 The EESC supports any initiative by the EU to encourage cooperation and coherence between international organisations. The EESC urges the EU to take an initiative to follow-up on the initiative of Ms Merkel and facilitate a formal dialogue between international organisations to promote cooperation based on the ILO Decent Work Agenda.

1.8 The EESC welcomes the Resolution of the European Parliament calling for ratification by the EU Member States of up-to-date ILO Conventions and supports the call of the European Parliament to the Commission to prepare a Recommendation to the Member States to ratify the up-to-date ILO Conventions and to actively contribute to their implementation. The EESC wishes to be actively engaged in preparing this Recommendation.

1.9 The EESC acknowledges the ‘soft power’ used by the EU in the governance structures of international organisations, but the Committee is nevertheless of the view that for each of the international organisations the EU should develop a strategy to increase its power and strengthen its position. The EESC should be heard in consultative meetings while preparing these strategies.

1.10 The EESC hopes that the new Lisbon Treaty, the new High Representative for Foreign Affairs and the reinforced diplomatic cooperation will result in a more unified voice and a better position of the EU in international organisations. The EESC encourages the EU to be coherent in its external policies and consistent with its objectives.

1.11 The process of shaping the new governance structure is not very transparent. Social partners and representative civil society organisations should be included and the EESC expects the EU to make information on this process easily available.

1.12 International organisations gain effectiveness by being open to consult representative civil society organisations as well as trade unions and employers’ organisations. They must be part of their transparent consultative structures and part of their monitoring system. The EESC expects the EU (EC and Member States) to promote and facilitate an improved consultation of civil society organisations and social partners in the future governance structures of international organisations.

2. Introduction

2.1 The discussion on the system of governance of international organisations is not new, but the rapid spread and deep impact of the global financial crisis revealed the weakness of global governance in the globalised economy. It showed the increased interdependence of all countries. Not only is the crisis affecting all economies, but it has turned into a major employment crisis affecting millions of already vulnerable workers and enterprises. In order to limit the negative impact of this crisis as much as possible and to avoid a future crisis, it will be necessary to better regulate the financial sector, where this crisis began. But not just that. In order to create a sustainable and value-based economy, new and more effective, more accountable and more transparent governance of the world economy must be created.

2.2 This opinion will focus on the international organisations that govern social, economic and financial policies, considering the ongoing process of reform of these organisations and the context of the financial crisis: the UN, WTO, ILO, World Bank, International Monetary Fund, OECD, the G20 and the Financial Stability Board.

2.3 The world faces major global crises that can only be addressed effectively at the global level. This not only applies to the challenge of the current financial and economic crisis, but also to the crisis in food, water and energy, increased poverty, environmental problems including the effects of climate change, security and increased migration.

2.4 Globalisation has changed economic relations and this must be reflected in the global economic governance structure. Power relations are changing, with the BRIC countries becoming more important economically, politically and strategically. We are moving from a bipolar (Cold War) via a unipolar (US supremacy) to a multipolar world. Emerging economies and developing countries must play their part in the institutions that compose the new global governance model.

2.5 These challenges can only be addressed by institutions that have legitimacy. The new governance structure will only have this legitimacy when they are coherent in their policies, effective in implementing them and inclusive to all nations and their peoples.

2.6 Several initiatives to review the global governance system of international organisations and to reform the UN have been taken in the past years. Progress has been made in the One UN Delivery approach at national level, with the UN Resident Coordinator in the driving seat. In 2009, the UN System Chief Executive Board of Coordination announced 9 initiatives to be jointly taken by UN organisations and the Bretton Woods Institutions. While looking for a new architecture for the governance of the world economy, it is suggested that the role and competence of ECOSOC should be strengthened. Since the outbreak of the financial and economic crisis the process of reform gained momentum, with the G20 taking the lead.

2.7 In Pittsburgh, USA, on 24 and 25 September 2009, the leaders of the G20 countries took decisions that will change the governance of international organisations substantially. They decided that the G20 will be their premier forum for international economic cooperation. They have decided that they will continue their efforts to regulate the financial markets and to put quality jobs at the heart of the economic recovery. They agreed to set up a Framework for Strong, Sustainable, and Balanced Economic Growth, by which they committed to formulate common–mid-term–objectives for their macroeconomic, fiscal and trade policies to be consistent with a sustainable and balanced growth of the global economy. They gave IMF the authority to assist them in assessing their policies in order to facilitate their dialogue. By doing so they largely increased the IMF role, which was already boosted by a USD 500 billion extra funding. The World Bank has its authority for poverty reduction reconfirmed with extra lending (USD 100 billion) and with a special focus on food and energy security for the poor. The G20 leaders will meet again in June 2010 in Canada, in November 2010 in Korea and in 2011 in France.

