Asem4people
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Asem4people
Asia-Europe Business Forum - ASEM's Corporate Bias
Since the start in 1996, the ASEM process has had a deep corporate bias. The Asia-Europe Business Forum (AEBF) has been given a key role, for instance in the step-by-step process of rolling back government regulations seen as "obstacles" to investment. The AEBF is nurtured, indeed kept alive, by government officials that see transnational corporations (TNCs) as a key political ally. The rightwing Danish government hosting the Fourth ASEM summit and the ASEM Economic Ministers' Meeting in Copenhagen in September 2002 has announced it will "strive for synergies" between the official events and the AEBF conference taking place in parallel. (3) ASEM (the Asia-Europe Meeting) is an "informal process of dialogue and cooperation" between the fifteen EU Member States, the European Commission and ten Asian countries (Brunei, China, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam). Established at a summit in Bangkok in March 1996, ASEM consists of three pillars (political dialogue, social and cultural cooperation and economic cooperation). In practice the economic pillar dominates, which reflects the fact that the ASEM process is inspired by the Asia-Pacific Economic Cooperation (APEC), which was established in 1989. Within APEC over 20 countries from the Asia-Pacific region pursue full-scale trade and investment liberalisation by 2020. After it had been denied membership of APEC, the EU decided to set up its own political and economic dialogue with East Asia. (4) The EU feared being sidelined politically and wanted to ensure EU-based corporations optimal access to the lucrative East Asian markets. (5) ASEM was established at a time when the EU, with the European Commission in a leading role, had started aggressively pursuing trade and investment liberalisation around the world. (6) The first ASEM summit decided to invite corporate leaders to set up an Asia-Europe Business Forum (AEBF) which could provide business input to the process. (7) Within APEC, the Asia-Pacific Business Advisory Council (ABAC) had been established earlier in 1996. (8) ABAC, dominated by US, Japanese and Canadian corporations, plays a powerful advisory role within APEC. Since the founding meeting in Paris in October 1996, AEBF conferences have taken place once per year. (9) Last year's conference in Singapore (October 2001) was attended by "over 500 leading businessmen and government representatives from the ASEM partners". (10) At these conferences working groups hammer out corporate wish lists on issues ranging from trade and investment rules over infrastructure to biotechnology. These demands are then presented to the governments at the official ASEM summits. Each working group is co-chaired by an Asian and a European businessman. Among the corporations that have played an active role in the AEBF in the last few years are transnational giants like Suez, the Finnish forestry corporation UPM Kymmene, pharmaceutical TNCs Pfizer and GlaxoSmithKline, electronics manufacturers Siemens and Sony, car producers Hyundai and Mitsubishi, Bank of Tokio and HSBC, and conglomerates like the Korea-based Doosan and Japanese Mitsui corporation. ASEM's bureaucratic-industrial complex The annual AEBF conferences are only the tip of the iceberg. The business forum 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 Coordinators and the Investment Expert Group (IEG). The relationship between the AEBF and the powerful SOMTI is intimate, if not symbiotic. 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. (11) During the meetings, with the AEBF leadership is present, the recommendations are discussed in detail. Representatives of SOMTI, in turn, attend that AEBF's Steering Committee meetings, "to report the follow-up on AEBF recommendations." (12) The European Commission is a particularly eager supporter of the AEBF. Trade Commissioner Lamy sees corporate influence in the ASEM process as purely beneficial. "Continued feedback from the business community will be vital to ensure that measures being developed by officials are adequate, and that the right problems are being addressed", says Lamy. (13) The AEBF is an ideal ally for the European Commission and European governments eager to promote trade and investment liberalisation on behalf of EU-based corporations. According to Anthony Murphy of the UK government's Department of Trade and Industry, the AEBF has a key role in "helping to overcome the reluctance of less liberal partners." Many East-Asian governments want to maintain the right to protect local companies that would not survive open competition with major transnational corporations. (14) "The business community", Murphy explains, "can use its significant leverage to help overcome the reluctance and outright resistance of officials who are otherwise