Summative Academic Essay Example

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9 Government Business Relations

GOVERNMENT BUSINESS RELATIONS

The Name of Class (Course)

The Name of the School (University)

The City and State where it is locate (Address)

GOVERNMENT BUSINESS RELATIONS

Do international institutions such as the WTO and the OECD help or hinder democracy? Discuss, drawing upon the concept of the “democratic deficit” and using examples from the case study countries.

Introduction

This paper aims to discuss how international organizations contribute to the hindrance of democracy worldwide. Using examples of the WTO and OPEC, the essay will assess the aspects of democratic deficit in policy making and the measures put forth by these institutions to address it. The multifaceted and sometimes contradictory impact of globalization has triggered mixed reactions and disagreements from different bodies. Intrinsic to globalization is the contemporary institutional and legal framework within which international trade regimes are conducted. In general, the goal of economic globalization is to improve economic wellbeing through efficient market exchanges. However, the congregation of international economic organizations such as the WTO, IMF and World Bank has always attracted crowds of protestors rallying against globalization. Most of these protestors include environmentalists concerned about ecological degradation and trade unionists worried about the loss of jobs. Some of the protestors claim that International organizations (IOs) have raised inequality levels and are convinced that globalization has driven the poor into deeper poverty rather than raise their standard of living. Whether these claims are valid or not is contentious since studies have shown that globalization has served a pertinent role in poverty reduction (Dollar & Kraay, 2004, F22-F26).

Discussion

While others accept the benefits of international markets, concerns regarding the legitimacy of international organizations (IOs) have been raised. One major charge brought against IOs is the ‘democratic deficit’ and the questionable legitimacy of many representatives involved in international governance. In the same context, many scholars argue that when dealing with global governance institutions such as the WTO, prospects for democracy beyond the nation-state need to be looked into. The aspect of democracy in global governance institutions can be viewed on different levels; the internal level addresses equal representation and participation of member states in the decision-making process (MacDonald, 2008, pp 109). Fundamentally, this includes the policy-making and implementation process to the satisfaction of all members. Based on this premise, democracy will be attained only when there is equitable and inclusive participation of all member states; implying equal voting rights and influence in setting the agendas (Dollar & Kraay, 2004, pp.F42- F46).

The WTO has not only been accused of being non-democratic, but also of being non-transparent. The legitimacy of the organization has been undermined by the criticisms on their decision-making process. Principally, all member states have equal decision-making rights in the WTO structure since the decisions are taken by consensus. In the event that consensus is not attainable, decisions are taken on the majority based on one country one vote principle. Practically, the consensus method of the WTO has been accused of perpetuating the dominance of powerful nations (MacDonald & Marchetti, 2010, p.63). Given the unfavorable terms of the trade, the bargaining power of developing countries is limited and the policy making process is characterized by informal working groups composed of a small group of powerful and rich nations known as the Quad: US, Japan, EU, and Canada. Apart from the Quad, some developing countries included in the informal meetings are Brazil, India, and, sometimes, South Africa among others. This is only a small representation of developing countries (Higgot & Lehmann, 2006, pp.31-33). This model of WTO decision-making has been under intense criticism from both NGOs and developing countries for being guilty of democratic deficit.

The development of the Australia-US Free Trade Agreement is a good example of the Australian government’s effort to overcome the democratic deficit in trade policy. The negotiations between the Australian and the United States governments to come to the initial decision were evidenced by democratic deficit. The American president was required to secure Congressional approval before entering into any trade negotiations with Australia. Approval was granted by congress after a lengthy process of public hearings. On the contrary, the Australian cabinet negotiated AUFST without recourse to the Australian Parliament. The Australian parliament was not included in the initial decision to negotiate the Agreement nor did they take part in the establishment of Australia’s negotiating objectives. A similar case of democratic deficit was evidenced by Canada in their multi-stakeholder consultations. Meetings between officials of the Department of Foreign Affairs and International Trade (DFAIT) and stakeholders have been accused of lacking transparency, participation and accountability.

Another argument pointing at democratic deficit in IOs has to do with the manner in which these institutions are run with regard to participating states. Firstly, not all member states are democracies; hence, the decisions arrived at these institutions do not always represent the inclination of the populace (Charnovitz, 2003, p.50). In their discussion on policy frameworks for the future Internet economy, the OECD displayed a shortfall with regard to the right of political participation and the right to self-determination. These two acts are encapsulated in the Universal declaration of Human Rights, as well as the Right to development respectively. The Word Summit on the Information Society (WSIS) envisaged placing global Internet economy issues within the broader social and political frameworks of the information society. The determination of OECD countries to developing policies for the information society has global implications, yet an exclusive group of countries shapes these policies. This is a sure sign of democratic deficit in developing global policies since a small group of countries dominantly makes Internet policies for the whole world. In order to uphold democracy and the values of political participation, it is important to involve equally developing nations in global Internet policy making.