2.8 The G20 leaders agreed to modernise the architecture for economic cooperation. Voting rights in IMF for emerging countries will increase by 5 % at the cost of overrepresented, smaller economies. The World Bank too is requested to look at the representation of the emerging countries in its decision-making structure.

2.9 However, despite relatively well-received results of the G20 meetings, the legitimacy of its leadership is being questioned. The world’s poorest countries are excluded from the debate. The G20 agenda is not based on an agreed policy and not all of the relevant international organisations are actively involved. Within the UN there is great concern that the role of the UN is being eroded in particular on social economic issues. A new balance has to be found between the new role of the G20, the UN and its agencies and the Bretton Woods Institutions. It is to be expected that new initiatives and ideas will come up, with economic and political relations changing permanently and swiftly.

2.10 The G20 countries must develop effective linkages with representative processes of the United Nations so that the interests of all countries worldwide are taken into account in a new and inclusive global architecture, accompanied by the establishment of a ‘UN Economic and Social Security Council’, a strongly reformed ECOSOC with reinforced decision-making powers or a ‘Global Economic Council’ (2) Within all of these changes, the EU has to position itself and some observers fear that the changing balance of power will be at the cost of European influence on the international stage.

2.11 Not enough attention is given to the role of civil society and social partners in this process. The EESC recommends that formal space is given by the G20 to civil society and social partners, and encourages the G20 Labour Ministers to involve in their work institutions representing social partners at international level. Though some international organisations do give consultative status to social partners and civil society organisations, the process overall lacks transparency and representative organisations like the EESC and the Social Economic Councils should be more actively involved.

3. New governance: principles

3.1 Any new governance of international organisations should be based on the UN principles and values. While all international organisations may have their own governance structure, all of their functioning should be based on the Charter of the United Nations, on the fundamental human rights, human dignity and equal rights for men and women. It should be based on justice and respect for international treaties and standards. It should promote social progress, better standards of living in larger freedom. A new governance structure of international organisations must promote sustainable development and social inclusion, and it must address the major global problems effectively.

3.2 The values of the UN Charter and the UN Universal Declaration of Human Rights are also the values of the European Union. The EU is based on the principles of freedom and dignity, dialogue and stability and respect for international agreements. The EU has been a strong promoter of multilateralism and of the UN and its treaties The EESC supports this. However the EESC notes that the environment for promoting the multilateral values has changed and therefore the EESC considers the need to revisit the EC Communications on EU’s policies towards multilateralism. (COM(2001) 231: Building an effective partnership with the United Nations in the field of development and humanitarian affairs. And COM(2003) 526: The European Union and the United Nations: The choice for multilateralism.)

3.3 A new governance structure of the global economy should be based on the International Covenant on Economic, Social and Cultural Rights and focused on addressing urgent social issues like unemployment, poverty, food security and the increasing inequality. It should contribute to social justice and a fairer world. It should play a greater role in promoting a green economy and protect public goods like clean water and air, biodiversity and the reduction of CO2 emissions.

4. New governance: Increased cooperation, greater coherence and effectiveness

4.1 The EESC calls upon the European Commission as well as other European institutions to actively promote a new governance of international organisations, aimed at enhancing their coherence and at making them more effective in contributing to sustainable development, as well as delivering decent work and sustainable enterprises.

4.2 International organisations, and the UN and its agencies in particular, do have clear objectives, but they are often lacking in effectiveness. Even if the objectives have been formalised in international treaties and standards, the implementation is often inadequate and an effective system of assessing the impact is missing. New governance of international organisations should put more emphasis on the enforcement and follow-up of its decisions.

4.3 Monitoring is becoming an important tool to guarantee coherence of policy implementation and to provide indications to managers and policy makers how to focus on the areas of greatest concern to them. It also provides ‘early warnings’ that allow timely and appropriate intervention. The EESC suggests that such approach be used and developed, along the needs of international organisations on a larger and more coordinated international scale, since the successful European experience in monitoring complex multi-level interventions has stimulated the common management capacity of public authorities, professionals, and the private sector.

