EU Presidency Statement - Business and development

I have the honor to speak on behalf of the European Union. The countries of Central and Eastern Europe associated with the European Union (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia), as well as the other associated countries (Cyprus, Malta, Turkey), align themselves with this statement.

Mr. President,

1. On 11 September, a symbol of the freedom of enterprise was indeed targeted. By annihilating the towers of the World Trade Center, beyond the horror provoked by their acts, the terrorists probably wanted to attack a particular idea of the business world. These acts are unspeakable and don't deserve the slightest attempt to explain them: the whole international community represented here at the United Nations must fight these fanatic forces.

Mr. President,

2. The European Union doesn't intend to engage today in a protracted debate about the importance of the private sector as the engine of growth and development. This is no longer in dispute: the contribution of the private sector to growth in developing countries is by far higher than the contribution of official development aid. Without the private sector, poor countries would depend indefinitely on international official assistance. Attracting foreign investment in thus crucial for the sustainable development of the poorest economies. Obviously the European Union is also convinced of the primacy of mobilization of domestic resources when it comes to financing development. However, we will engage more extensively in this debate on the enabling environment for foreign investment in the framework of the International Conference on Financing for Development ». The European Union doesn't wish to address today in details the measures that are likely to enhance private sector presence in the poorest countries.

3. The report of the Secretary-General addresses a number of general questions related to business and development: how to foster a climate that is conducive to entrepreneurship, what is the relationship between property rights and development, how to strengthen the technological infrastructure through knowledge acquisition, what about the linkage between democracy and growth, and finally what do we really mean by the concept of responsibility of business? The European Union would like to focus today on this last question, without denying of course the importance of the discussion on the other issues addressed by the Secretary-General.

Mr. President,

4. The business sector is increasingly being called upon to intensify its efforts in terms of social responsibility. It is no longer sufficient to sell a good inexpensive product and generate profits. Doing well without doing harm is no longer enough. Companies must perform their job well and also generate well-being around them.

5. At the 54th session of the General Assembly and in particular during the negotiations on resolution 54/204, the European Union had insisted that the "Global Compact" initiative taken by the Secretary-General in Davos in the beginning of 1999 should be recognized in a formal setting. This « Global Compact » finally didn't receive the blessing of some delegations, which felt rightly that they didn't possess all elements to make an authorized judgment on this issue. Since then, the situation has changed and the responsibility of business in terms of social development, respect for human rights and protection of the environment is no longer questioned. There was an agreement on this issue in the outcome documents of the follow-up UNGASS to the Social Summit (Copenhagen + 5), in the Commission on Social Development, in the Economic and Social Council and in our Assembly. More importantly, Mr. President, we should acknowledge that the United Nations is stepping timidly but steadily towards recognition of the private sector, and transnational corporations in particular, as actors in their own right in the pursuit of the sustainable development goals defined by the United Nations throughout the overall corpus of the major international Conferences and the Millennium Declaration. This certainly represents a positive response to the anti-globalists of all kinds who accuse sometimes without due consideration the transnational corporations of being the perverse instrument of social and environmental degradation.

Mr. President,

6. A number of normative instruments attempt to set a framework for business responsibility. In 1976, the OECD adopted its first set of Guidelines for Multinational Enterprises. In 1977, the ILO approved the " Declaration of Principles on Multinational Enterprises and Social Policy". However, this instrument never took the shape of an ILO Convention. Actually, there is no such thing as a « United Nations Code of Conduct for Multinational Enterprises » as it had been envisaged at the time. Moreover, these existing conventions never really addressed the issue of the worse forms of anti-social activities. One had to wait until the adoption of the 182 ILO Convention Concerning the Prohibition and Immediate Elimination of the Worst Forms of Child Labor for global awareness to set in concerning the need to respect core labor standards.

In 1995, at the Social Summit in Copenhagen, and later in the ILO Declaration on Principles and Rights at Work, the international community established clearly four basic principles: freedom of association, abolition of forced or compulsory labor, elimination of child labor and non-discrimination in employment and occupation.

7. As I mentioned above, the Secretary-General Kofi Annan launched the most recent and dramatic initiative in this field in Davos. The European Union is committed to invite its own enterprises to adhere to the nine principles stated by the Secretary-General in his initiative. Some European companies already recognize the value of the Global Compact, but too many multinationals from big industrialized countries and developing countries are still remaining outside this global movement.

Mr. President,

8. Please allow me to react briefly to the report of the Secretary-General prepared by the United Nations Center for International Crime Prevention of the United Nations Office for Drug Control and Crime Prevention, on the prevention of corrupt practices and illegal transfer of funds. The European Union also considers that the expression "illegal transfer" of funds is probably not the most appropriate. In many cases indeed, the transfer is performed in a legal way. What is illegal is the way by which those funds have been obtained…. We will thus henceforward use the expression « transfer of funds of illicit origin and the return of such funds ». Large-scale corruption cases commonly involve immense amounts of wealth and the transfer of diversion of this wealth is detrimental to the economic development of too many countries. Even when a corrupt ruler is overthrown or dies, recovery of diverted assets is complex and cumbersome. The European Union is convinced that recovery of diverted funds and their transfer to the victims of the crime can contribute to rebuilding political trust in the countries that have suffered from large-scale corruption. Whatever may be the practical and legal constraints on recovery of funds derived from acts of corruption, the European Union is convinced that a common and determined action by the international community is of the essence. In this regard, it underscores the importance of the work already accomplished at the OECD (by the Financial Action Task Force) in combating money laundering. The European Union is ready to assist in building management capacities for illicit funds recovery. Finally, the European Union considers that combating petty daily corruption at the local level is just as high a priority. These practices destabilize economic development just as much and have a serious impact on the disposable income of the poorest populations.

I thank you for your attention.

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