Speech by President of the Republic of Finland Tarja Halonen at the University of Louvain-la-Neuve on 1 April 2004

Globalization is one of the key words in our time. Interesting enough it is difficult to find a clear-cut definition for globalization, although there is wide agreement on its basic factors. The liberalisation of international trade and investments and the rapid development of technology have been viewed as the engines of globalization. The enormous development of information and communication technology (ICT) has made today's globalization different from previous globalization periods in human history.

So it is no wonder that people often see globalization as a technical-financial phenomenon. We have also become aware of the environmental problems caused by economic activity. The social dimension of globalization - its effect on people - has received less attention. This is unfortunate, since the acceptability of globalization depends entirely on how people experience its effects in their own lives.

A well-managed economy, a balanced current account, competitiveness and technical development are all important things. At best, however, they are only means to promote the actual goal of human wellbeing and security. Means are too often seen as goals.

That is why, Ladies and gentlemen, it was most welcome that two years ago the International Labour Organization established the World Commission on the Social Dimension of Globalization. I agreed to co-chair the commission together with President Benjamin Mkapa of Tanzania. The commission published its report on 24 February in London – in consensus. But, serving as co-chair gave me, in deed, a good course in the faces of globalization around the world.

This independent commission, which covered a much broader field than that of the ILO, has no doubt been a learning process for all its members. An independent commission was established because sufficient agreement could not be reached in the ILO's normal work. This is easy to understand. Employers, workers and government representatives had their own background organizations and discussion resembled a negotiating situation, where no one wanted to give ground.

The commission was assembled a bit unusual way. Generally people or groups who agree with one another try to achieve something. In this case people who were sure to have different and even opposing opinions on globalization were selected for the group.

The commission included quite different people, from north, south, east and west, from industrialized countries and developing countries and so forth. Just one example, the United States was represented by three very different people: Joseph Stiglitz, the Nobel Prize winning economist; John Sweeney, the strong President of the American Federation of Labour and Congress of Industrial Organizations (AFL-CIO); and Ann McLaughlin Korologos, who served as Secretary of Labour in the Reagan administration. Many people said it was an achievement just for them to stay involved in the commission's work and even agree on the final outcome.

I am emphasizing the process because it was positive and significant in itself. Genuine discussion can help people who think in different ways to reach an understanding about how globalization should change and develop.

The joint report does not present the viewpoint of any single member. If the co-chairs had written it separately, the result would have been a little different, and each member of the commission would have taken a different approach. And if you read the commission's report and talk about it, you will probably talk about it in a somewhat different way than I or someone else would. This is completely all right, since it tells of a collection of views and proposals which are equally correct but must somehow be brought together so that we can move forward.

The commission's basic assumption was that globalization in its present form is not fair and is not politically or morally sustainable. The benefits of globalization are divided unequally between and within countries. Those who are already in a weaker position, such as developing countries or women, miss out on the benefits of globalisation. Consequently change is needed. This desire for change was the first thing that connected us. We approached the issue from a human viewpoint: globalization is not fair for people because it does not meet people's needs, without forgetting the limits of what nature can bear.

In our opinion the social dimension of globalization should be such that it promotes employment, stable growth and development and reduces poverty and unemployment. We considered how globalization should meet people's needs and we made proposals that extend to different levels: the global level, the level of the nation-state and the local level.

All change requires political will and forming it can be difficult. For this reason we may have to wait a few years to see whether our report has helped create and strengthen a process which will give globalization a more human face. At this university it is good to point out that research and civic action are key means to bring about change.

One of the important conclusions of the commission concern the role of the nation-state, the importance of promoting employment, the cross-border movement of people and the significance of a fair and coherent multilateral system.

The commission's message is that the nation-state still plays a key role in globalization and in governing and influencing it. The measures taken by nation-states have international repercussions, though these naturally vary according to size. On the other hand, how people can benefit and how they suffer from globalization also depends to a large extent on what kind of state they live in. We consider the rule of law especially important in nation-states, without forgetting democracy and respect for human rights.

Two other most significant things in the report are employment and the cross border movement of people. Jobs are a common concern. Workers in the north are worried about their jobs moving somewhere else while the developing countries are willing to accept quite unfair terms for foreign investment in order to attract jobs. We can well ask why employment has not been considered a common international goal more clearly. Promoting employment is mentioned in many international organizations’ charters, but in practical work it is easily overshadowed by other matters.

Promoting employment is in the interests of both the industrialized countries and the developing countries. The commission calls for international economic arrangements to pay key attention to promoting employment. It is important to study how matters influence employment. In addition to economic growth, interest rates and inflation, the development of employment should also be monitored.

There has long been a consensus that equitable free trade benefits everyone. Alongside the free movement of capital, goods and increasingly services, however, we have not seen the free movement of people. Regional arrangements exist, but even in the EU, as a result of enlargement we have found this to be a difficult matter. The attitude has been one of marked caution. Moving to another country is always a challenge for those who move and also for family members who stay behind and for the people they meet in the new country.