4.4 International organisations can be more effective if they reinforce each others objectives. Some international organisations have complaints and binding arbitration mechanisms (WTO), others have well developed supervisory mechanisms, however without enforcement competence (ILO). Policies of international organisations should not contradict each other and only if the UN organisations, the International Financial Institutions and the EU work together to promote each others standards, like gender equality, sustainability, decent work and liberalisation of trade, can the objectives of any of them be achieved.

4.5 The governance of financial institutions, the IMF, the World Bank and the Financial Stability Board, has been at the centre of the debate for international governance of the global economy. The need to regulate financial markets and to make them more transparent is more urgent than ever, as it is no longer possible to take adequate measures at national level alone. In order for international organisations to be able to be more effective in preventing future crises, the EESC supports an even-handed increase of their authority to regulate financial markets at the international level, without becoming over restrictive, stifling and bureaucratic. The EESC supports greater regulation at European and international level in the following areas: increasing reserves, regulating hedge funds, opening up tax havens, discouraging excessive and perverse remuneration, reduction of leverage risk, and supra-national consolidation of supervisory authorities, amongst other concerns.

4.6 More international cooperation is needed to address the impact of the financial crisis on the real economy. A safe global economy needs more regulation on a more value based foundation. An important initiative was taken by German Chancellor Ms Merkel. At a meeting of the WTO, World Bank (WB), IMF, ILO and OECD early in 2009 she proposed a Charter for Sustainable Economic Governance (3) which would lay the groundwork for coherent policies to achieve joint objectives, with each organisation working from its own mandate. Based on this Charter the G20 leaders in Pittsburgh formulated ‘Core values for Sustainable Economic Activity’, in which they formulate their responsibility to the different stakeholders – consumers, workers, investors and entrepreneurs – to increase the prosperity of the people through coherent economic, social and environmental strategies. The OECD has prepared a ‘Global Standard for the 21st Century’ based on its existing standards for corporate governance, multinational enterprises, fighting corruption and fiscal cooperation (4). The Stiglitz Commission recommends strong measures for countering falling demand, creating jobs and attaining the Millennium Development Goals. The EESC recommends that the EU and its Member States support these initiatives.

4.7 A special role in the new governance structure is to be played by the ILO. Its core labour standards and the concept of decent work and sustainable enterprises give guidance in addressing the employment crisis. At its 98th Conference in June 2009, the three constituent parties of the ILO, agreed on a Global Jobs Pact, a package of measures to reverse the downward employment and growth trends. The EESC urges the EU to press for a formal dialogue between international organisations based on the ILO Decent Work Agenda on employment, enterprise development, social protection, humane working conditions, sound labour relations and rights at work.

4.8 To obtain greater coherence, the Committee advises the EU to promote internally as well as externally the ratification of up-to-date ILO Conventions and the implementation of the decent work agenda. The Committee urges in particular the ratification and implementation of the conventions most relevant to the decent work agenda, including the Conventions on OHS, the Conventions on Social Security and Convention 94 on labour clauses in public contracts. EU rules do not absolve Member States of their obligations under ratified ILO Conventions. The EESC supports the call of the European Parliament to the Commission in its Resolution of 26 November 2009 to prepare a Recommendation to the Member States to ratify the up-to-date ILO Conventions and to actively contribute to their implementation. Following the EESC opinion on The Social Dimension of Globalisation (5) and Promoting Decent Work for All (6), the EESC wishes to be actively engaged in preparing this Recommendation.

4.9 In addition to this the EESC supports any initiative by the EU to encourage cooperation on specific topics between international organisations. Good examples are the cooperation between the WTO and the ILO on employment, cooperation on the issues of social security between the World Bank and the ILO, cooperation on the implementation of Core Labour standards between WB and IMF. Youth employment, micro finance and social security are the issues of most importance.

5. New governance: More consideration for the interests of developing countries

5.1 Developing and emerging countries must play a stronger role in new global governance structures to be adopted by international organisations. However their integration must be based on the UN rules and on respect for human rights. The goal of securing decent work and the implementation of ILO core labour standards in emerging and developing countries should guide the policies of the international organisations. The World Bank and the IMF must restructure further in order to increase the representation and strength of the poorer countries in their institutions and processes.