unconvinced of the need for change." The AEBF is only one of many examples of the EU putting large corporations in the drivers seat in order to speed up global economic deregulation (or TNC-friendly re-regulation). Since the mid-90's, the European Commission has initiated the Trans-Atlantic Business Dialogue (TABD), the EU-Japan Business Dialogue Roundtable, the EU-Mercosur Business Forum and several other similar structures through which TNCs are given a leading role in steering bilateral economic relations. (15) The most powerful of these bodies is undoubtedly the TABD which has the mandate to identify "barriers to trade" between the EU and the US, which in effect means a broad range of regulations and policies that do not fit corporate interests. (16) While powerful within ASEM, the AEBF seems less of a well-oiled machine than the TABD which runs secretariats in both Brussels and Washington D.C. (17) While the TABD mobilises CEOs from the largest EU and US corporations in on-going lobbying campaigns, the AEBF events are often attended by managers below CEO level and their involvement seems to be less stable. Rather than on its own strength, the AEBF's influence within the ASEM process is based on the far-reaching support from government officials, who also take an active role in securing the continuity of the AEBF's work. The last SOMTI meeting, in July 2002, not only discussed the AEBF's recommendations, but also the preparations for the AEBF conference in Copenhagen as well as the venue for the following "AEBF VIII" which is to take place in Asia. (18) The role of the European Commission is particularly awkward. In a October 2000 press release, the Danish employer's association 'Dansk Industri' announced that it had "accepted the European Commission's invitation to become host and chair of the Asia Europe Business Forum AEBF VII in the autumn of 2002 in Copenhagen". (19) The European Commission seems to play a key role in ensuring the AEBF's continuity from one ASEM summit to another, undoubtedly because the involvement of business leaders adds momentum to ASEM and particularly the EU's own neoliberal ambitions for the process. With such blurred lines between government officials and the industry, the AEBF can best be described as a corporate-government alliance. This becomes clear from the AEBF's work on issues like investment liberalisation and water privatisation. MAI in Slow-motion? As soon as ASEM was established, the EU started pushing for an ASEM investment treaty mirroring the Multilateral Agreement on Investment (MAI), which was then under negotiation in the OECD. (20) Asian governments questioned whether the treaty should be based on the MAI, which was becoming increasingly controversial due to its corporate bias and potentially far-reaching social and environmental implications. (21) Instead of MAI-style investment deregulation, which would limit government's abilities to regulate foreign investment, Southern governments preferred to emphasise promotion of investment. (22) The AEBF, meanwhile, was directly involved in these ASEM investment talks. (23) The final version of what was to be called the Investment Promotion Action Plan (IPAP) was adopted at the ASEM summit on 3-4 April 1998 in London, together with a Trade Facilitation Action Plan (TFAP). While the IPAP did include investment promotion activities (for instance websites), then EU Commissioner Sir Leon Brittan triumphantly declared that the IPAP is "aimed at removing regulatory barriers to investment." (24) The spirit of the MAI is clearly present in IPAP's 'pillar 2', which focuses on "investment Policies and Regulations, including all activities relating to the regulatory and legal framework governing the investment environment." Integral part of IPAP is "ensuring active business/government dialogue and co-operation in all ASEM investment-related activities." (25) The IPAP is not binding, but through the work of the Investment Expert Group (IEG), ASEM governments face pressure to adapt their regulations to a MAI-style model. The IEG uses a "Consolidated List of Obstacles to Investment", 'obstacles' identified by the AEBF and its working group on Investment. (26) The working group was last year chaired by Frans van Loon of ING Barings, a bank with major interests in East Asia. As with SOMTI, the AEBF is directly involved in the IEG and vice versa. (27) Apart from the process of step-by-step deregulation, the European Union also uses ASEM to promote its ambitions for WTO investment negotiations, as part of a broad new round of trade talks. (28) ASEM member states like Malaysia and Indonesia are among the main opponents of bringing investment policies into the WTO regime. After the collapsed WTO summit in Seattle (November 1999), the Commission announced it would use the ''informal character of ASEM'' to "deepen our mutual understanding and building alliances" for