In the European Union we must hold on to the principle of the free movement of people. It is acceptable to apply transition periods in connection with enlargement, however. The Union must not become a fortress which is hard to get inside. Creating a common immigration and refugee policy is becoming even more important.

Although the cross-border movement of people has increased a great deal, there is no comprehensive convention concerning it. Measures should be taken rapidly, since the situation in this sensitive area will not improve by putting things off. With this in mind I particularly welcome the Global Commission on International Migration established by the Secretary-General of the UN.

The cross-border movement of people is much more than traditional migration. Refugees are a small part of the picture, although they number in the millions. People smuggling and related crime are an especially bad problem. Then there is traditional migration, which involves permanent settlement in a new country. More typical are shorter or longer stays abroad during the course of life. Regulation in this area is still in its infancy. We should always remember that this is not just about the movement of labour, but the movement of fellow citizens across borders.

Another important issue concerns why people move. In most cases the reason is work: people travel or move in search of jobs. This is something that surprisingly connected north and south during the process. We noticed that people’s reactions to globalization are often associated with work. People want to earn their living primarily through work and often the goal is to ensure their children a better future.

The commission calls for fair international rules and globalization with solidarity. Ostensibly equal rules for countries in different stages of development do not guarantee a fair result. In the commission's opinion, global rules are not entirely fair at present. And they are unfair particularly towards the weaker, developing countries.

A typical example of this is the rules regarding international trade. The biggest criticism concerns trade in agricultural products and textiles. In these fields many developing countries could be competitive, but the industrialized countries' subsidies and obstacles to market access, quotas and tariffs, prevent them from taking advantage of this opportunity.

Coherence and cooperation need to be improved in the international system. By improving coordination at the national level we can achieve a lot, but not all.

International organizations' representativeness and decision-making mechanisms must also be improved. The principle of one country one vote is not suitable for financial institutions, but representativeness can be improved with regional seats on governing bodies, for example.

The European Union is a key actor in globalization. This will be emphasized when the Union receives ten new members a month from now. Decisions made in the Union affect citizens in the Union as well as citizens of other countries in and outside the Union.

Promoting employment is one of the most important matters on the Union's agenda. Employment should be improved in every part of the Union, including the new members. The shifting of traditional industrial jobs to countries with lower production costs is familiar to us all. In my opinion it is clear that in the future many companies will shift their operations to countries with lower production costs, and many new assembly plants and other enterprises will also be established in these countries.

Our challenge is not to keep these jobs in Europe but to create new jobs. New jobs should be created above all in sectors of high expertise, but also in service fields. Key means to achieve this are active education, research and labour-market policies. These should be supported by growth-promoting economic and internal-market policies. National measures are of primary importance, but coordinating Union measures and the member states' policies has its own significant place.

The European Summit in Lisbon in summer 2000 approved a strategy whose core is to strengthen competitiveness, strive for full employment and support social cohesion. The goal is to combine economic stability with economic dynamism and the reform of social structures. One key part of the Lisbon strategy is a European employment strategy.

Implementing the Lisbon strategy has run into serious problems. The member states are mainly at fault. National economic reforms have proceeded much more slowly than was decided in Lisbon in 2000, and European competitiveness and employment fall way short of the objective. In the third quarter of last year the global economy grew faster than it had in twenty years, according to many estimates - but not in Europe.

Strategies, monitoring reports and new initiatives lead nowhere if measures are not implemented. The countries of Europe must look to the future and make the necessary decisions on that basis. In this respect last week's European Council in Brussels was positive. The emphasis was on implementing good decisions that had already been made. Decisions which hold on to the past cannot improve employment in Europe.

In order to promote the governance of globalization, the Union must improve the coherence of its external activities. This applies especially to the Union's development policies as well as trade policies. The Union is the world's largest donor of development aid. This is well supplemented by the Everything But Arms initiative, which will liberalize our markets for the least developing countries. At the same time we should consider how we can further promote our international development objectives by means of trade policies.

The Union's trade policies and the effects of the Common Agricultural Policy are not the worst examples of measures in the industrialized countries which hamper development in the developing countries. Nor are the detrimental effects of these measures clear-cut. I consider it important, however, to develop the Union's external activities so that they unequivocally support development and do not contain elements which hamper development. This is an issue, which has been addressed also by Guy Verhofstad, the Prime Minister of Belgium.

In spite of all the challenges, globalization can also be a positive force. It could be much more positive. This requires a change in the present form of globalization, however. For this we need political will and better governance of globalization.

I hope that the report of the World Commission on the Social Dimension of Globalization and the matters presented in it will receive sufficient attention nationally and internationally. The report is already being discussed in the European Union and in different UN forums.

I hope that this will lead to globalization with a more human face.