5.2 It is necessary to assist developing countries in order to facilitate their effective participation in the decision making process of WTO. They must be equipped to participate more readily in trade negotiations and be encouraged in improving their depth of knowledge of trading matters as well as their technical capacities and competences in the field of market integration. Developing countries must be allowed some legitimate policy space in trade relations.

5.3 In March 2009 the IMF made an analysis of the vulnerability of low income countries to the adverse effects of the global financial crisis and the ensuing recession (7). According to ILO estimates, over 200 million people could be pushed into extreme poverty, most of them living in developing and emerging economies. The number of working poor, those who earn less than USD 2 per day, may rise to 1.4 billion, undoing the progress made on global poverty reduction during the past decade. Increasing poverty will affect women the most, considering that 60 % of the world’s poor are women. Under these circumstances additional efforts must be made to meet the MDGs. The EESC urges the EU to enact forcefully its commitment to achieve the MDGs.

6. What role could the EU play in promoting a new governance of the different international organisations?

6.1 The EU has a special role to play on this international stage. The European Union is the most important exporter in the world, the foremost donor of aid to developing countries and the market of reference worldwide. Despite this, some research indicates that the EU is losing its position in the UN (8). The EU is gaining less support for its human rights resolutions in the General Assembly than a decade ago due to the increased influence of countries that resist interference in ‘internal affairs’ like China and Russia (9).

6.2 The EU has much at stake in the system of global governance. The EU’s social market model is unique and has proven to be particularly adept at addressing the complex problems of the current economic crisis. The EU and its institutions need to take active steps to safeguard their interests and to promote their values.

6.3 The EU is represented in all international organisations dealing with the governance of the global economy, be it by the presence of member countries in the Board of these organisations, by coordinating the members’ policies in these organisations, by being represented by the member that holds the presidency of directly with a representative status for the EC. In most international organisations the EU has only observer status (the exceptions are the WTO and the FAO) and it relies on ‘soft power’ to exert influence. Though this ‘soft power’ and the EU’s network of goodwill may be effective, the EU should actively strive for formal positions where possible. For each of the international organisations the EU should develop a strategy to increase its power and strengthen its position in order to promote a more effective and just governance of these organisations.

6.4 In the IMF the EU is represented by different Spokesmen (the EURIMF President, the ECB, the Eurogroup President, the Minister of Finance of the EU’s Presidency). and divergences among Member States on financial and development issues prevent Europe to speak with one voice. Whereas on trade issues the EC has the authority to speak on behalf of the EU, on other financial or economic issues even the 16 EU Member States that have a common currency and delegated some of their competences to the ECB, do not necessarily take a unified position. Given the increased importance of the Bretton Woods Institutions, the IMF in particular, the EESC urges the EU and its institutions to improve their coordination in the governance of these institutions. EU countries together hold 32 % of the voting rights in IMF, as compared to US 17 %. A loss of influence by smaller EU members to make space for emerging economies, can be compensated by a better coordinated EU policy.

6.5 The EESC calls on the EU to encourage IMF to promote policies that provide access to credit and financing, for SMEs and farmers in particular, as in all national economies, these sectors act as the backbone and largest providers of employment. The EESC also requests that the EU urges the international financial institutions to make funds available for developing countries to implement counter-cyclical measures and in so doing to abstain from pro-cyclical conditional ties.

6.6 Since 2000 the EU has significantly increased its financial contributions to the World Bank (EUR 241 M in 2008). The EESC acknowledges the importance of the World Bank for poverty eradication and recommends that the EU encourages the World Bank to adopt economic development policies that include decent work as well as access to health care, education and other public goods. The EESC urges the EU to support the World Bank to finance recovery plans for countries affected by the current financial and economic crisis, that focus on supporting sustainable enterprise development, job creation, public investment, active labour market policies, the extension of basic social security to all, additional safety nets for the most vulnerable and investment in the ‘green economy’.

6.7 Under the new Lisbon Treaty the European Parliament has co-decision competences in trade policy areas. For the EESC this poses new opportunities to reinforce its cooperation with Parliament and the Commission on trade issues. The EESC prepared several relevant opinions on trade issues and on the need to make trade policies coherent with the EU’s social and environmental policies (10) .