On the external level, democratic theorists insist that, for any political entity to count as democratic, they must allow the equal participation or representation of the people. To establish democracy in global governance, cosmopolitan theorists emphasize on the electoral representation in the IOs (Held, 2002, p.32). On the other hand, the civil society approach is to enhance democracy through the increased involvement of civil society actors (Steffek & Nanz 2008, p.78; Scholte, 2005, p.49). Such actors are expected to be a voice for the local stakeholders, as well as representatives for marginalized groups. As far as the civil view goes, it is argued that, international organizations will always lie below any reasonable threshold of democracy. Furthermore, they are not equipped to fulfill the conditions of democracy. Scholars and practitioners have gone ahead and pointed out that, in reality, democratic governance can only be realized fully at the level of the nation-state and that democratic goals can be best attained through national sovereignty. Keohane and Nye (2002, p. 234) recognize that no international policy making is without the ‘democratic deficit’:

International institutions lack the essential feature that makes democracy possible and that, in democracies, facilitates accountability: an acknowledged public, operating within a political community in which there is a general consensus on what makes public decisions legitimate.

Scholte (2005, p.63) pointed out that, in recent years, there has been a strong tendency toward increased participation of non-state actors in global decision-making. This is attributable partly as a response to the criticism of the democratic deficits in global governance. Most IOs have opened up formal and informal avenues for political participation. In Scholte’s view, since the conventional state formula of democratic legitimacy is not sufficient for expanding global governance, the major democratic deficit of IOs can be resolved through civil society activism. Most notably, civil society actors have increased and continue to increase the democratic accountability of IOs. This is by promoting transparency of global decision-making, monitoring global policies and pushing for the creation of formal accountability mechanisms to monitor and control the agencies concerned (Scholte, 2005, pp. 93–98).

In response to the criticisms, many international institutions such as the OECD, the World Bank and the UN have established the goal of increasing public engagement as a top priority. With the focus of infusing democratic legitimacy in international institutions, trade lawyers have called for the direct participation of NGOs in WTO decision-making and adjudicatory processes. Supporters of NGO participation, in the WTO, aim for the establishment of new international norms and procedures that will be based upon participatory democracy. A legal scholar, Richard Shell (1995, pp. 829-830) postulates the ‘normative superiority’ of stakeholders in building a version of liberal international relations theory. The model aims to make global trade a sustainable aspect of the transnational society. This is by opening dispute resolution and policymaking processes to environmental, labour and other groups.

Conclusion

In conclusion, though most of the international institutions have implemented strategies aimed at promoting democracy, various aspects in their policy making still remain wanting. In practice, advancing democracy through international institutions is limited by many factors. Some national governments fear that making democracy a universal norm could undermine their own legitimacy. Secondly, most governments want to sustain what is left against the norm of non-intervention. The political reality at the WTO is that, it has undertaken operations only with the permission of the government in question.

References

Charnovitz, S., 2003. The emergence of democratic participation in global governance.

Indiana
Journal of Global Legal Studies, 10(1), pp. 45-77.

Dollar, D, & Kraay A., 2004. Trade, growth, and poverty. Economic Journal, 114 (493), pp.

Held, D., 2002. Law of states, law of peoples: three models of sovereignty. Legal Theory, 8(1),

pp. 1-44.

Higgott, R, Lehmann, J., & Lehmann, F., 2006. Markets and institutions: how to manage the governance gap at the WTO. Garnet Policy Brief, 2, pp 30-39.

Keohane, R., & Nye, J., 2001. Power and interdependence: world politics in transition. Camdem,

ME: Elm street Publishing Services Inc.

MacDonald, T., 2008. Global Stakeholder Democracy. Oxford: Oxford University Press.

MacDonald, T. & Marchetti, R., 2010. Symposium on global democracy: introduction. Ethics &

International Affairs, 24(1) pp. 13-90

Scholte, J. A., 2005. Civil society and democratically accountable global governance,’ in D. Held and M. Koenig-Archibugi (eds), Global Governance and Public Accountability. Oxford: Blackwell.

Shell R., 1995. Trade legalism and international relations theory: an analysis of the World Trade

Organization. Duke Law Journal, 44 (5), 829-927.

Steffek, J. & Nanz, P., 2008. Emergent patterns of civil society participation in global and European governance. New York: Palgrave Macmillan

The Global Policy Forum., 2002. NGOs call on trade ministers to reject closed WTO Process. [online]. Available at:

<http://www.globalpolicy.org/component/content/article/177/31586.html> 30 Apr. 2014.