a new WTO round. (29) At the WTO summit in Doha last November a new WTO round was launched, but much to the regret of the EU and Japan, talks on investment liberalisation were not included. The Danish government hosting ASEM IV has announced that it sees the ASEM summit as an "important opportunity to build alliances to promote the negotiations" in the WTO. While European and Japanese corporate lobby groups have long campaigned for a WTO agreement that would accelerate and lock in investment deregulation, the AEBF does not take a clear position on this issue. This may reflect opposition from businesses based in various East Asian countries to WTO investment rules that would further empower large TNCs at the expense of local companies. Privatisers at Work Since the beginning, the AEBF has stressed "the important role of privatisation and deregulation in attracting foreign investment". (30) The AEBF's very active working group on Infrastructure promotes the privatisation of public services, particularly in Asian countries. (31) The working group is dominated by Suez, the world's biggest private water corporation. Like Vivendi, Thames and other global water corporations, Suez has enormous ambitions to expand into East Asian markets, but privatisation is a pre-condition. Asian business people in the working group tend to be from construction and engineering companies. Last year, the group was co-chaired by Pascal Roger, International Director of Suez. The year before the working group was led by Yves-Thibault de Silguy, senior advisor to the CEO of Suez and former EU Commissioner for Finance. "Governments are often still reluctant to involve Private Sector participation in the provision of water services", the AEBF complained to ASEM governments in 1998. (32) In the last few years privatisation of water supply has become increasingly controversial, as numerous cases of privatisation have resulted in worsened services, often combined with price increases. (33) This is one reason for the AEBF Infrastructure working group to promote 'Public-Private-Partnerships' (PPP) between (local) governments and the water corporations. In the AEBF's vision of PPPs, governments should "share the risks", "provide necessary guaranties and support" and "develop public awareness programmes" in order to "educate consumers on need to pay for water". (34) PPPs, a basket concept describing models that fall short of full-scale privatisation, are increasingly popular among water corporations. Not only can they use PPPs as a more benign sounding concept to expand their role in hugely profitable water markets, it has numerous other advantages for the corporations. "Sharing the risks" with governments is obviously attractive if a privatisation does not lead to the expected profits or if the local population mobilises against increased water prices. Public-private partnerships can result in private corporations taking over only the profitable parts of a local water market and leaving the poorer neighbourhoods without water, as happened for instance in Cartagena, Colombia and La Paz, Bolivia. (35) The AEBF uses the ASEM process to "speed up wide acceptance of PPP in public utility development", by convincing government officials of the concept. (36) The working group lobbies actively through ASEM's Investment Expert Group (IEG), but also uses other channels, such as contacts to individual governments and multilateral financial institutions. (37) It moreover organises seminars for government officials "to disseminate ideas about PPP", with financial support from ASEM governments. (38) There is already government support for establishing a Task Force, consisting of government officials and business representatives, to "look after PPP development in the provision of public utility services in each respective ASEM country". (39) The AEBF infrastructure working group wants governments to "review and if necessary reform" all aspects of their public services policies "to make them conducive for PPP". (40) It has called each ASEM government to set up its own Task Force, again including business, to speed up the process. (41) European Commission in Denial It is hardly surprising that the corporations active in the AEBF use the opportunity given to them within ASEM to promote a narrow, corporate agenda. The core problem is of course the group's privileged status within the ASEM process and the fact that governments have granted corporations such inappropriate political power. As explained, there is an almost symbiotic relationship between the AEBF and the government officials within ASEM, including those from the European Commission. It was the Commission that asked the Danish employers federation Dansk Industri to host AEBF VII in Copenhagen, which reveals that the Commission has an indeed very active role in ensuring the continuity of the AEBF. This reality is in stark