6.8 The EU is spending much time on coordination of its views and positions in international organisations and less time and effort is therefore available to gain support for these positions among other members of international organisations. The UN Convention of the Rights of People with Disabilities is one of the recent positive exceptions. Civil society organisations can support a joint position. The EESC notes that the voting of the EU member countries shows convergence and encourages the EU to prepare to speak with one voice to prevent influence being lost because the members disagree. The Lisbon Treaty will hopefully contribute to the improvement of this. The acceptance of the new Treaty, the new position of High Representative and the reinforced diplomatic cooperation represents an opportunity to increase the EU’s international position.

6.9 A better governance of international organisation, with more coherence and therefore more effectiveness, starts at home. EU policies in the UN and in UN agencies, in the G20 and in the Bretton Woods Institutions should be subject to the same principles and promote the same objectives, within the mandate and structure of the different organisations. Much more effort is needed to develop coherent policies in international organisations. The EU policy on Coherence for Development is a positive example. The EESC also refers to the coherence between the internal and external policies in the Lisbon Strategy (11).

7. Better consultation and involvement of social partners and civil society organisations

7.1 Participation of social partners and civil society organisations is a precondition for protecting and promoting the values that are fundamental to international organisations. Civil society has a lot at stake in the governance of international organisations. The recent crisis showed that civil society, as tax payers, workers, consumers, savers, house owners and entrepreneurs pay a high price for insufficient and ineffective global governance.

7.2 The new governance structure is getting shape in high-level diplomatic summit meetings. This process is not very transparent. Civil society organisations and social partners have very little access to information about the process, let alone access to the decision making. Civil Society organisations and trade unions try to mobilise public opinion and lobby their governments to communicate their ideas on the future governance structure of the global economy. Some parts of the business community are consulted, others are excluded. The voice of civil society organisations and social partners should be better heard within the EU policy process towards the international organisations.

7.3 Several examples of good practice at national, regional and international level of involvement of civil society in the governance of international organisations are available. At international level the example of the ILO stands out. Employers’ and workers’ representatives participate on an equal footing with governments in all ILO institutions, be it in governance, decision-making, standard-setting or monitoring. The OECD’s Advisory Councils for Business (BIAC) and Trade Unions (TUAC) also stand as good examples of institutionalised consultation of the social partners. All other international organisations have more distanced consultations of social partners and other civil society organisations, like the consultative status for NGOs at the UN, or none at all as in the G20. The effective governance of international organisations will be strengthened by institutionalising the involvement of representative organisations of civil society and social partners in a transparent way. International organisations can also become more effective when civil society organisations and social partners are included in their follow-up and monitoring mechanisms and early warning systems.

7.4 The EESC expects the EU to include civil society organisations and social partners in the development of its policies and positions towards the new governance of international organisations. The Committee also expects the EU to promote within the international organisations an openness to consult civil society and social partners when discussing their governance structures. A meaningful consultation assumes transparency and easy access to documents within a timeframe that enables stakeholders’ views to be considered and incorporated.

7.5 The EESC expects the EU (EC and Member States) to promote and facilitate an improved consultation of civil society organisations and social partners in the future governance of international organisations.

Brussels, 17 March 2010 The President of the European Economic and Social Committee Mario SEPI

(1) COM(2001) 231: Building an effective partnership with the United Nations in the field of development and humanitarian affairs; and COM(2003) 526: The European Union and the United Nations: The choice for multilateralism.

(2) As was recommended by the Commission of Experts chaired by Prof Joseph Stiglitz advising the UN Conference on the World Financial and Economic Crisis and its Impact on Development, June 2009. The Stiglitz Commission also advised to establish a Panel of Experts advising the Council.

(3) Joint press release by Chancellor Merkel, 5 February 2009, Berlin.

(4) Angel Gurría, OECD General Secretary, Rome 12 May 2009.

(5) OJ C 234, 22.9.2005, p. 41.

(6) OJ C 93, 27.4.2007, p. 38.

(7) IMF, The Implications of the Global Financial Crisis for Low-Income Countries, March 2009.

(8) Richard Gowan, Franziska Brantner: A Global Force for Human Rights? An audit of European Power at the UN European Council on Foreign Relations, September 2008. www.ecfr.eu

(9) OJ C 182, 4.8.2009, p. 13.

(10) OJ C 211, 19.8.2008, p. 82.

(11) OJ C 128, 18.5.2010, p. 41.