contradiction with the Commission's official version of its relations with the AEBF. Take for instance the response which Satoshi Nakamura of the Netherlands-based Institute for Social Studies received to his question about AEBF-Commission relations. "AEBF is a private organisation", Eduard Auer of the Commission's Directorate General for External Relations replied. (42) "The European Commission has no mandate to get involved in the organisation of the AEBF", Mr. Auer wrote and continued stating that "The Commission is careful to respect the private sector driven nature of AEBF." When Satoshi Nakamura tried to use the European Union's "public access to documents" rules to get copies of Commission correspondence with the AEBF as well as minutes of joint meetings, his request was rejected. (43) The Commission argued that releasing the documents would harm its "interest in the confidentiality of the internal decision-making process". This implies that the Commission considers AEBF meetings to be part of the Commission's "internal decision-making process", which clearly contradicts Mr. Auer's claims that the AEBF is a private sector body to which the Commission is only an observer. In any case, defining the AEBF as an internal part of the Commission's decision-making structures and therefore to be protected by secrecy, is at serious odds with basic standards of democratic transparency and accountability. TNCs Out of ASEM Improved transparency around the Commission's relations with the AEBF is clearly a matter of urgency. The fundamental problem, however, is the fact that the EU continues to shape its international trade policies around the 'offensive interests' of major EU-based corporations. The AEBF's privileged powers within ASEM are at odds with democracy and should be rolled back. Withdrawing the group's status within ASEM structures like SOMTI and the IEG would be a good starting point. Experiences from similar corporate-government alliances such as the Trans-Atlantic Business Dialogue (TABD) show that establishing NGO dialogues in an attempt to complement or "balance" the influence of business is not a solution. In reality these NGO dialogues have never come close to correcting the excessive power of the TABD, because government officials pay far less attention to them and because the mandate given to the business dialogue reflects the neoliberal focus of EU-US relations. (44) Similarly, the privileged role of large corporations within ASEM reflects the deep flaws of the process. The underlying agenda of ASEM's economic pillar is to accelerate and consolidate the current model of economic globalisation. Promoting deregulation in order to expand the quantity of trade and investment flows has proved to be socially and ecologically unsustainable. Instead, an intergovernmental process like ASEM should focus on regulating and improving the quality of trade and investment flows. Rather than working to implement corporate wish lists, governments should cooperate to move away from the flawed current model of globalisation. How to prevent over-dependency on transnational corporate investment and the resulting downwards pressure on regulatory standards and corporate taxation? How to develop effective forms of taxation of transnational corporations and financial markets? How to redistribute wealth, for instance to enable the expansion of public services for the poorest? These are some of the pressing questions which could be addressed after the ASEM process has been freed from its current corporate bias. Thanks to Satoshi Nakamura, who provided essential research to this report during his internship at Corporate Europe Observatory in the summer of 2002. Which vision for ASEM? The corporate bias in the ASEM process was further exemplified by the so-called "Asia-Europe Vision Group", established at the ASEM Summit in London in April 1998. This "Vision Group" included corporate heavyweights like Percy Barnevik (then Chairman of ABB) and Francois-Xavier Ortoli (Honorary Chairman of TotalFina Elf), which might explain why the report, approved by the ASEM governments in April 2000, is an undiluted apology for corporate globalisation. The report calls governments to adopt the "goal of free trade in goods and services by the year 2025." It recommends a massive further boost in the political role of business, recommends that the ASEM Leaders establish "Asia-Europe Business Advisory Councils (BACs)", "to institute high level dialogue to promote Asia-Europe investment, with a membership including national government leaders and the CEOs of companies" as well as "the establishment of an ASEM Advisory Network of Senior Executives". [45] References 1. AEBF website, http://www.aebf.dk/ Corporate Europe Observatory (CEO) is a research and campaign group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups. |
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